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TMI Blog2022 (7) TMI 114X X X X Extracts X X X X X X X X Extracts X X X X ..... es claim of depreciation to be patently not in accordance with law. In fact whatever was surrendered by the assessee has been accepted by the Revenue without even examining the same. Thus the addition made in the impugned case on account of excess depreciation claimed, having been surrendered by the assessee itself without any prior detection by the Revenue, the excess claim having been demonstrated to have been made for bonafide reasons, it is surely not a case for levy of penalty at all. All particulars, relating to the properties on which depreciation was claimed, was duly disclosed by the assessee. And the assessee itself, to align its books of accounts with an MCA notification, disclosed all particulars relating to the excess claim also. We therefore hold that the assessee cannot be charged with having concealed/furnished any inaccurate particulars of income in the present case. On the contrary we agree with the ld. Counsel for the assessee that the assessee had on its own come clean before the Department when it rectified its Books of accounts. Appeal of assessee allowed. - ITA No. 1682/Ahd/2019 - - - Dated:- 29-6-2022 - Ms. Annapurna Gupta, Accountant Member And Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s also clarified that the Mumbai property the assessee had no ownership rights but only exclusive, perpetual right to use, occupy and enjoy the land. It was also pointed out that at the time of purchase of these properties the assessee had sought legal opinion whether or not it was required to separate the land and building component in the cost of purchase and based on the legal opinion had capitalized the entire amount of property. But subsequently, on reviewing the Ministry of Corporate Affairs mandate ,vide notification dated 29.08.2014,requiring companies to apply component accounting to tangible fixed assets existing on or after 01.04.2015,the assessee bank, in accordance with best practices, decided to componentize these assets in its books of accounts and claim depreciation accordingly . That it obtained valuation report from independent valuers and made the necessary componentisation in its books of account prospectively from financial year 2018-19. And in order to align the tax books with the account books it was proposed to reverse the depreciation claimed on the land portion on the componentized assets in the respective years. That accordingly revised tax depreciation o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and return of income as the property was purchased as a single unit. 3. In case of premises at Bangalore, the property was initially acquired on lease for a term of three years. On expiry of lease term, the building was purchased and capitalized in the books in 2012. The Bank also acquired ownership rights in the underlying land. The entire amount of consideration paid towards single unit with no separate consideration towards land as well as P M (elevators and water tank in this case). 4. Thus, in both the above cases, the entire amount of consideration was capitalized as building and depreciation was claimed on the enlire amount under building tax black 5. Ministry of Corporate Affairs |MCA) vide its notification dated 29 August 2014 hos made it mandatory for the companies to apply component accounting to tangible fixed assets existing on or after April 1, 2015. Under component accounting, if cost of a part of the asset is significant to total cost of the asset and useful life of that part is different from the useful life of the parent asset, then such significant part is to be depreciated separately based on its identified useful life. 6. The Bank has review ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted on the same. Ld. Counsel for the assessee contended that this fact of suo moto reversal of depreciation of the impugned year by the assessee was noted by the ld. CIT(A) also in the order as reproduced at Para 5 of the Penalty Order as under: 5. In view of the facts mentioned above during the appeal proceedings in Appeal No.CIT(A)-6/311/2018-19 Appeal No.CIT(A)-6/312/2018-19 dated 29.03.2019 it was stated as under:- 8.1. The above submission has been gone through thoroughly. After going through the submission filed by the bank as above, it is seen that the appellant bank had claimed depreciation on land as well as elevators and water tank in the case of premises at Bengaluru. In the case of Axis House, Mumbai, it has been submitted that the property was purchased by the bank at a single unit with no separate consideration being paid for the land. The bank does not have any ownership right in the land. The bank has kept the building underlying under the head 'premises' and the entire amount of consideration was subject to depreciation along with elevators, DG sets, chillers, fire protection system. The bank has further stated that the bank wishes to treat the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ages Pvt. Ltd. vs. ITO reported in (2010) 5 ITR 90 (Delhi) and in the case of Hardeep Sachdeva vs. ACIT in ITA No. 5948/Delhi/2014 dated 26.12.2018. 7. Ld. D.R. on the other hand relied on the order of the Ld. CIT(A) stating that the assessee had neither provided any bonafide explanation for non-disclosure of such income in the return of income filed and therefore the penalty has been rightly levied. Our attention was drawn to Para 9 of his order as under: 9. As stated herein above, as appellant has not provided any bonafide explanation regarding non-disclosure of such income in return of income and offer was in appellate proceedings. It was only an attempt to pre-empt the Revenue finding out the appellant had furnished inaccurate particulars. The bank has submitted that on review, when the Bank decided to componentized the assets into respective class of assets in its books of accounts and provide for depreciation following the component accounting principles, it was also decided to align the tax books with account books and reverse excess depreciation claimed on land component in earlier years. Thus, there was no deliberate attempt by the Bank to claim higher depreciation, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be due to bona fide inadvertence or bona fide mistake on part of assessee and even if assessee agreed to addition with a condition that penalty could not be imposed, department is not precluded from initiating penalty proceedings . Hon'ble Punjab Haryana High court in the case of Sandeep Kumar Garg Co. Vs ITO [2008] 298 ITR 106 has held as under: Section 271(1)(c) of the Income-tax Act, 1961 - Penalty - For concealment of income - Where it was clear that mistake, as was sought to be explained by assessee in not-declaring receipt of amount from Man/ana State Agricultural Marketing Board, was not a bona fide mistake and on consideration of the entire material on record, all authorities below had come to conclusion that showing of less receipt of amount by the assessee itself proved concealment, levy of penalty - on assessee was justified In view of the above discussion, I am satisfied that the assessee has filed inaccurate particulars of income of Rs.6.78 crores and is liable for penalty u/s 271(1)(c) of the Act. Thus, penalty u/s 271(1)(c) of the Act is leviable on Rs. 6.78 crores. As per provisions of section 271(1)(c) of the Act, minimum penalty leviable @100% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was so claimed based on a legal opinion taken. 11. That subsequently in FY 2018-19, taking cognizance of a circular issued by MCA ,it bifurcated the value of these properties into its different components having different useful life, as in land, building and plant and machinery and reworked its claim of depreciation vis a vis these assets. The reworking of depreciation was done prospectively in the Books of accounts from FY 2018-19. And to align the tax records with the Books of accounts ,excess depreciation claimed in earlier years was sought to be reversed ,one such year being that before us, i.e A.Y 2015-16.Since the reworking was done in the Books of accounts in FY 2018-19, when the appeal of the assessee before the Ld.CIT(A) for the impugned year in quantum proceedings, i.e AY 2015-16, was pending , accordingly the assessee surrendered before him the excess depreciation so worked out on the land and Plant and Machinery component of the assets purchased ,amounting to Rs.6.78 crs . 12. All the above contentions of the assessee made to the Ld.CIT(A) both in quantum proceedings and the penalty proceedings have remained uncontroverted. 13. Clearly all the years when the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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