2025 (8) TMI 1590 - AT - Income Tax

Penalty under s.271(1)(c) deleted where trust claimed s.11 exemption and depreciation; s.11(6) amendment not yet effective

ITAT DELHI - AT deleted penalty under s.271(1)(c) for AY 2015-16 where a charitable trust was found to have claimed both application of income under s.11 ... Penalty u/s 271(1)(c) - Assessment of trust - addition of depreciation claimed by the assessee/ charitable trust by way of a double deduction - Revenue’s case in nutshell is that once the assessee had claimed the cost incurred for occupying it’s corresponding fixed assets on both application of income u/s 11 as well as depreciation in computation under the business head, it is indeed an instance of double deduction only. DR further quotes section 11(6) of the Act to this effect as inserted by the Finance Act, 2015; w.e.f. 1.4.2015 onwards. HELD THAT:- It is reiterated that the assessment year involved herein is A.Y. 2015-16 and therefore, the tribunal hereby quotes CIT v. Reliance Petroproducts Pvt. Ltd.[2010 (3) TMI 80 - SUPREME COURT] that quantum and penalty proceedings are parallel proceedings wherein each and every addition/disallowance made in the course of former does not ipso facto attract the latter penalty provision, to delete the impugned penalty in very terms. Assessee’s appeal is allowed. Appeal against NFAC order dated 27.04.2024 (CIT(A) Kanpur-2/10078/2018-19) challenging levy of penalty under section 271(1)(c) for A.Y. 2015-16. Revenue contended penalty was justified because the assessee (a charitable trust) claimed the same cost both under application of income u/s 11 and as depreciation in business income, resulting in a 'double deduction'; reliance placed on s.11(6) as inserted by Finance Act, 2015 (w.e.f. 1.4.2015). Tribunal observed the relevant year is A.Y. 2015-16 and applied the principle from CIT v. Reliance Petroproducts Pvt. Ltd. that 'quantum and penalty proceedings are parallel proceedings wherein each and every addition/disallowance made in the course of former does not ipso facto attract the latter penalty provision,' and accordingly deleted the impugned penalty of Rs. 49,65,088/-. Appeal allowed.