2018 (6) TMI 1630

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.... learned CIT(A) erred in confirming the impugned penalty of Rs. 78,00,000/- imposed on the assessee.   3. The relevant material facts are like this.  The quantum disallowances in respect of which the impugned penalty is levied are as follows :- (i) Addition of Rs. 1,30,869/- on account of other income; (ii) Addition of Rs. 1,01,456/- on account of interest expenses; (iii) Addition of Rs. 42,40,790/- on account of exchange fluctuation; (iv)  Disallowance of Rs. 50,00,000/- on account of depreciation on land; (v)  Disallowance of Rs. 1,33,39,000/- under section 40A(2)(b). 4. As regards the disallowance of Rs. 1,33,39,000/- under section 40A(2)(b), the same stands deleted v....

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....ty which has survived the first appeal as well.  The assessee is now in second appeal before us.   7. The last adjustment, in respect of which impugned penalty is levied, is in respect of denial of depreciation of Rs. 50 lakhs on building.  The assessee had purchased land and building for a value of Rs. 5,93,47,914/-.  The purchase deed did not separately specify the value of land and building components.  On these facts, the assessee claimed depreciation of Rs. 50 lakhs treating cost of building at Rs. 5 Crores.  The Assessing Officer declined the deduction and held that the building was effectively worthless as it had to be eventually demolished next year.  The matter has travelled upto this Tribunal ....

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....as a result of wrong posting of capital field vouchers in the revenue account.  Certainly, this kind of a casual approach is not desirable but then right now we are only concerned whether the explanation of the assessee is reasonable, and whether meets the test of preponderance of probabilities, or not.  Viewed in this perspective, in our considered view, the explanation offered by the assessee is reasonable and worth being accepted.  We, therefore, deem it fit and proper to delete the penalty in respect of the addition for exchange fluctuation as well.  As regards the claim of depreciation, we have noted that the assessee had purchased the building and land for Rs. 5,93,47,914/- and the stamp duty valuation of land was ....