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TMI Blog2018 (3) TMI 1036X X X X Extracts X X X X X X X X Extracts X X X X ..... nowhere go to suggest that the assessee had furnished the inaccurate particulars to attract penalty u/s. 271(1)(c). Had the assessee not declared the capital subsidy received and claimed the depreciation on full value of capital assets, the matter would have been different. However, once all the information were given in the return of income accompanied by relevant books maintained by assessee, in our considered opinion, simple disallowance of depreciation will not amount to furnishing of inaccurate particulars, as held in the case of CIT vs. Ajaib Singh & Co. [2001 (8) TMI 79 - PUNJAB AND HARYANA High Court] and other several decisions relied by the assessee before us including CIT vs. Reliance Petroproducts Pvt. Ltd (2010 (3) TMI 80 - SUP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dditions, the AO initiated penalty proceedings and after considering the submissions of the assessee, imposed a penalty of ₹ 2,22,241/- u/s. 271(1)(c) of the IT Act for furnishing inaccurate particulars of income on the premise that the assessee had received capital subsidy on 10.2.2009 under TUFF Scheme, from Ministry of Textile of the ₹ 40,60,000/- for setting up of plant & Machinery which the assessee has shown as a part of reserve instead of deducting the same from cost of fixed the assets (Plant and Machinery) and therefore, the assessee had claimed excess depreciation of ₹ 14,21,000/- for the whole year. He also observed that the addition of ₹ 8,725/- was not contested by the assessee in the quantum proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and machinery installed. However as stated earlier it was to encourage setting up of new plants and not as reimbursement of the cost of machinery installed by the assessee. b) The assessee created a capital reserve of Rs. 40.60,000/- in the balance sheet based on the decision of M/s P J Chemicals Ltd. given by the Supreme Court. It did not reduce the cost of the asset and claimed depreciation on the entire cost of plant and machinery installed. c)The AO did not accept the version of the assessee company and allowed depreciation after reducing the subsidy received as per definition of Actual cost given in section 43(1) of the Act. d) Thus the depreciation allowed by him was reduced by ₹ 14,21,000/- being 17.5% of the subsidy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addition retained by the department. We are now submitting the following case laws and submissions directly on the issue that no penalty should be levied in cases where claim of depreciation has not been allowed in full. In this regard, the decision of Hon'ble Supreme Court in the case of M/s Flexituff International Ltd. order dated 04.05.2010 may be referred to. The Hon'ble Court has decided that imposition penalty u/s 271(1)(C), there must be definite finding that either there must be concealment of income or furnishing inaccurate particulars. 1. The admission or rejection of a claim is a subjective exercise and whether a claim is accepted or rejected has nothing to do with furnishing of inaccurate particular of income or con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l) Indore (ITA No. 29/lnd/2009) dated 21/04/2011. In which Hon'ble ITAT has described the word "Conceal" as under: " The expression "has concealed the particulars of income" and "has furnished inaccurate particulars of income" have not been defined either in sec. 271(l)(c) or elsewhere in the Act. One thing is certain that these two circumstances are not identical in details although they may lead to same effect, namely, keeping of a certain portion of income. The former is direct and the later may be indirect in its execution. The word "conceal" is derived from the Latin word "concolare" which implies to hide. In the present appeal, even if a excess depreciation has been claimed by the assessee on the basis of the Companies Act does ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions v. Department of Income Tax Page 24 9. ACIT v. Hotel Dan Private Limited Page 28 10. DCIT, Circle 11(1) v. M/s. Speciality Food India (P) Ltd. Page 30 11. JCIT v. Super Cassetes Industries Page 32 12. Sayaji Iron & Engg Co. v. CIT Page 33" 6. On the other hand, the ld. DR relied on the order of the lower authorities and he further submitted that the assessee has wrongly claimed depreciation on the fixed assets which is not as per section 43(1) of the Income Tax Act, 1961 (hereinafter referred to as the Act). Had it not been taken up for scrutiny, the assessee would have escaped. The assessee has admitted the factual position in the quantum proceedings before the CIT(A) that the capital subsidy should have been d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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