2018 (1) TMI 889

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....f the case and in law, the learned CIT(A) has:- 1. Erred in holding that the Appellant has submitted inaccurate particulars of income. 2. Erred in levying penalty of Rs. 8,90,97,652/- under section 271(1)(c) of the Act. Without prejudice to Ground 1 3. Erred in considering the enhanced income, on which penalty is levied under section 271(1)(c) of the Act, as Rs. 24,83,55,826/- instead of Rs. 23,83,55,826/-. 3. The issue raised in the present appeal is against levy of penalty under section 271(1)(c) of the Act. 4. Briefly, in the facts of the case, the assessee had filed the return of income showing total loss of Rs. 16,93,18,730/-. The assessment in the case of assessee was completed under section 143(3) of the Act on total los....

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....-how and hence, no depreciation is to be allowed. Further, the CIT(A) also held that where no know-how was purchased nor owned by the assessee, there was no question of allowing any depreciation. In this regard, the CIT(A) referred to the terms and conditions of Business Transfer Agreement and Toll Conversion Agreement and concluded that the assessee is not entitled to any claim of depreciation on know-how. He further held that there was no evidence to show that know-how, patents and trademark were used for the purpose of business and hence, the assessee was not entitled to the aforesaid claim. The CIT(A) also did not accept the valuation report of Ernst & Young Pvt. Ltd. for the purpose of determining the total value of intangibles. The CI....

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....lty order, wherein enhancement was made to the extent of Rs. 24,83,55,826/-. The CIT(A) further observed that For these elaborated reasons, I am also satisfied that the assessee had committed default by furnishing inaccurate particulars of income by claiming depreciation on "indeterminable cost of assets" on the basis of a Valuation Report which was biased, hypothetical, dictated by the Management, not based on actual facts & figures and untrue as it excluded the most valuable assets i.e. lands worth Rs. 187.36 Crores. The plea of assessee that it had disclosed all facts and information in the return of income and Annual Accounts etc. regarding claim of depreciation on various assets for which it was under bonafide belief that the same was ....

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....e fees. However, the CIT(A) enhanced the income assessed in the hands of assessee by disallowing claim of depreciation on know-how, patents and trademarks and initiated penalty proceedings under section 271(1)(c) of the Act for furnishing inaccurate particulars of income. The learned Authorized Representative for the assessee further stated that the issue on merits has been decided by the Tribunal in assessee's own case and claim of assessee has been allowed in entirety and hence, there is no merit in penalty proceedings initiated and levied under section 271(1)(c) of the Act. 9. The learned Departmental Representative for the Revenue on the other hand, placed reliance on the order of CIT(A). 10. We have heard the rival contentions and pe....