2012 (7) TMI 987 - AT - Income Tax

Tribunal Upholds Deletion of Penalty for Incorrect Depreciation Claim

The Tribunal rejected the department's appeal against the deletion of a penalty under section 271(1)(c) of the IT Act for Assessment Year 1996-97. The ... - Issues Involved: Appeal against deletion of penalty u/s 271(1)(c) of IT Act for Assessment Year 1996-97.Facts and Decision on Depreciation Claim:The assessee claimed 100% depreciation on machinery for research and development purposes, but the Assessing Officer allowed only 25% depreciation, considering it part of normal production facilities. The CIT (A) later directed 100% depreciation. However, the Tribunal reversed this decision, stating the machinery was for testing defects in products, not R&D. Penalty Imposition and Deletion:The Assessing Officer imposed a penalty for inaccurate particulars leading to higher depreciation claim. The CIT (A) deleted the penalty, prompting the department's appeal. The department argued the penalty was justified as the assessee concealed income by claiming higher depreciation. However, the Tribunal noted the difference of opinion among authorities on the depreciation claim, citing precedents where penalty was not warranted in such cases. The department's objections were dismissed, and the appeal was rejected.This judgment highlights the dispute over the depreciation claim for machinery used by the assessee, leading to a penalty imposition and subsequent deletion. The Tribunal's decision emphasizes the lack of consensus among authorities on the depreciation issue, ultimately resulting in the dismissal of the department's appeal against the deletion of the penalty.