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Income Tax Appellate Tribunal, JODHPUR BENCH (SMC
Before: SHRI R.C. SHARMA
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.
The impugned penalty does not attribute to furnishing inaccurate particulars of income and concealment of income. Making of claims which is not sustainable in law would not amount to furnishing inaccurate particulars of income or concealment of income.
The appellant prays your honour indulgences to add, amend or alter of or any of the grounds of the appeal on or before the date of hearing.”
In this appeal, assessee is aggrieved for leaving penalty in
respect of claim of depreciation on factory land and building.
Rival contentions have been heard and record perused. The
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.
By the impugned order, the ld CIT(A) has confirmed the
action of the Assessing Officer against the assessee is in further
appeal before me.
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I have heard the rival contentions and carefully gone
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.
Respectively following the proposition of law laid down by
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