The Mumbai bench of Income Tax Appellate Tribunal (ITAT) has held that disallowance of additional depreciation claim would not attract any penalty.
The Tribunal bench comprising of D.T.Garasia (Judicial member) and Manoj Kumar Aggarwal (Accountant Member) was hearing an appeal filed by an Assessee being a resident firm engaged as a manufacturer and exporter of cut and polished diamonds.
He claimed an additional depreciation of 20 percent on certain plant & machinery which is over and above the normal depreciation of 15 percent during the assessment year.
The AO has decided to impose penalty against the assessee and he argued that the activities carried out by the assessee did not represent a manufacture activity that’s why he is not entitled to claim an additional depreciation. So the Assessee has to pay penalty for this.
The bench observed that, “there was no furnishing of inaccurate particulars of income or concealment of income and also found that the activities of the assessee amounted to manufacturing. So the assessee is entitled to get an additional claim of depreciation. The relevant records including orders of the tribunal submitted by the assessee regarding the same issue on different years make his arguments more strong and depreciation has been allowed in subsequent orders of the tribunal for preceding as well as succeeding years. And the bench also added that the provisions of section 271(1)(c) are not attracted, because there was no furnishing of inaccurate particulars of income or concealment of income”.
While allowing the appeal the bench also observed that, disallowance of additional depreciation claim would not attract any penalty under section 271 (1) (c) of the Income Tax Act.
Read the full text of the Order below.
