Case Law Details
Jubilant Infrastructure Ltd Vs DCIT (ITAT Delhi)
The disallowance of depreciation in quantum proceedings in A.Y.2016-17 has also resulted in corresponding enhancement of deduction under section 80IAB by the equal amount. The AO has also allowed the enhanced deduction in the quantum and, therefore, no prejudice was caused to the revenue by such claim. It was thus contended that no malafide can be attributed to the assessee towards such claim and thus no penalty is warranted under normal provisions of Act. It was thereafter pointed out that the adjustment in the ‘book profits’ towards such disallowance of depreciation does not trigger penalty u/s. 271 (1) (c) in the context of section 115JB of the Act in the light of judgment rendered in the case of CIT Vs. Nalwa Sons Investments Limited ( 2010) 194 taxmann 387 (Delhi).
In the absence of any malafide as demonstrated on behalf of the assessee, the penalty u/s. 271 (1) (c) are not attracted under the normal provisions. Not only the allowances for depreciation was accepted in the earlier assessment years such disallowance has not resulted in increase in assessed income due to enhancement of deduction under section 80 IAB. Thus, it is far fetched to impose penalty on such disallowance.
Adjustment in the book of profit on account on disallowance of depreciation could not culminate in imposition of penalty under the MAT provisions in view of the judgment of rendered in Nalwa Sons (supra) in which SLP was dismissed by the Honble Supreme Court reported in (2012) 21 com 184 (SC).
FULL TEXT OF THE ORDER OF ITAT DELHI
The captioned appeal has been filed at the instance of the assessee against the penalty order passed by the Commissioner of Income Tax (Appeals) [CIT(A)], National Faceless Appeal Centre, Delhi dated 29.10.2021 concerning AY 2016-17.
2. As per the grounds of appeal, the assessee has challenged imposition of penalty of Rs.9,50,000/- u/s. 271 (1) (c) of the Act with respect to disallowance of depreciation of Rs.28,39,272/- claimed on intangible assets viz water use rights acquired by the assessee.
3. When the matter was called for hearing the Ld. Counsel for the assessee, in defence, broadly submitted that :-
(a) A Onetime payment of Rs.3,58,94,000/- M/s. Gujarat Industries Development Corporation (GIDC) for use of water supply and drainage connection which was capitalized in its fixed assets and the assessee has been claiming depreciation since A.Y.2011-12. No disallowance was carried out in the part.
(b) The disallowance of depreciation in quantum proceedings in A.Y.2016-17 has also resulted in corresponding enhancement of deduction under section 80IAB by the equal amount. The AO has also allowed the enhanced deduction in the quantum and, therefore, no prejudice was caused to the revenue by such claim. It was thus contended that no malafide can be attributed to the assessee towards such claim and thus no penalty is warranted under normal provisions of Act. It was thereafter pointed out that the adjustment in the ‘book profits’ towards such disallowance of depreciation does not trigger penalty u/s. 271 (1) (c) in the context of section 115JB of the Act in the light of judgment rendered in the case of CIT Vs. Nalwa Sons Investments Limited ( 2010) 194 taxmann 387 (Delhi).
4. We find prima facie merit in the plea of the assessee for cancellation of penalty on both counts i.e. under normal provision as well as under MAT provision. In the absence of any malafide as demonstrated on behalf of the assessee, the penalty u/s. 271 (1) (c) are not attracted under the normal provisions. Not only the allowances for depreciation was accepted in the earlier assessment years such disallowance has not resulted in increase in assessed income due to enhancement of deduction under section 80 IAB. Thus, it is far fetched to impose penalty on such disallowance.
5. Similarly adjustment in the book of profit on account on disallowance of depreciation could not culminate in imposition of penalty under the MAT provisions in view of the judgment of rendered in Nalwa Sons (supra) in which SLP was dismissed by the Honble Supreme Court reported in (2012) 21 com 184 (SC).
6. The penalty imposed stands cancelled.
7. In the result, the appeal of the assessee is allowed.
This Order was pronounced in the open court on 12/09/2022
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