Case Law Details
DCIT Vs Sasan Power Ltd (ITAT Mumbai)
In a recent decision by the Income Tax Appellate Tribunal (ITAT) Mumbai, the case of DCIT vs. Sasan Power Ltd for Assessment Year 2017-18 has brought to light the complex interplay between tax laws and the treatment of excessive depreciation claims. This article provides an in-depth analysis of the case, discussing the facts, arguments presented by both parties, and the ultimate ruling by the tribunal.
Introduction: The dispute revolves around the imposition of a penalty under section 270A of the Income Tax Act, 1961, by the Assessing Officer (AO) on Sasan Power Ltd, a company engaged in solar power generation. The AO levied a penalty due to the alleged underreporting of income by Sasan Power Ltd, resulting from an excessive claim of depreciation on fixed assets. The crux of the matter lies in whether the excess depreciation claim was a bona fide mistake or an attempt to evade taxes.
Background and Facts of the Case: Sasan Power Ltd filed its income tax return for Assessment Year 2017-18, initially declaring a substantial loss. However, during the assessment proceedings, it came to light that the company had claimed excess depreciation on its fixed assets due to an oversight. Specifically, Sasan Power Ltd failed to reduce the amount of insurance claim received from the block of assets, leading to a higher depreciation claim.
Upon discovering this discrepancy, Sasan Power Ltd promptly submitted a revised working of depreciation, correcting the error and reducing the claimed amount accordingly. Despite this corrective action, the AO proceeded to levy a penalty under section 270A of the Income Tax Act, citing underreporting of income by the company.
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