2014 (1) TMI 549

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....uring the assessment proceedings, the AO disallowed the claim of the assessee in relation to depreciation of Rs.3,09,66,960/- on office premises. The said disallowance was further confirmed by the CIT(A) and then by the ITAT vide order dated 12.01.10. The AO also initiated penalty proceedings and imposed a penalty of Rs.1,13,80,360/- upon the assessee for furnishing inaccurate particulars of income by way of putting a wrongful claim of depreciation on office premises. In appeal the ld. CIT(A) deleted the penalty observing that the case of the assessee was not that of concealment of income rather the same was relating to disallowance of claim of depreciation. He further observed that the purpose of making any wrong claim is to get benefit in....

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....t of his contention the ld. A.R. has placed reliance on various case laws including "CIT vs. Reliance Petro Pproducts Ltd." - 322 ITR 158 and "CIT vs Indian Metals and Ferro Alloys Ltd." - 211 ITR 35. On the other hand the contention of the ld. D.R. has been that even wrongful claim of depreciation invites penalty under section 271(1)(c) of the Income Tax Act. He has relied in this respect on an another authority of the Hon'ble Delhi High Court styled as "CIT vs. Morgan Finvest (P.) Ltd. - [2013] 30 taxmann.com 6 (Delhi). 4. A perusal of the assessment order reveals that the claim of depreciation was disallowed by the AO on the ground that the property in question was never used by the assessee for the purpose of business of the assessee. ....

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.... made a wrong claim under bonafide belief or under a bonafide mistake rather in this case the assessee has tried to justify his wrongful claim up to the level of Tribunal which has not been accepted. The contention of the ld. A.R., that the assessee was entitled to claim depreciation under Company's Act and it was mandatory for it to claim the same in its return of income, has no force of law. Under the Income Tax Act the claim of depreciation can be allowed on an asset which is used for the business purpose of the assessee. 6. At this stage, the ld. A.R. has contended that the claim of wrong depreciation was a bonafide onetime mistake of the assessee as for the subsequent years the assessee has not claimed any such depreciation. He has re....