TaxTMI 
TaxTMI 
2012 (9) TMI 429
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....y, filed its return of income declaring a loss of Rs.22.46 lacs and the assessment was completed u/s 143 on 28.12.2007.In the assessment order at para 4.1, the AO records that vide questionnaire dated 16.8.2007, he had asked for details to be furnished by the assessee justifying its claim for depreciation, by furnishing copy of bills and invoices. The assessee in response agreed to disallowance of depreciation of Rs.16,53,881/-. Thereafter, penalty proceedings were initiated u/s 271 (1) (c). As assessee had not furnished any explanation, the AO levied penalty. Aggrieved the assessee carried the matter in appeal. The first appellate authority vide order dated 4th November, 2011 deleted the penalty on the ground that mere disallowance or not ....
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....the DR and submitted that the AO has wrongly recorded the facts. He pointed out that there is no dispute of the fact that the assessee has made the said addition to its assets. He further submitted that the only issue was whether the assessee has put to use the assets during the year, so as to enable it to claim depreciation. He pointed out that the assessee gave the reply to the query of the assessing officer on 28.12.2007 and on the same date, the assessment was finalized. He pleaded that the assessee had declared a loss of Rs.22.46 lacs and disallowance of the claim of depreciation, was only a question of postponement of claim to the subsequent year and did not make any difference to the assessee and hence it agreed to the disallowance.....
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....se, for enabling it to claim depreciation. The issue as to whether the assets were put to use,2 has not been tested in this case as the assessee has surrendered the claim. The assessee has declared a loss and surrendering part of the depreciation would only result in reduction of loss. Either way the assessee is not saddled with any tax liability. Under these circumstances, the assessee had agreed to forego part of its claim for depreciation. The fact remains that in the subsequent assessment year, the Revenue has allowed the claim of the assessee for depreciation on these assets. Under these circumstances, we are of the considered opinion that the claim of the assessee was bonafide. 7. Coming to the submissions of the Ld. Department repre....