AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2024 (4) TMI 1054
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....) was justified in accepting the submissions of the assessee and there by ignoring the facts brought on the record by the Assessing Officer. Any other ground which may be adduced at the time of hearing. 3. The brief facts of the case are that the assessee is a limited company, its case for the AY 2018-19 was selected for limited scrutiny assessment under e-assessment scheme, 2019 on the issue "Investment in intangible assets". During the assessment proceedings queries were raised by the Ld. AO and responded by the assessee, however, assessee's explanation regarding allowability of depreciation on acquisition of mining rights treating the same as intangible asset could not found favour before the Ld. AO, accordingly a disallowance of Rs. 21,69,41,302/- was made. Consequently, penalty proceedings u/s 270A of the Act, was initiated for under reporting of the income. The initiation of penalty proceedings was further taken up by the Assessing Officer, NFAC, wherein Ld. AO had elaborately discussed the nature of intangible asset declared at Rs. 173,55,30,417/- for a period of less than 180 days and depreciation of @25% for half year amounting to Rs. 21,69,41,302/- was claimed. The allow....
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....d and attached on 21.07.2021. 6. The submissions of the assessee dated 21.07.2021 have been duly considered with facts of the case and provisions of the Act but the same is not acceptable. The assessee has not filed any appeal against the assessment done u/s 143(3). The assessee Kas submitted that "there is no conscious and deliberate intentions to concealed the addition income" and hence, the request of the assessee to drop penalty. The argument that the entire addition is accepted and tax paid thereon is not acceptable as there is no provision for dropping the penalty if assessee have not objected to the addition in assessment order. This only proves that the assessee does not have any valid explanation to offer to the Income Tax authorities and has therefore agreed that the true and full disclosure of his income for AY 2018-19 has not been made. 7. From the above discussion, it is clear that there is no merit in the assessee's argument since, the assessee has failed to furnish any supporting documentary evidence with respect to above discussed issues. The assesse has declared a loss in business only due to the depreciation claimed thus choosing to make a wrong claim by u....
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....ccordingly, considering substance in the contentions of the assessee the appeal of the assessee was allowed by deleing the penalty imposed u/s 270A of the Act. 5. The impugned decision of deleting the penalty by the Ld. CIT(A) has not been accepted by the revenue, alleging that the same is unjustified and without appreciating the facts brought on record by the assessing officer, therefore, the revenue carried this matter before us in the present appeal. 6. At the outset, Ld. CIT DR vehemently supported the penalty order passed by the Ld. AO wherein Ld. AO has categorically deliberated upon the reasons for disallowance of depreciation stating that (i) The acquisition of mining right is not intangible asset as defined in section 32(1)(ii) of I.T. Act, (ii) The asset is now owned by the company and (iii) The asset is not put to use during the year under consideration neither it is ready for use of commercial exploitation. It is further submitted that since the assessee itself had agreed with the interpretations of the Ld. AO and have withdrawn their claim of depreciation and had paid tax on the same a/w interest, this clearly shows that there was under reporting of income by the ass....
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....de explanation and discloses all the material facts to substantiate the explanation. Explanation with regard to the claim of depreciation and submission on the observations made by the AO while levying the penalty is made as under. Depreciation has been claimed on mining rights acquired from the state government (initially acquired by holding company i.e. NMDC Limited and assessee acquired the same from NMDC during the year under consideration). Obtaining of a mining lease i.e. mining right is a very long process and various compliances need to be made at different stages in order to obtain the same which entails incurring of various incidental expenses. All these expenses are capitalized in the books of accounts as intangible asset under the head "Mining Rights" and amortized from the year of obtaining the mining rights. Under the Act, Intangible assets (which includes business or commercial right) has a separate block for the purpose of depreciation. Accordingly, the assessee has classified the mining rights in the block of Intangible Asset and claimed depreciation. It is understood that there are 3 aspects based on which the claim of assessee was disallowed. 1. AO took a vie....
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....gaged in the similar business) in ITA No. 7656/Mum/2010 has held that "There are various business stages including obtaining of permits, prospecting license/mining lease. When the assessee has been granted Reconnaissance permit, such stage must constitute foundation for subsequent stages. The activity of commercial production is not needed to describe the business is set up when assessee is in the business of exploration, In this line of business of exploration, the business commences with 'exploring' for minerals/gold/silver in the crests of the Earth and ends with successful identification of such mineral rich blocks of earth. " Similarly in the instant case, there are various stages involving several activities whereby one activity paves way for the next one. There are some activities (Locating potential mineral deposits, surface exploration, environmental clearance, forest clearance, mine plan) to be done before obtaining of mining lease and some activities (tree enumeration, tree felling, preparation of approach road, deploying of man and machinery/appointment of MDO (mine developer cum operator) after obtaining mining lease. Eventually all the activities will lead t....
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....demonstrate the bonafide intent of the assessee and accordingly it is humbly requested that order of CIT(A) deleting the penalty may kindly be upheld. 8. Ld. AR of the assessee on the basis of aforesaid submissions have further drawn our attention to the order of Ld. CIT(A), have reiterated the findings therein and have submitted that considering the fact and circumstances of the present case, the assessee's bonafide intent cannot be doubted, therefore, the order of Ld. CIT(A) deleting the penalty may kindly be upheld. 9. We have considered the submission of both the parties, perused the material available on record and case laws pressed before us in support of contentions raised by the parties. On perusal of the order of Ld. CIT(A), wherein the issue in the present case have been deliberated upon at length and the same has been culminated by deleting the penalty imposed on the assessee. Ld. CIT(A) was convinced with the explanations of the assessee, observing that the disallowance of depreciation is a subject matter of debate as in the case of holding company of the assessee i.e., NMDC the mining right has consistently been held as a depreciable asset eligible for depreciation....
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...., when the issue involved is a debatable one, where two views are possible, holding the appellant for penalty is not correct. 5.6 More importantly in this case, the appellant has filed an application before the Assessing Officer, seeking immunity u/s 270AA of the Act after fulfilling all the conditions as under: a. Tax and interest payable has been paid within the period specified in the demand notice. b. No appeal has been preferred against the order of the assessment. c. An application in the prescribed form in Form 68 has been filed on 18-022022, within one month from the end of the month in which the assessment order was received. 5.7 Under the above circumstances, there was no reason for the Assessing Officer not to accept the application of the assessee to grant immunity. 5.8 In the case Ultimate Infra Tech Private Limited reported in 2022- 326 CTR 547, the Hon'ble Delhi High Court has held that immunity u/s 270AA has to be granted on satisfaction of the conditions prescribed in the said section. The observations of the Hon'ble High Court is reproduced hereunder: "5. Having heard learned counsel for the petitioner this Coutt is of the view that it is onl....