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Income Tax Appellate Tribunal, MUMBAI BENCHES, ‘E’ MUMBAI
Before: Shri Joginder Singh, & Shri Manoj Kumar Aggarwal
आदेश / O R D E R Per Joginder Singh(Judicial Member) The assessee is aggrieved by the impugned order dated 18/01/2012 of the Ld. First Appellate Authority, Mumbai, confirming the levy of penalty u/s 271(1)(c) of the Income Tax Act, 1961 (hereinafter the Act).
During hearing, the Ld. counsel for the assessee, Miss. Aarti Vissanji, contended that the quantum addition has been deleted by the Tribunal on the basis of which the penalty was imposed. The Ld. counsel also filed the copy of the order of the Tribunal dated 24/01/2014 (ITA No.2997, 2735/Mum/2016) by inviting our attention to para 7 & 8 of the order of the Tribunal. On the other hand, the Ld. CIT- DR, Shri Manjunatha Swamy, defended the confirmation of penalty by the Ld. Commissioner of Income Tax (Appeal).
2.1. We have considered the rival submissions and perused the material available on record. Before adverting further, we deem it appropriate to reproduce the relevant portion from the aforesaid order of the Tribunal dated 24/01/2014 for ready reference and analysis:-
Tata Motors Ltd. (Successor to Tata Finance Ltd.)
2. In ground no.1, assessee has challenged ` disallowance of depreciation amounting to 55,02,27,227, on leased assets.
Brief facts are, the assessee earlier known as Tata Finance Limited was engaged in financing and related activity. For the assessment year under dispute, the assessee filed its return of income on 30th December 1999, declaring loss of ` 1,14,86,748 under normal provisions and book profit of ` 13,18,79,252, on which assessee paid taxes. In course of the assessment proceedings, the Assessing Officer noticed that the assessee has claimed depreciation of ` 55,02,27,226, on assets leased by it which includes depreciation @ 50% amounting to ` 16,04,71,679, on leased assets depreciation on which was disallowed in assessment year 1998–99. The Assessing Officer being of the view that allowability of depreciation is based on fulfillment of twin condition of ownership of assets by the claiment and its user for the purpose of business, called upon the assessee justify its claim. Though, the assessee made elaborate submissions justifying its claim of depreciation, however, the Assessing Officer did not find merit in the submissions of the assessee. The Assessing Officer referring to the sale and lease back transactions entered with different companies held that they are simply in the nature of finance / loan transaction, therefore, the assessee is neither the owner of the assets nor such assets were used for the purpose of its business. Accordingly, he disallowed assessee’s claim of depreciation on leased assets.
Though, the assessee challenged the disallowance of depreciation before the first appellate authority, however, he also sustained the disallowance.
The learned Sr. Counsel, Shri Dinesh Vyas, appearing for the assessee submitted that in the preceding assessment years in assessee’s own case, the Tribunal has decided the issue in favour of the Tata Motors Ltd. (Successor to Tata Finance Ltd.)
assessee by applying the ratio laid down by the Hon'ble Supreme Court in case of ICDS Ltd. v/s CIT, 350 ITR 527 (SC). In this context, he referred to the decision of the Tribunal for assessment years 1994– 95 to 1998–99. He submitted, there being no difference in facts on the basis of which the Tribunal had decided the issue in assessee’s own case earlier, the decisions have to be followed in the impugned assessment year as well. Further, he also relied upon the decision of the Hon'ble Jurisdictional High Court in CIT v/s Apollo Finvest (I) Ltd., of 2013.
The learned Departmental Representative Shri Manjunatha Swamy, relied upon the observations of the Departmental Authorities.
We have considered rival submisions and perused material on record. We have also applied our mind to the decisions relied upon. Undisputedly, the issue relating to assessee’s claim of depreciation on leased assets is a recurring dispute between the parties from the preceding assessment years. The Departmental Authorities treating the lease transaction as finance transaction continued to disallow assessee’s claim of depreciation. However, the Tribunal while deciding the issue in assessee’s own case for assessment year 1997–98 and 1998– 99 in ITA no.6214/Mum./ 2003 and others, dated 6th January 2017, followed the decision of the Hon'ble Supreme Court in ICDS Ltd. (supra) and allowed assessee’s claim of depreciation. Following the aforesaid decision, the Tribunal again while deciding assessee’s appeal for assessment years 1994–95 to 1997–98 in ITA no.1484–1487/Mum./2012, dated 12th June 2017, allowed assessee’s claim with the following observations:–
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There being no difference in facts nor any contrary decision brought to our notice by the learned Departmental Representative, respectfully
Tata Motors Ltd. (Successor to Tata Finance Ltd.) following the decisions of the Co–ordinate Bench in assessee’s own case, as referred to above, wherein, the principle laid down by the Hon'ble Supreme Court in ICDS Ltd. (supra), were applied we allow depreciation claimed by the assessee. This ground is allowed. 2.2. We find that while adjudicating the quantum addition, the Bench followed the decision of the Tribunal in the case of the assessee for Assessment Year 1997-98 and 1998-99 and thereafter the decision from Hon'ble Apex Court in ICDS Ltd. (350 ITR 527) (Supreme Court) and further the decision from Hon'ble jurisdictional High Court in CIT vs Apollo Finvest (I) Ltd. (ITA No.2298 of 2013) and then applying the principle laid down by Hon'ble Apex Court allowed the claim of depreciation. Before us, the ld. counsel for the assessee contended that since the quantum addition has been deleted and on the same basis, the penalty was imposed u/s 271(1)(c), the same has to be deleted. We find merit in the contention the ld. counsel for the assessee. In view of this factual matrix, we are of the view that penalty imposed u/s 271(1)(c) will not survive. Our view find support from the decision in K.C. Builders vs ACIT (2004)
265 ITR 562 (SC) and the ratio laid down in CIT vs S.P. Viz, 176 ITR 76 (Patna). Even otherwise, when the quantum
Tata Motors Ltd. (Successor to Tata Finance Ltd.) addition is deleted, there remains no basis at all for levying the penalty for concealment or furnishing inaccurate particulars, because, of its own, the penalty cannot stand on its legs when addition on the basis of which the penalty was imposed remains no more in existence. Thus, the penalty is directed to be deleted.
Finally, the appeal of the assessee is allowed.
This Order was pronounced in the open court in the presence of Ld. representative from both sides at the conclusion of hearing on 08/05/2018.
Sd/- Sd/- (Manoj Kumar Aggarwal) (Joginder Singh) लेखा सद�य / ACCOUNTANT MEMBER �या�यक सद�य /JUDICIAL MEMBER मुंबई Mumbai; �दनांक Dated : 08/05/2018 f{x~{tÜ? P.S/.�न.स. आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant (Respective assessee) 2. ��यथ� / The Respondent. 3. आयकर आयु�त(अपील) / The CIT, Mumbai. 4. आयकर आयु�त / CIT(A)- , Mumbai, 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, मुंबई / DR, ITAT, Mumbai 6. गाड� फाईल / Guard file.