SHRI ANAND JAIN ,BHILWARA vs. ITO,WARD-4, BHILWARA

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH (SMC), JODHPUR

BEFORE SHRI R.C. SHARMA, ACCOUNTANT MEMBER

ITA No. 295/Jodh/2018 (ASSESSMENT YEAR-2008-09

Shri Anand Jain, Vs The Income Tax E-151, Anand Spinners, Officer, RIICO Phase I & II, RIICO Ward-4, Bhilwara Industrial Area, Bhilwara (Appellant) (Respondent) PAN: AAZPJ3120D

Assessee By Shri Hemant Chhajed (CA) Revenue By Shri Shri A. K. Das (JCIT) DR Date of hearing 17/07/2018 Date of 19/07/2018 Pronouncement

O R D E R PER: R.C. SHARMA, AM

This is an appeal filed by the assessee against the order of

the CIT(A), Ajmer dated 16/04/2018 for the A.Y. 2008-09 in the

matter of imposition of penalty u/s 271(1)(c) of the Income-tax

Act, 1961 [hereinafter referred to as ‘the Act’, for short]. The

grounds raised by the assessee in appeal are reproduced as

under:

“1. The impugned penalty of Rs. 46,200 made in the AO order u/s 271(1)(c) and confirmed by CIT in his order dated 16.04.2018 for the alleged depreciation claims of Rs. 74,603 i.e. 10% of Rs. 7,46,025 from factory building buying cost of Rs. 23,59,842/- which includes notional price of

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the land at Rs. 7,46,025/-, is bad in law and on facts of the case, for want of jurisdiction and various other reasons and hence the same kindly be deleted.

respect of claim of depreciation on factory land and building.

facts in brief are that the during the year under consideration,

the assessee has purchased land & building. In return of income

he claimed depreciation on entire value of such land and

building. During the course of assessment proceedings, the

Assessing Officer disallowed proportionate claim of depreciation

by estimating the value of land comprising in the sale deed.

With respect to the disallowance of depreciations, the Assessing

Officer also levied penalty u/s 271(1)(c) of the Income-tax Act.

action of the Assessing Officer against the assessee is in further

appeal before me.

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through the orders of the authorities below. From the record, I

found that the assessee has purchased factory building. The

assessee claimed depreciation on the value so paid for acquiring

factory building. However, in the purchase deed, there was no

bifurcation any amount attributable to land and building. There

was a composite amount of the property so acquired by the

assessee. However, the Assessing Officer estimated value of the

land and observed that assessee is not eligible for claim of

depreciation on the amount attributable to the cost of such

land. Accordingly, he declined proportionate claim of

depreciation and also levied penalty u/s 271(1)(c) of the I.T.

Act. I found that there was full disclosure of facts in the return

of income. It is not the case of the Assessing Officer that the

assessee has paid separate amount for the land and building nor

any amount was stated in the purchase deed as attributable to

the land. There was a composite amount for purchase of factory

land and building. The Hon’ble Supreme Court in the case of Reliance Petrol Products 322 ITR 158 by order dated 23rd March,

2010 held that mere decline of claim of assessee will not lead to

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levy of penalty u/s 271(1)(c). It was precisely observed by the

Hon’ble Supreme Court that by no stretch of imagination can the

making of an incorrect claim in law tantamount to furnishing

inaccurate particulars. A mere making of claim, which is not

sustainable in law, by itself, will not amount to furnishing

inaccurate particulars regarding income of assessee. The

Supreme Court further observed that if the contention of

revenue is accepted then in case of every return where the

claim made is not accepted by the Assessing Officer for any

reason the assessee will invite penalty u/s 271(1)(c). This is

clearly not the intendment of the legislature. In this case, the

Hon’ble Supreme Court has duly considered the law lay down in

the case of Dilip Sharof 291 ITR 519 and Dharmendra Textile

306 ITR 277.

Hon’ble Supreme Court in case of Reliance Petro Products

(supra) and applying the same to the facts of instant case, I do

not find any merit for levy of penalty with respect to the

proportionate disallowance of claim of depreciation.

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In the result, appeal of the assessee is allowed.

Order pronounced in the open court on 19/07/2018.

Sd/- [R.C. SHARMA] Accountant Member Dated : 19/07/2018 *Ganesh Kr. Copy to : 1. The Appellant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR 6. Guard File (ITA No. 295/Jodh/2018)

Assistant Registrar Jodhpur Bench