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TMI Blog2023 (9) TMI 1316X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 26.12.2017 passed by the Commissioner of Income Tax (Appeals)-1, Ahmedabad arising out of the Penalty order passed under section 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as the Act ) relating to the Assessment Year (A.Y) 2011- 12. 2. The solitary ground raised by the Revenue is that the Ld. CIT(A) erred in law in deleting the levy of penalty of Rs. 2,27,86,676/- u/s. 271(1)(c) of the Act. 3. The brief facts of the case is that the assessee is mainly engaged in development, operation and maintenance of Ports Economic Zone at Mundra, Gujarat. For the Assessment Year 2011-12, the assessee filed its Return of Income declaring total income of Rs. 30,81,75,558/-. Regular scrutiny assessment was completed u/s. 143(3) of the Act on 01-03-2014 determining the total income as Rs. 1,41,39,57,721/- after making various additions/disallowances The A.O. initiated penalty proceedings u/s. 271(1)(c) of the Act for furnishing inaccurate particulars of income against the various disallowances. However on appeal against the assessment order, the Ld. CIT(A) vide its order dated 13-11-2014 confirmed the additions made on account of Amortized value of Leasehold Land of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 80HHC which was also certified by chartered accountant, no penalty could be levied under section 271(1)(c) just because claim on merit was not granted [In favour of assessee] 3.6 It is observed that the appellant has argued that so far as deduction of Amortized value of Leasehold Development Land is concerned, Kolkata ITAT in case of Sicpa India (P) Ltd. v/s DCIT 80 taxmann.com 87 dated 22.03.2017, has held that depreciation on landscape expenses on leasehold land was allowed @ 10%. Assessing Officer treated the same as disallowable under section 35D, however, CIT(A) confirmed disallowance on the ground that Appellant was unable to justify that the said expenditure pertains to building. As apparent from the ongoing discussion the issue is highly debatable and therefore, penalty under Section 271(1)(c) cannot be levied. . 3.7 As far as levy of penalty on disallowance of expenditure on leasehold land and depreciation on right to use leasehold land. Appellant argued that such addition will in turn lead to increase in eligible profit u/s 80IAB of the Act. Such fact was accepted by the AO himself while passing the Assessment Order for AY 2013-14 follo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd. It is pertinent to note that the amortisation expenses are not available to the assessee as it was part of lease rent payment and, therefore, the plea of the assessee that eligible profit for computation of deduction under Section 80IAB should increase is acceptable. Hence, ground nos.6 and ground no.6.1 are allowed. . 11. As regards Ground nos. 5 5.1 of the assessee s appeal, the Ld. AR submitted that the CIT(A) erred in confirming the disallowance of depreciation on right to use lease hold land of Rs. 1.54 Crores. If the disallowance is to be confirmed, the same to increase the eligible business profits for deduction under Section 80IAB of the Act are not justifiable. The Ld. AR submitted that the recognition of the right to use leasehold land as intangible asset is as per the requirement of accounting standards. The assessee has to recognise the same and assessee has correctly recognised it. Once an intangible asset is recognised, the same is eligible for depreciation under Section 32 and, therefore, the claim of depreciation is correct. The Ld. AR further submitted that if the said depreciation is not available, the eligible profit for computation of ded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gree, as the assessee had furnished all the details of its expenditure as well as income in its Return, which details, in themselves, were not found to be inaccurate nor could be viewed as the concealment of income on its part. It was up to the authorities to accept its claim in the Return or not. Merely because the assessee had claimed the expenditure, which claim was not accepted or was not acceptable to the revenue, that by itself would not, in our opinion, attract the penalty under section 271(1)(c). If we accept the contention of the revenue then in case of every Return where the claim made is not accepted by Assessing Officer for any reason, the assessee will invite penalty under section 271(1)(c). That is clearly not the intendment of the Legislature. 11. In this behalf the observations of this Court made in Sree Krishna Electricals v. State of Tamil Nadu[2009] 23 VST 249 as regards the penalty are apposite. In the aforementioned decision which pertained to the penalty proceedings in Tamil Nadu General Sales Tax Act, the Court had found that the authorities below had found that there were some incorrect statements made in the Return. However, the said transactions were ..... X X X X Extracts X X X X X X X X Extracts X X X X
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