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TMI Blog2018 (9) TMI 623X X X X Extracts X X X X X X X X Extracts X X X X ..... ace to mention that the authorities below opinion, that the said term would include capital contribution also, prima facie itself has no basis. The principal of ‘ejusdem generis’ would also not support such an extension of the term “subsidy or grant or reimbursement (by whatever name called)”. The assessee’s belief that assessee was entitled for depreciation out of purchase made from capital contribution received from Government was bonafide. Hence, no case is there for furnishing of inaccurate particulars of income or concealment of income - Decided against revenue. - I.T.A. Nos. 2276 & 4891/Mum/2016 - - - Dated:- 7-9-2018 - Shri Shamim Yahya, AM And Shri Pawan Sing, JM Appellant by : Shri S. Padmaja Respondent by : Shri Sudhir Dabir ORDER Per Shamim Yahya, A. M. These are appeals by the Revenue directed against the respective orders of the learned Commissioner of Income Tax (Appeals)-1, Thane ( ld.CIT(A) for short) dated 15.01.2016 pertaining to the assessment years (A.Y.) 2008-09 and 2010-11, wherein the ld. CIT(A) had deleted the penalty levied u/s. 271(1)(c) of the Income Tax Act, 1961 ( the Act' for short) amounting to ₹ 23,03,31,738/- an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to Corporation Fund : The State Got shall by appropriation duly made in this behalf, from time to time provide an aggregate sum of not less than ₹ 173 crores to the corporation funds as its share of the capital required by the Corporation for the performance of the functions of the corporation under this ordinance and such contribution shall be paid in suitable installments spread over a period of five years from the date of establishment of the corporation. 6. In support of the above contention, the AR has submitted copies of the covering letters received from the govt of Maharashtra which stated that it is a capital contribution (Anshdaan) towards the Corporation fund. The ld. Counsel of the assessee has also relied upon following judicial pronouncements claiming that provisions of section 43(1) is not applicable to the assessee's case. 188 ITR 22(MAD) 188 ITR 11 (BOM) 215 ITR 834 (MAD) 234 ITR 53 (MAD) , 210 ITR 830(SC) :. ITA N0.5/NAG/2002- ITAT MUMBAI BENCH 'A') ITA NO.101 102/NAG/2006- ITAT NAGPUR BENCH ) ITA N0.222 223/NAG/2007- ITAT NAGPUR BENCH) 7. During the course of assessment proceedings, the ld. Counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O. noted that the ld. CIT(A) has upheld the action of the A.O. regarding the application of section 43(1) read with Explanation 10, though the ld. CIT(A) had granted some relief. The A.O. negated the assessee s reliance upon the decision of the Hon ble Apex Court in the case of Reliance Petroproducts (P.) Ltd. [2010] 322 ITR 158 (SC). The A.O. proceeded to levy penalty u/s. 271(1)(c) of the Act. 11. Upon the assessee s appeal, the ld. CIT(A) elaborately dealt with the issue. The ld. CIT(A) noted that the assessee does not claim deprecation in the books of accounts and computes depreciation only for the purpose of income tax. In this regard, he referred to the audit report which is as under: The details of deprecation allowable as per Income Tax Act, 1961 is as per Annexure A attached. The Depreciation chargeable on Fixed Assets is not charged in Books and assets stands overstated to that extent. Similalry, the deficit stands understated to that extent. 12. The assessee had been claiming depreciation as per the Act in the computations. The ld. CIT(A) negated the assessee s contention that the assessee should be granted the benefit of Hon ble Apex Court decision in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o some third party. After the order of the CIT(A)-II dated 3,09.2013 wherein he held that provisions of section 43(1) r.w. Explanation 10 of the I.T. Act were applicable in the appellant's case, the appellant accepted this legal position and according claimed depreciation in the subsequent assessment years after giving effect to these provisions. Moreover, bonafide of the appellant cannot be doubted. As already stated above the appellant is a Government of Maharashtra undertaking and was established in terms of Konkan Irrigation Development Corporation Act, 1998. The appellant corporation was incorporated for promotion and operation of irrigation projects in Konkan region, the functions which were earlier being performed by Irrigation Department of Government of Maharashtra. The appellant is allotted expenditure-wise grants for projects for meeting day-do-day expenditures of the corporation on administrative expenses. The appellant corporation does not carry out any activity which would fetch it any revenue except for a small amount received on account of water revenue which also is remitted to the Government. As the appellant does not have any profit making motive, therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utation of its income. The penalty levied in the appellant's case u/s. 271(l)(c) of the I.T. Act amounting to ₹ 23,03,31,738/- is therefore, directed to be deleted. 14. Against this order, the Revenue is in appeal before us. 15. We have heard both the counsel and perused the records. The ld. ld. Departmental Representative ( ld. DR') relied upon the orders of the A.O. She further claimed that in absence of necessary details, it cannot be established that the contribution by the Government was capital contribution. 16. Upon careful consideration, we note that it is the assessee s claim that the Government s contribution was capital contribution and not grant subsidy or reimbursement. In this regard, it has been noted in the order s of the authorities below that the covering letter of the contribution were produced. In the said letter it was mentioned to be capital contribution. None of the authorities below has disputed this aspect. So the claim of the ld. DR that it cannot be established that the contribution was capital contribution is liable to be rejected. The opinion of the authorities below is that section 43(1) and Explanation 10 thereto is applicable. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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