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TMI Blog2016 (12) TMI 294X X X X Extracts X X X X X X X X Extracts X X X X ..... e to levy of penalty under section 271(1)(c) of the Act. Accordingly, we uphold the order of CIT(A) in confirming the levy of penalty under section 271(1)(c) of the Act. - Decided against assessee - ITA No. 1464/PN/2014 - - - Dated:- 4-11-2016 - SHRI VIKAS AWASTHY, JM AND SHRI PRADIP KUMAR KEDIA, AM For The Assessee : Shri Niraj Seth For The Revenue : Shri P.L. Kureel ORDER PER VIKAS AWASTHY, JM : This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-I, Nashik dated 30-05-2014 for the assessment year 2007-08 whereby the penalty of ₹ 14,50,240/- levied u/s. 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as the Act ) was confirmed. 2. The brief facts of the case as emanating from records are: The assessee is engaged in the business of manufacturing of rock roller drilbits. The assessee filed its original return of income for the assessment year 2007-08 on 27-10-2007 declaring total income as Nil. During the course of scrutiny assessment proceedings the Assessing Officer observed that the assessee has claimed depreciation on lease hold land. The Assessing Officer inter alia disallowed the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... furnished by the appellant not only during the course of assessment but also in the return of income and in the audited accounts which were not found false either by the A.O. or by the Id. CIT(A) and that the appellant did substantiate its explanation and also proved its bonafide. 4. Shri Niraj Seth appearing on behalf of the assessee submitted at the outset that in the immediately preceding assessment year i.e. assessment year 2006-07 the Co-ordinate Bench of the Tribunal has upheld the levy of penalty u/s. 271(1)(c) of the Act in respect of disallowance of claim of depreciation on lease hold rights of land. The ld. AR submitted that even though the Co-ordinate Bench of the Tribunal has confirmed the levy of penalty in the immediately preceding assessment year, the case of the assessee has merit on various other grounds which were not agitated/raised before the Tribunal at the time of hearing of penalty appeal for assessment year 2006-07. 4.1 The ld. AR submitted that the notice issued u/s. 274 r.w.s. 271 of the Act does not specifically states, whether the penalty is levied for furnishing of inaccurate particulars of income or concealment of income. The irrelevant claus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tribunal. However, there are several decisions wherein depreciation on lease hold land has been allowed by the various Benches of the Tribunal. In support of his submissions the ld. AR placed reliance on the following decisions : i. NMDC Ltd. Vs. Joint Commissioner of Income Tax, 56 taxmann.com 396 (Hyderabad-Trib.). ii. Piaggio Vehicles (P.) Ltd. Vs. Assistant Commissioner of Income Tax, 37 taxmann.com 133 (Pune-Trib.). iii. M/s. Hindoostan Spinning Weaving Mills Ltd. Vs. Dy. Commissioner of Income Tax in ITA Nos. 3822 3823/M/2003 for assessment years 1996-97 1997-98 decided on 30-06-2016. 4.3 The ld. AR contended that although at the time of claiming depreciation on lease hold rights in land, the Special Bench of the Tribunal in the case of Joint Commissioner of Income Tax Vs. Mukund Ltd. reported as 106 ITD 231 (Mum) had decided the issue in favour of the Department. However, thereafter, much water has flown and the Tribunal has been allowing depreciation claim on lease hold land. It is an issue where two possible divergent views have been taken. The assessee has followed one of the views. In such circumstances even if the claim of the assessee has been disal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appeal of the assessee by placing heavy reliance on the order of Tribunal in the immediately preceding assessment year. 6. We have heard the extensive submissions of the ld. AR and the ld. DR. The ld. AR has assailed the order levying penalty by raising several arguments which purportedly were not raised before the Coordinate Bench of the Tribunal when the penalty appeal of the assessee for assessment year 2006-07 was adjudicated. It is an admitted fact that the penalty in assessment year under appeal has been levied on same set of facts as was levied in assessment year 2006-07. The Coordinate Bench of the Tribunal upheld the levy of penalty by holding as under : 10. We have heard the rival contentions and perused the record. The issue arising in the present appeal is in relation to levy of penalty under section 271(1)(c) of the Act on denial of claim of depreciation on leasehold rights in land acquired by the assessee as part of the acquisition of a running unit during the year. Penalty under section 271(1)(c) of the Act is leviable where the assessee conceals its income or furnishes in-accurate particulars of income. The Explanation 1 to section 271(1)(c) of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of the Assessing Officer was upheld by the CIT(A). 12. The claim of the assessee before us was that it had claimed the depreciation on the said leasehold rights on land, as the same were intangible assets and eligible for deduction under section 32(1)(ii) of the Act. The said section provides that depreciation on intangible assets i.e. Know-how, Patents, Copy rights, Trade marks, Licenses, Franchise or any other business or commercial rights of similar nature being intangible assets acquired on or after 01.04.1998. The first aspect to be noted in the present case is the claim made by the assessee in the return of income. The perusal of the computation of income placed at pages 8 and 9 of the Paper Book reflects the claim of depreciation under the Income Tax Act at ₹ 2,57,96,236/-. The details of the said depreciation chart as per the Income Tax Act are available at page 10 of the Paper Book, in which depreciation @ 10% has been claimed at building, where the total value of the building is ₹ 6,97,77,990/-. The learned Authorized Representative for the assessee fairly pointed out that the said value of the building includes the value of land i.e. ₹ 4,18,17,6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciation on the leasehold rights of land was found to be untenable, Explanation 1 to section 271(1)(c) of the Act is clearly attracted and the assessee is exigible to levy of penalty under section 271(1)(c) of the Act. Even otherwise, the perusal of the record reflects that the assessee in the return of income had claimed the depreciation on land perse and not on intangible assets. The said claim was against the provisions of the Act and was thus not bonafide claim made by the assessee. On this account also, the assessee is liable to levy of penalty under section 271(1)(c) of the Act. 15. Another contention raised by the assessee was that merely because the claim by it had been held to be not correct, would not amount to furnishing of in-accurate particulars of income. Reliance in this regard was placed on the ratio laid down by the Hon ble Supreme Court in Price Waterhouse Coopers Vs. CIT Another (2012) 348 ITR 306 (SC). The said plea of the assessee does not stand because it is undisputed that the claim made by the assessee, was not bonafide. The claim of the assessee in any case, was not sustainable in law and in view of the above, where the explanation of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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