2014 (8) TMI 806

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.... 28.11.2003 declaring income of Rs. 6,33,87,472 under normal provisions and book profit of Rs. 22,81,22,386 under 115JB of the I.T. Act. In the said return, assessee has claimed depreciation of Rs. 92,47,719 on an Effluent Treatment Plant ("ETP" in short) situated at Kazhepally and depreciation of Rs. 85,42,220/- on PO3 unit situated at Pashmylaram. It also claimed additional depreciation of Rs. 50,27,873 under section 32(1)(iia) of the Act on the above PO3 unit. A survey operation under section 133A of the Act was carried out at the business premises of the assessee on 28.07.2004. During the survey operation, A.O. noticed that the above units on which depreciation was claimed even though ready were not put to use. Since depreciation was cl....

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.... under section 115JB and that tax liability being higher on account of provisions under section 115JB, which was later adopted as tax payable, there is no tax sought to be evaded requiring levy of penalty. Ld. CIT(A) vide his order in para 5.4 to 7 elaborately discussed the issue and rejected assessee's contentions and confirmed the penalty. 4. Ld. Counsel explaining the reasons for claiming depreciation and why the claims were made as submitted before the Ld. CIT(A), submitted that incomes were assessed under section 115JB. As can be seen from the assessment order even with reference to claims of depreciation, it was submitted that the above are bonafide claims, as the units are ready for operation and operations are started immediately....

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....etition which arises out of the Order of Delhi High Court in the case of CIT vs. M/s. Nalwa Sons Inv. Ltd., 235 CTR 209. The Hon'ble Delhi High Court considered similar facts and held that penalty under section 271(1)(c) is not warranted when incomes were accepted under 115JB while additions are made in the regular computation. The relevant observations of the Hon'ble Delhi High Court are as under : "The reason which prompted the AO to take steps to impose penalty against the assessee was that though the assessee had bought the concerned machinery only on the last day of the year in respect of which book entry was made on 31st March, 2001, it still claimed the depreciation which could be claimed only if the machinery was put to use for t....

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....If the tax payable under the normal provisions is higher, such amount is the total income of the assessee, otherwise, 'book profits' are deemed as the total income of the appellant in terms of s. 115JB. In the present case, the income computed as per the normal procedure was less than the income determined by legal fiction namely 'book profits' under s. 115JB. On the basis of normal provision, the income was assessed in the negative i.e. at a loss of Rs. 36,95,21,018. On the other hand, assessment under s. 115JB resulted in calculation of profits at Rs. 4,01,63,180. The income of the assessee was thus assessed under s. 115JB and not under the normal provisions. No doubt, there was concealment but that had its repercussions only when the ass....