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TMI Blog2016 (8) TMI 376X X X X Extracts X X X X X X X X Extracts X X X X ..... particulars of income for considering the particulars of income. It was an inadvertent mistake. The assessee had acted on the advice of a professional and his advice was found not as per the provisions of the Act. Penalty levied u/s. 271(1)(c) to be deleted. - Decided in favour of assessee. Penalty with regard to disallowance of expenditure incurred on account of increase in share capital - Held that:- There is no ambiguity about the nature of the expenditue. The expenses incurred by the assessee for issuing shares on right basis cannot be treated as revenue expenditure. It is neither a debatable issue nor there are two opinions about the said expenditure. The assessee had made a patently wrong claim. There is a difference between a deb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... completed the assessment u/s. 143(3)of the Act, on 18/12/2008, determining its income at ₹ 30. 98 crores. ITA/4428/Mum/2012: 2. Effective ground of appeal is about deleting the penalty levied by the AO u/s. 271(1)(c), amounting to ₹ 21. 86 lakhs. During the assessment proceedings, the AO found that the assessee had claimed additional depreciation of ₹ 43. 72 lakhs u/s. 32 (ii) r. w. s. 32(iia) of the Act on the addition to the plant and machinery to the tune of ₹ 2. 18 crores, that the new plant and machinery was put to use after 30/09/2005, that the depreciation was restricted to 10% as per the second proviso to section 32 (i) of the Act. He disallowed depreciation of ₹ 21. 86 lakhs. He further found ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an appeal before the FAA. Before him, it was argued that there was an inadvertent mistake in claiming additional depreciation that instead of claiming additional depreciation at the rate of 10% it had claimed depreciation at the rate of 20%, that the material facts were disclosed in the audit report wherein the date of addition of assets had been mentioned, that the auditor itself had made mistake in the audit report, that during the assessment proceedings the assessee had agreed to restrict the depreciation to 10%, that during the quantum proceedings the FAA had confirmed the addition on account of expenditure relating to increase in authorised capital for right issue, that the addition was on account of difference of opinion, that penalty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment proceedings. He referred to the pages 24-27 of the paper book. 6. We have heard the rival submissions and perused the material before us. We find that the assessee had claimed additional depreciation at the rate of 20% though the plant and machinery was used only for period of six months, that during the assessment proceedings it submitted letter to the AO to reduce the additional depreciation, that the Chartered Accountant had, in the audit report, recommended the claim of depreciation at the rate of 20%. In our opinion, considering the clear facts and circumstances of the case, it is not a case of filing inaccurate particulars of income for considering the particulars of income. It was an inadvertent mistake. The assessee had ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company. Thus, there is no ambiguity about the nature of the expenditue. The expenses incurred by the assessee for issuing shares on right basis cannot be treated as revenue expenditure. It is neither a debatable issue nor there are two opinions about the said expenditure. The assessee had made a patently wrong claim. There is a difference between a debatable claim and a wrong claim. In the first instance because of the divided judicial opinions the assessee can argue that it had opted for one of the opinions. But, as far as the second category is concerned nobody can argue that the claim is supported by judicial pronouncement. The claim made by the assessee, in the case under consideration, falls under the second category. We find t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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