M/S. LAKHANI RUBBER UDYOG (PVT) LTD.,NEW DELHI vs. ACIT, FARIDABAD

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ITA 5269/DEL/2016Status: DisposedITAT Delhi26 December 2017AY 2008-093 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the issue was a matter of application of law to facts regarding the head of income, not concealment or furnishing of inaccurate particulars. Therefore, penalty could not be sustained.

What were the facts?

The assessee company, deriving income from footwear manufacturing, claimed depreciation on a house property from which it received rental income. The Assessing Officer disallowed the depreciation and initiated penalty proceedings.

What were the issues?

Whether penalty under Section 271(1)(c) is leviable when the dispute is on the classification of income and allowability of depreciation, rather than concealment or furnishing of inaccurate particulars.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH: ‘D’ NEW DELHI

Before: SHRI G.D. AGRAWAL, HON’BLE & SHRI K.N. CHARY

Hearing: 26.12.2017Pronounced: 26.12.2017

ORDER PER BENCH:

These two appeals, relating to the assessment years 2008-09 & 2009-10, are preferred by the assessee, aggrieved by the confirmation of the penalty levied by the Ld. AO on account of the disallowance of depreciation made by the AO.

2.

Facts in brief are that the assessee is a company deriving income from the manufacture of footwear. During the scrutiny of the return of income for the years 2008-09 & 2009-10 AO made certain additions. Insofar as these two appeals are concerned, it is recorded by the Ld. AO that during these years the assessee being the owner of the house property, received rental income, however, claimed depreciation in respect of the same. AO treated 1 & 5270/Del/2016 the receipt as income from house property, disallowed the depreciation and added it back to the total income of the assessee. AO also made certain other additions. AO initiated penalty proceedings and levied penalty. In appeal, Ld. CIT (A) while deleting the other additions sustained the addition made by the AO on account of this particular addition made while disallowing the depreciation. However, Ld. CIT (A) restricted the penalty to the net disallowance. Challenging the same, the assessee is in this appeal.

3.

None appeared on behalf of the assessee, whereas it is the argument of the Ld. DR that in as much as the assessee claimed depreciation in respect of the rental income, the assessee furnished inaccurate particulars, as such, the penalty is sustainable.

4.

We have gone through the record. Record reveals that insofar as the facts and figures are concerned, it is not the case of the Revenue that the assessee had concealed any income or furnished any inaccurate particulars. The entire matter revolves around the question as to under what head the receipt falls – whether it is business income or income from House property, i.e, in respect of treatment to be given to the income from the building. According to the assessee, it is income from business, as such, they claimed depreciation thereon, whereas according to the Revenue it is the income from house property, as such, the assessee is entitled to the deductions relevant to the house property, but not to the business income. This is a question of application of law to the facts but not a question of fact as to the assessee concealing any income or furnishing any inaccurate 2 particulars thereof. We are of the considered opinion that unless the Revenue makes out a case that the assessee either concealed any income or furnished any inaccurate particulars thereof, the penalty cannot be sustained. With this view, we, therefore, allow the appeals and direct the AO to delete the penalty in respect of these two years.

5.

In the result, both the appeals of the assessee are allowed.

Order pronounced in the open court on 26.12.2017

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