TaxTMI 
TaxTMI 
2015 (6) TMI 566
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....nces on assessee's wind mills amounting to Rs. 2.40 crores, interest amount of Rs. 60,892/- on account of interest bearing funds utilised in interest free advances and the one made under section 40A(3) of Rs. 1,72,780/- @ 20% of the cash payment amounting to Rs. 8,63,903/-; respectively. The Revenue strongly argues in support of the impugned penalty arising from the aforesaid disallowances and prays for acceptance of its appeal. The assessee supports the CIT(A)'s order. 3. Brief facts of the case are that the assessee had claimed depreciation relief on wind mills of Rs. 2.40 crores. It would also claim deduction of interest payment amounting to Rs. 60,892/- towards unsecured loans and freight payment in cash of Rs. 8,63,903/-. The Assessi....
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....ed in the penalty order referred earlier. The major addition on which penalty was levied is claim of depreciation on windmill. The said windmill was not transferred in the name of the appellant and therefore ownership was not proved and accordingly it is held that since appellant is not the owner of windmill, depreciation cannot be claimed. However it is not in dispute that appellant purchased windmill by entering into a MOD and also made the payment of purchase consideration. The proceeds of electricity generated through this windmill were also offered as income by the appellant. All these documents along with the documents submitted by the appellant for transferring the windmill in its name were submitted. It is clear that except the tran....
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....cisions relied upon by the appellant and referred earlier are relevant. The same are not repeated here however these support the appellant's argument that confirmation of addition or rejection of any claim will not automatically result in levy of penalty. AO has to find out what inaccurate particulars were furnished by the appellant. Assessing officer only mentioned that the terms of MOD were not fulfilled still the depreciation was claimed by the appellant. When the matter regarding transfer of name is pending, appellant cannot reverse the transaction in its books even after ^completion of three months as mentioned in MOU. When income as a result of this transaction has been offered for taxation, payment has been made, the depreciation....
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....lty cannot be levied for interest disallowance. As regards levy of penalty on claiming capital expense as revenue, appellant did not submit anything. The mobile was costing more that RS 5000 and accordingly the same should have been capitalised. By not doing so appellant claimed excess expenditure to the extent of RS 4275 for which it offered no explanation. In the penalty proceeding also appellant could not submit any reason for claiming capital expense as revenue therefore on this issue appellant is liable for penalty. Penalty levied by the assessing officer on this addition is confirmed." 6. We have heard the parties and gone through the case file. The Revenue invites our attention to assessee's depreciation claim. It transpires that....
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....he very concept of depreciation suggests that the tax benefit on account of depreciation legitimately belongs to one who has invested in the capital asset, is utilizing the capital asset and thereby loosing gradually investment caused by wear and tear; and would need to replace the same by having lost its value fully over a period of time. It is well settled that there cannot be two owners of the property simultaneously and in the same sense of the term. The intention of the Legislature in enacting section 32 would be best fulfilled by allowing deduction in respect of depreciation to the person in whom for the time being vests the dominion over the building and who is entitled to use it in his own right and is using the same for the purpos....