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Before: Shri A. Mohan Alankamony & Shri Duvvuru RL Reddy
O R D E R
PER DUVVURU RL REDDY, JUDICIAL MEMBER:
This appeal filed by the Revenue is directed against the order of the Commissioner of Income Tax (Appeals) 6, Chennai dated 28.11.2016 relevant to the assessment year 2012-13. The only effective ground raised in the appeal of the Revenue is that the ld. CIT(A) has erred in deleting the penalty levied under section 271(1)(c) of the Income Tax Act, 1961 [“Act” in short].
2. Brief facts of the case are that the assessee is engaged in generator of power. During the course of assessment proceedings, the Assessing Officer noticed that the assessee has installed one Mega Watt Solar Power Plant at Madurai. In the return of income, the assessee has claimed depreciation of ₹.9,11,22,002/-, which includes additional depreciation of ₹.1,82,19,363/-. In view of the amendment inserted to the Finance Act with effect from 01.04.2013, the Assessing Officer observed that the assessee was not eligible to claim of additional depreciation for the business of generation/generation and distribution of power and the same was brought to the notice of the AR of the assessee. The AR of the assessee admitted the wrong claim of additional depreciation and filed a letter dated 18.03.2015 revising the claim of depreciation. Accordingly, the assessment was completed under section 143(3) of the Act by disallowing the additional claim of depreciation of ₹.1,82,19,363/-.
2.1 Subsequently, the Assessing Officer initiated penalty proceedings under section 271(1)(c) of the Act. After considering the submissions of the assessee during the course of penalty proceedings, the Assessing Officer levied penalty of ₹.60,00,000/- under section 271(1)(c) of the Act by holding that but for the selection of case under scrutiny, the assessee would have availed additional depreciation, which was not allowable as per law.
The assessee carried the matter in appeal against levy of penalty before the ld. CIT(A). After considering the submissions of the assessee and 3 following the decision in the case of CIT v. Reliance Petroproducts (P) Ltd. 322 ITR 158(SC), the ld. CIT(A) deleted the penalty levied under section 271(1)(c) of the Act.
Aggrieved, the Revenue is in appeal before the Tribunal. The ld. DR has submitted that the decision of the Hon’ble Supreme Court in the case of CIT v. Reliance Petroproducts (P) Ltd. (supra), followed by the ld. CIT(A) while deleting the penalty, is distinguishable. Further, the ld. DR submitted that the ld. CIT(A) failed to follow the decision in the case of NG Technologies 70 taxmann.com 37 (SC), the decision in the case Ramesh Ranganathan and M. Satyanarayana Murthy 73 taxmann.com 323 (AP) as well as the decision in the case of SBI DFHI Ltd. 71 taxmann.com 178 (Mum. Trib.) and pleaded to reverse the findings of the ld. CIT(A).
On the other hand, the ld. Counsel for the assessee strongly supported the order passed by the ld. CIT(A).
We have heard both sides, perused the materials available on record and gone through the orders of authorities below. The assessee claimed depreciation as well as additional depreciation and the Assessing Officer was of the opinion that the assessee is not eligible to claim addition depreciation for the business of generation/generation and distribution of power as per amendment inserted to the Finance Act. As per provisions of 4 Income Tax Act, the assessee has claimed additional depreciation. The Assessing Officer held that such claim of additional depreciation is not allowable and accordingly, the AR of the assessee also agreed for and not disputed in appeal. Whether the issue of eligibility to claim additional depreciation under section 32(1)(iia) of the Act for the business of generation/generation and distribution of power has been decided by this Tribunal in I.T.A. Nos. 154 & 155/Mds/2014 dated 26.06.2014 in the case of Atlas Export Enterprise, which was upheld by the Hon’ble Jurisdictional High Court in T.C.A. No. 121 & 122 of 2015 M.P. No. 1 of 2015 in the case of CIT v. Atlas Export Enterprise, wherein, the Hon’ble High Court has followed its own Division Bench decisions in the case of CIT v. VTM Limited [2009] 319 ITR 336 (Ma) and CIT v. Hi Tech Arai Ltd. [2010] 321 ITR 477 (Mad). Further, the Special Leave Petition filed by the Department against the decision of the Hon’ble Madras High Court in the case of CIT v. VTM Ltd. was dismissed summarily by the Supreme Court at the admission stage without any discussion on the issue. More so, in the case of ACIT vs Ankit Metal & Power Ltd in ITA No. 517/Kol/2012 for assessment year 2008-09 dated 8.1.2014, the Calcutta Benches of the Tribunal held that assessee is entitled for additional depreciation under section 32(1)(iia) of the Act for its power plant. On further appeal by the Revenue, the Hon'ble Calcutta High Court dismissed the appeal in CIT vs Ankit Metal & Power Ltd reported in (2016) 66 taxmann.com 367 (Calcutta) dated 20.11.2014. Thus, just because the Assessing Officer mistakenly held that the claim is wrong, which was agreed by the AR of the assessee, the claim cannot be held as a wrong claim, in fact, even though it is not subject matter in appeal. But, initiating penalty proceedings, against a claim stated to be wrong, cannot be sustained under law. Otherwise also, in the case of CIT v. Reliance Petro Products Pvt. Ltd. 322 ITR 158, the Hon’ble Supreme Court has observed that “a mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing of inaccurate particulars regarding the income of the assessee. Such claim made in the return cannot amount to the inaccurate particulars”. The case law relied on by the ld. DR has no application to the facts of the present case or distinguishable. Under the above facts and circumstances, we find no reason to interfere with the order passed by the ld. CIT(A) in deleting the penalty levied under section 271(1)(c) of the Act. Thus, the ground raised by the Revenue is dismissed.