Income Tax Appellate Tribunal (ITAT), Ahmedabad bench consisting of Annapurna Gupta, Accountant Member and Mahavir Prasad, Judicial Member granted relief to Axis Bank as concealment of particulars of income not proved.
S.N. Soparkar, and Bandish Soparkar, Counsels for the appellant submitted that during appellate proceedings for the impugned assessment year before the CIT(A), the assessee, Axis Bank Ltd had suo moto requested reversal of excess depreciation claimed on two properties owned by the assessee bank, one in Mumbai and other in Bangalore, to the extent claimed on the land component included in the cost of the same and that it was clarified to the CIT(A) that the properties purchased included elevators, power backups, chillers etc and no separate consideration had been paid for the land ,building or the other components therein. It was also clarified that the Mumbai property the assessee had no ownership rights but only exclusive, perpetual right to use, occupy and enjoy the land.
It was also pointed out that at the time of purchase of these properties the assessee had sought legal opinion whether or not it was required to separate the land and building component in the cost of purchase and based on the legal opinion had capitalized the entire amount of property. But subsequently, on reviewing the Ministry of Corporate Affairs mandate, requiring companies to apply component accounting to tangible fixed assets existing on or after 01.04.2015, the assessee bank, in accordance with best practices, decided to componentize these assets in its books of accounts and claim depreciation accordingly.
That the assessee obtained valuation report from independent valuers and made the necessary componentisation in its books of account prospectively from financial year 2018-19 and in order to align the tax books with the account books it was proposed to reverse the depreciation claimed on the land portion on the componentized assets in the respective years. That accordingly revised tax depreciation on the same was worked out and the excess depreciation claimed of Rs.6.78 Crores offered to tax during appellate proceedings for the impugned year.
Accordingly, addition of the excess depreciation claimed by the assessee, as admitted by it during appellate proceedings was made amounting to Rs. 6.78 crores and penalty u/s 271(1) of the Act, for concealing/furnishing inaccurate particulars of income, initiated on the same. Counsel for the assessee contended that this fact of suo moto reversal of depreciation of the impugned year by the assessee was noted by the CIT(A).
The Tribunal held that “All particulars, relating to the properties on which depreciation was claimed, was duly disclosed by the assessee. And the assessee itself, to align its books of accounts with an MCA notification, disclosed all particulars relating to the excess claim also. We therefore hold that the assessee cannot be charged with having concealed/furnished any inaccurate particulars of income in the present case.”
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