Bunge India P.Ltd, Mumbai vs Assessee

Bunge India Private Limited, बनाम/ 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 (अपीलाथ /Appellant) .. ( !यथ / Respondent)

थायी ले ख ा सं . /जीआइआर सं . /PAN/GIR No. :AAACG7034K

अपीलाथ ओर से / Assessee by: Shri V Mohan

!यथ क% ओर से/ Revenue by:: Shri Premanand J

सन ु वाई क% तार)ख / Date of Hearing :6.1.2015 घोषणा क% तार)ख /Date of Pronouncement : 18.2.2015

आदे श / 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 4

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.

घोषणा खल ु े यायालय म, -दनांकः 18th Feb, 2015 को क% गई ।

sd sd

(आय.पी. बंसल/I.P. BANSAL) (बी.आर. बा करन,/ B.R. BASKARAN) या यक सद य / Judicial Member लेखा सद य/Accountant Member

मुंबई Mumbai: 18th Feb,2015.

व. न.स./ SRL , Sr. PS

आदे श क त ल प अ े षत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. !यथ / The Respondent.

3. आयकर आयु2त(अपील) / The CIT(A)- concerned

4. आयकर आयु2त / CIT concerned

5. 3वभागीय त न5ध, आयकर अपील)य अ5धकरण, मुंबई / DR, ITAT, Mumbai concerned

6. गाड फाईल / Guard file.

आदे शानुसार/ BY ORDER, true copy सहायक पंजीकार (Asstt. Registrar) आयकर अपील)य अ5धकरण, मुंबई /ITAT, Mumbai