DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE -2 (1), PUNE vs. M/S. ISMT LTD, PUNE

This appeal by the Revenue against the order dated 31-10-2018 passed by the Commissioner of Income Tax (Appeals)-12, Pune [‘CIT(A)’] for assessment year 2013-14.

The only issue is to be decided is as to whether the CIT(A) justified in deleting the penalty imposed by the AO u/s. 271(1)(c) of the Act by placing reliance on the decision of Hon’ble Supreme Court in the case of Reliance Petro Products Pvt. Ltd. reported in 322 ITR 158 (SC) in the facts and circumstances of the case.

We note that the assessee received industrial promotional subsidy which was credited to the capital account for A.Ys. 2011-12 to 2013-14. The assessee claimed depreciation on the same. Further, we note that the assessee received subsidy of Rs.10,69,68,800/- during the year under consideration and claimed depreciation to an extent of Rs.4,20,94,167/-. It was explained to the AO in response to notice u/s. 142(1) of the Act the assessee treated the said subsidy as capital receipt and the value thereof was deducted from the value of fixed assets for computing depreciation allowable under the Act and also admitted that the depreciation claimed would be disallowed. For which the AO initiated penalty proceedings u/s. 271(1)(c) of the Act. The CIT(A) by placing reliance on the decision of Hon’ble Supreme Court in the case of Reliance Petro Products Pvt. Ltd. (supra) held that where complete disclosure of facts and claim were made though not found acceptable was bonafide to conclude that no penalty be imposed. In the present case, admittedly, the assessee disclosed all the details in respect of subsidy and depreciation thereon and voluntarily admitted that Rs.4,20,94,167/- as may be disallowed. The AO disallowed the same. When all the details are on the record no penalty can be imposed for making incorrect claim, therefore, we do not find any infirmity in the order of CIT(A) and it is justified.

In the result, the appeal of Revenue is dismissed.