TaxTMI 
TaxTMI 
TaxTMI 
2018 (8) TMI 1981
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....nd substance of the dispute in the present appeal is with regard to penalty of Rs. 6,44,09,354/- imposed by the Assessing Officer, which has since been deleted by the CIT(A). 3. Briefly put, the relevant facts are that subsequent to an assessment finalised by the Assessing Officer u/s 143(3) of the Act dated 30.09.1998 determining the total income at Rs. 16,23,79,710/-, the Assessing Officer vide order dated 31.03.2006 imposed a penalty u/s 271(1)(c) of the Act amounting to Rs. 6,44,09,355/-. The said penalty has been levied on four elements of income which have been detailed by the CIT(A), and which read as under :- Sr. No. Particulars Amount Rs. Penalty Levied Rs. 1 Disallowance of depreciation on leased assets capitalized in A.Y. ....
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....and, therefore, on this aspect we affirm the ultimate decision of the CIT(A), albeit on a different ground. 5. Further, so far as the penalty on the disallowance of Rs. 4,02,71,266/- representing disallowance of depreciation on sale and lease back contained in item (2) above is concerned, in the quantum proceedings the Tribunal vide its order dated 03.01.2018 (supra) has deleted the disallowance made by the Assessing Officer. The Tribunal in its order dated 03.01.2018 (supra) directed the Assessing Officer to allow the depreciation as claimed by the assessee. Thus, the disallowance which has formed the basis for imposition of penalty no longer survives and, therefore, on this aspect also, we uphold the decision of CIT(A) in deleting the pe....
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.... Hon'ble Karnataka High Court in the case of CIT vs Shaan Finance (P). Ltd., 199 ITR 409, which was subsisting at the relevant point of time, to say that actual use of asset by lessee was not relevant so long as assessee, which was in the business of leasing, had leased the relevant asset, thus putting to use such asset for its business of leasing. On this aspect, the learned representative for the assessee also pointed out that ownership and use by the assessee are the relevant criteria for allowability of depreciation in a leasing business and not the use of asset by the lessee. In any case, it has been pointed out that at the time of filing of the return of income on 30.09.1998, the claim was bona fidely made based on the legal under....
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.....1 of the assessment order notes that the lessee, i.e. Tata Telecom Ltd., confirmed that the asset has been installed on 18.03.1995, yet he has proceeded to disallow the depreciation on the ground that the asset was not being used on the date of claim of depreciation. What one can understand from the discussion is that as per the Assessing Officer, not only the installation, but use of the asset by the lessee was also essential so as to enable the assessee-lessor to claim depreciation. In our considered opinion, whether or not the proposition canvassed by the Assessing Officer is merited is not the issue before us. We are only concerned with the levy of penalty u/s 271(1)(c) of the Act, and for that purpose, we find that none of the particu....
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....eciation allowable would be @ 40%. The learned representative explained that initially when the Assessing Officer gave effect to the order of Commissioner passed u/s 263 of the Act, allowance of depreciation was restricted to 20% and thereby depreciation of Rs. 9,49,69,652/- was disallowed. The learned representative pointed out that in an appeal against the aforesaid disallowance the same has since been scaled down by the CIT(A) to Rs. 1,93,24,793/-. It was, therefore, contended that the disallowance which is required to be considered for levy of penalty, if at all, has to be of Rs. 1,93,24,793/- as the order of CIT(A) had since become final on this aspect. In this context, our attention has also been invited to the depreciation schedule f....
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....iable. 11. We have carefully considered the rival submissions. On this aspect, the only dispute between the assessee and the Revenue is to the merit of depreciation claimed by the assessee @ 40% on trucks. Notably, the higher rate of depreciation @ 40% was allowable in case of vehicles which were used in the business of running them on hire. Initially, in the assessment proceedings, depreciation claimed @ 40% was allowed as such, but the Commissioner vide his order dated 06.03.2003 passed u/s 263 of the Act directed the Assessing Officer to modify the depreciation allowable on vehicles and restricted the same to 20% and not at 40%, as claimed by the assessee. This direction of the Commissioner came-up in appeal before the Tribunal and vide....