Do Publicity Media P.Ltd, Mumbai vs Department Of Income Tax

Dy. CIT, Circle 3(1), M/s. Do Publicity Media Pvt. Room No.607, 6th Floor, Ltd., Aayakar Bhavan, 310-B, Skylark, Vs. Mumbai - 400020 New Kantawadi Road, Bandra (East), Mumbai - 400 050 PAN: AACCD8460G (Appellant) (Respondent)

Assessee by : Ms. Anjali Jagtiani, A.R. Revenue by : Shri Love Kumar, D.R.

Date of Hearing : 11.03.2015 Date of Pronouncement : 25.03.2015

ORDER

Per Sanjay Garg, Judicial Member:

The present appeal has been preferred by the Revenue against the order dated 19.11.2012 of the Commissioner of Income Tax (Appeals) [(hereinafter referred to as CIT(A)] relevant to assessment year 2008-09.

2. The Revenue has agitated the action of the Ld. CIT(A) in deleting the penalty of Rs.6,34,062/- levied by the Assessing Officer (hereinafter referred to as the AO) under section 271(1)(c) of the Act on account of claim of higher rate of depreciation in respect of LCD screens.

3. The facts of the case as drawn from the impugned order are as under:

"The AO observed that:-

ITA No.939/M/2013 2 M/s. Do Publicity Media Pvt. Ltd.

(i) During the course of assessment proceedings, the assessee was asked to explain why not depreciation @15% be allowed on LCD screens treating it is as plant and machinery and not computers. The AO states that the assessee did not offer any explanation nor any details were furnished and it was held that the assessee has purchased LCD screens but it had shown the same as Integrated Panel Computers for the sole purpose of claiming higher depreciation @60%.

(ii) The assessee neither filed any appeal against the assessment order nor any detailed in response to penalty notices dated 16.12.2010. The assessee company however attended on 15.06.2011 arid furnished its submission which is reproduced by the AO from Page 2 to 8 of the assessment order.

(iii) The AO at Para 3 concluded that the appellant claimed higher depreciation and had the case not been selected for scrutiny assessment, the assessee could have benefited by filing inaccurate particulars of income. The Finance Act 1964 amended the provisions of section 271(1)(c) and omitted the word 'deliberately'. The AO concluded that the assessee has not only deliberately furnished inaccurate particulars of income by wrongfully claiming higher depreciation but it has also failed to offer any explanation with regard to such purchase of assets on which it has wrongly claimed depreciation at higher rate. The AO levied penalty at the minimum rate of 100% of Rs.6,34,062/-."

4. The Ld. CIT(A) deleted the penalty so levied by the AO by observing as under:

"4. I have gone through the order of the AO and submission of the appellant.

4.1 The appellant's loss as per Return of Income was at Rs.70,51,443/- and after disallowance of depreciation, the assessed loss was at (-) Rs.51,30,040/-. The appellant submits that it did not file appeal because the addition did not lead to any tax liability and the depreciation on the capital asset would even otherwise be allowed, even though at a lower rate.

4.2 The appellant filed invoice of purchase dated 30.03.2007, which gives the description as "IRIS Integrated Thin Client, 32" LCD, 512MB RAM, 40GB HDD" and IRIS Integrated Thin Client, 42" LCD, 512MB RAM, 40GB HDD" the invoice of $76290. The bill of entry examined by Rajiv Agrawal, Appraising Officer of Indian Customs, JNPT, Navs Sheva Mumbai also gives the description of the goods imported by the appellant company as mentioned. The appellant, therefore, was under the bona fide belief that the goods imported by it and installed by it were computers as the same contained "512MB RAM, 40GB HDD" and there is a very thin line of difference between an integrated LCD screen and a computer screen as the integrated LCD screen contains numerous features of a computer and the LCD screen runs various computer software.

4.3 In the present case, the fact of acquisition of assets were disclosed in the ITA No.939/M/2013 3 M/s. Do Publicity Media Pvt. Ltd.

schedule forming part of the account at Schedule-A of 2nd Annual Report of Profit and Loss A/c as well as in the Director's Report and the audited accounts of the appellant. Furthermore, it is a case of reduction of depreciation based on difference of opinion. It is, therefore, held that the present case is not fit for levy of penalty of concealment of income. The penalty of Rs.6,34,062/- is cancelled.

5. The appeal is allowed".

5. Rival contentions have been considered. In our view, it is not a case where the assessee had claimed any higher depreciation to avoid or reduce any tax liability payable during the year. As observed by the Ld. CIT(A), the description of the high definition LCD screens itself shows that certain features and components of the said screens gives description of a computer. There is very thin line of difference between an integrated high definition LCD screen and a computer screen. In this era of emerging technology even the high definition LCD screens cannot be said to be less than a computer because of its components and features. The assessee had, under bonafide belief, claimed depreciation claiming the same as computers. Moreover, as observed by the Ld. CIT(A), the assessee has returned the loss of Rs.70,51,443/-. The AO, after disallowance of depreciation, has assessed the loss at Rs.51,30,040/-. Under such circumstances, even after the disallowance of certain percentage of depreciation, there was no tax liability payable during the year.

5.1 Even to the extent the claim of depreciation has been disallowed during the year under consideration, it is obvious that the assessee would otherwise be entitled to the remaining claim of the depreciation during subsequent years as per the provisions of the Income Tax Act and the Rules. It is neither a case of any concealment of income nor a case of furnishing of inaccurate particulars of income, nor has resulted any escapement of tax at the hands of the assessee. Hence, we do not find any infirmity in the order of the Ld. CIT(A) in deleting the penalty levied by the AO under section 271(1)(c) of the Act. The order of ITA No.939/M/2013 4 M/s. Do Publicity Media Pvt. Ltd.

the Ld. CIT(A) is therefore upheld.

6. In the result, the appeal of the Revenue is hereby dismissed.

Order pronounced in the open court on 25.03.2015.

Sd/- Sd/- (B.R. Baskaran) (Sanjay Garg) ACCOUNTANT MEMBER JUDICIAL MEMBER

Mumbai, Dated: 25.03.2015. * Kishore, Sr. P.S.

Copy to: The Appellant The Respondent The CIT, Concerned, Mumbai The CIT (A) Concerned, Mumbai The DR Concerned Bench //True Copy// [

By Order

Dy/Asstt. Registrar, ITAT, Mumbai.