TaxTMI 
TaxTMI 
2018 (4) TMI 509
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....capital subsidy received from Government. 2. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the penalty holding that multiple opinions are involved in the issue as AO has taken two different opinions in two different years without appreciating the fact that the issue remained silent and never deliberated upon in earlier year's assessment. 3. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the penalty holding that issue involves multiple opinions without appreciating the fact that there is settled law for treating capital subsidy in the books of account and hence, there could not be two views on the issue." 4. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the penalty in set-aside proceedings without appreciating the fact considering the same set of facts and circumstance of the case, penalty was confirmed during original appellate proceedings before him." 5. The appellant prays that the order of the ld. CIT(A)-16, Mumbai on the above ground be set aside and that of the assessing officer be restored. 6. The appe....
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....value of the fixed assets, had however, reflected the same on the credit side of the balance sheet as a „Capital reserve‟. The assessee in its explanation for not having reduced the amount of the capital subsidy from the cost of the fixed assets, submitted that the subsidy under the TUFS scheme of the Ministry of textiles was received subject to certain terms & consideration mentioned in the sanctioned letter which were required to be complied over a period of time. It was, thus, the contention of the assessee that in case of any failure on its part in complying with the norms under the TUFS scheme, the benefits availed therein were to be recovered from it. The assessee elaborating on the aforesaid conditions of sanction of subsidy, further submitted that due to precarious business conditions, it was doubtful about its ability to comply with the terms and conditions on which the subsidy was sanctioned, particularly as the project was facing adverse market and demand condition. The assessee submitted before the Assessing Officer that as it envisaged the likelihood of reimbursement of the subsidy on its part on account of failure in payment of instalment and interest, the....
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.... excess depreciation of Rs. 35,92,013/-, thus, imposed penalty of Rs. 11,09,932/-. 5. Aggrieved, the assessee assailed the penalty imposed by the A.O under Sec. 271(1)(c) in appeal before the CIT(A). During the course of appellate proceedings, the assessee after reiterating the submissions which were made before the Assessing Officer, further submitted that as the subsidy so received was subject to certain terms and conditions which were mandatorily required to be complied over a period of time, therefore, the amount of this subsidy was reflected on the credit side of the balance sheet as a "capital reserve", which treatment accorded by the assessee was accepted by the Assessing Officer while framing the assessment in its hands for the immediately preceding year, viz. A.Y. 2008-09, vide his assessment order passed under section 143(3), dated 24/11/2010. The assessee taking support of the aforesaid contentions submitted before the CIT(A) that now when the Assessing Officer after necessary scrutiny had accepted the treatment given by the assessee to capital subsidy in the immediately preceding year, viz. A.Y. 200809, therefore, as it stood clearly revealed that two set of views of....
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....y preceding year, viz. A.Y. 200809, therefore, it could safely be concluded that the issue as regards the treatment of capital subsidy, viz. (i) that as to whether the same was to be reduced from the cost of the fixed assets; or (ii) the same was to be shown as a liability in the balance sheet, remained a debatable one. The ld. A.R taking support of the fact that as the issue under consideration was not free from doubts and debate, specifically when a view contrary to that arrived at by the Assessing Officer during the year under consideration was taken by him in the immediately preceding year, viz. A.Y. 2008-09, therefore, on the said count itself no penalty under section 271(1)(c) was called for in the hands of the assessee. The ld. A.R further submitted that even otherwise as the complete details in respect of the capital subsidy received and the computation of depreciation was furnished by the assessee along with its return of income for the year under consideration, therefore, merely for the reason that the said claim of depreciation so raised by the assessee was modified by the Assessing Officer by taking recourse to another view, no penalty under section 271(1)(c) could have....
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.... with the claim of the ld. A.R that though during the year under consideration the Assessing Officer discarded the claim of the assessee that the capital subsidy under the TUFS scheme was not to be reflected as a liability in the balance sheet, but rather, was to be reduced from the cost of the fixed assets, however, by not dislodging or rather accepting a similar claim of the assessee while scrutinizing its case for the immediately preceding year, viz. A.Y 2008-09, thus, undoubtedly established that there were two plausible views of the revenue as regards the treatment to be accorded to such capital subsidy sanctioned to the assessee. We are further of the view that as the assessee during the year under consideration had duly disclosed the complete details in respect of the capital subsidy received under the TUFS scheme along with the calculation of the depreciation on the fixed assets, therefore, though the treatment given by the assessee to the capital subsidy received under the TUFS scheme, may not have found favour with the Assessing Officer, therein leading to a consequential reworking of the depreciation on his part, but however, in the backdrop of the fact that a complete d....