2010 (1) TMI 777

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....:-   1. This appeal by the assessee is directed against the orders of the ld. CIT(A) dated 07.05.2009 pertaining to assessment year 2003-04 confirming the penalty under section 271(1)(c) amounting to Rs. 4,69,365/-.   2. In this case the assessee company is in the business of manufacturing of oil seals. The company was a sick industrial company and for the year under consideration ....

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....h allows depreciation for assets and machinery 'kept ready'. He found that section 32 clearly states that the assets has to be put to use for claim of depreciation. Hence he confirmed the levy of penalty.   3.1 Against this order assessee is in appeal before us.   4. Ld. counsel of the assessee in this regard submitted that ld. CIT(A)'s contention that the depreciation cannot be cl....

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....section 32 includes passive user of the assets in the business. In that case claim of depreciation was on office which was furnished and kept ready for use. AO had disallowed the claim of depreciation on the ground of passive use of the asset. 4.2 Ld. DR on the other hand relied upon the orders of the authorities below.   5. We have heard both the counsels and perused the records. We fi....

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....tion 271(1)(c).   5.1 In this regard we also draw support from the Apex Court decision rendered by a larger Bench comprising of three of their Lordships in the case of Hindustan Steel vs. State of Orissa in 83 ITR 26 wherein it was held that "An order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceedings, and penalty will not ordinar....