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IN THE INCOME TAX APPELLATE TRIBUNAL "B" BENCH, MUMBAI
BEFORE S/SHRI I.P. BANSAL, (JM) AND B.R.BASKARAN (AM)
.. , .. ,
./I.T.A. No.6510/Mum/2012
( / Assessment Year : 2004-05)
Bunge India Private Limited, / Jt.Commissioner of Income Tax
B-401 & 501, Business square,
Vs. (OSD) 8(1),
Andheri Kurla road, Room No.210, 2nd Floor,
Chakala,
Andheri (E),
Ayakar Bhavan,M.K.Road,
Mumbai-400093 Mumbai-400020
( /Appellant) .. ( / Respondent)
. / . /PAN/GIR No. :AAACG7034K
/ Assessee by: Shri V Mohan
/ Revenue by:: Shri Premanand J
/ Date of Hearing
:6.1.2015
/Date of Pronouncement : 18.2.2015
/ O R D E R
Per B.R.BASKARAN, Accountant Member:
The assessee has filed this appeal challenging the order dated 01-
08-2012 passed by Ld CIT(A)-16, Mumbai confirming the penalty of
Rs.62,83,900/- levied by the AO u/s 271(1)(c) of the Act for the
assessment year 2004-05.
ITA No.6510/M/12
2
2. We heard the parties and perused the record. The AO noticed that
the assessee has claimed depreciation @ 40% on Plant and Machinery,
where as the applicable rate of depreciation was only 25%. Similarly, the
AO noticed that the assessee has claimed depreciation @ 10% on land and
development works, where as the Act does not provide depreciation on
land. After confronting these mistakes, the AO recomputed the
depreciation and accordingly disallowed excess claim and also levied
penalty u/s 271(1)(c) of the Act on the said disallowance. The Ld CIT(A)
also confirmed the same.
3. We notice that the explanation of the assessee was that the
Depreciation chart of the current year was prepared through the computer
system by adopting the relevant figures from the immediately preceding
year. However, the rate of depreciation relating to the Plant and Machinery
was inadvertently omitted to be modified to 25% from 40% and the said
error came to be noticed only when the AO pointed out the same.
Accordingly it was submitted that the mistake has occurred due to
inadvertence. But the said explanation was not acceptable to both the tax
authorities.
4. Now the effective question that arises before us is whether the
above said explanation of the assessee is a bonafide one or not. If it is
found to be a bonafide one, then the penalty shall not lie in view of the
Explanation 1 to sec 271(1)(c) of the Act. The fact that the assessee was
ITA No.6510/M/12
3
eligible to claim higher rate of depreciation @ 40% in the immediately
preceding year was not disputed. It is also quiet natural in this computer
era to prepare Depreciation chart by downloading the relevant figures
from the chart of the immediately preceding year. Viewed from this angle,
we are of the view that the explanation of the assessee appears to be
bonafide one. It is quite possible that the depreciation rate may escape
the attention while preparing the Depreciation Chart, since the basic
depreciation rate has not been changed in the Statute during the year
under consideration. Hence, we are of the view that the explanation given
by the assessee should be considered as bonafide one and hence
Explanation 1 to sec. 271(1)(c) shall apply to the same. Accordingly, we
set aside the order of Ld CIT(A) on the penalty levied on the disallowance
of depreciation claimed on Plant and Machinery and direct the AO to delete
the penalty levied thereon.
5. The next disallowance relate to the depreciation claimed on land. It
is an admitted position of law that the depreciation is not allowable on
land. Hence, the depreciation claimed by the assessee land turns out to
be a wrong claim even in the immediately preceding year. Further, we
notice that the assessee has failed to furnish any explanation in this
regard. Under these set of facts, we are of the view that the Ld CIT(A)
was justified in confirming the penalty levied on disallowance of
depreciation relating to Land.
ITA No.6510/M/12
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6. In the result, the appeal of the assessee is partly allowed.
The above order was pronounced in the open court on 18th Feb,
2015.
18th Feb, 2015
sd sd
(.. /I.P. BANSAL) (.. ,/ B.R. BASKARAN)
/ Judicial Member /Accountant Member
Mumbai: 18th Feb,2015.
. ../ SRL , Sr. PS
/Copy of the Order forwarded to :
1. / The Appellant
2. / The Respondent.
3. () / The CIT(A)- concerned
4. / CIT concerned
5. , , /
DR, ITAT, Mumbai concerned
6. / Guard file.
/ BY ORDER,
true copy
(Asstt. Registrar)
, /ITAT, Mumbai
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