Pace Laboratories Ltd, Mumbai vs Assessee

BEFORE HON'BLE S/SHRI H.L. KARWA, PRESIDENT AND B.R.BASKARAN (AM) सव ी एच.एल. कावा, अ य एवं बी.आर.बा करन, लेखा सद य

आयकर अपील सं./I.T.A. No.6239/Mum/2012 ( नधारण वष / Assessment Year :2005-06)

M/s Pace Laboratories Ltd., बनाम/ Income Tax Officer, 8(2)(4) 12-B-241/242, Vs. 2nd Floor, Aayakar Bhavan, Backbay Reclamation , M K Road, Nariman Point, Mumbai-400020 Mumbai-400021. (अपीलाथ /Appellant) .. ( यथ / Respondent)

थायी ले ख ा सं . /जीआइआर सं . /PAN/GIRNo. :AAACP2235R

अपीलाथ ओर से / Assessee by : Shri Govind Agarwal यथ क ओर से/Respondent by Shri Neil Phlip.

सन ु वाई क तार ख / Date of Hearing : 1.1.2015 घोषणा क तार ख /Date of Pronouncement : 14.01.2015

आदे श / O R D E R

Per B.R.BASKARAN, Accountant Member:

The assessee has filed this appeal challenging the order dated 12- 07-2012 passed by Ld CIT(A) confirming the penalty levied u/s 271(1)(c) of the Act for assessment year 2005-06.

2 ITA No.6239/Mum/2012 2. We heard the parties and perused the record. The facts that led to levy of penalty are that the assessing officer, on verification of the depreciation claimed by the assessee, noticed that the assessee had purchased a building costing Rs.1.42 crores and also sold another building for a sum of Rs.1.18 crores and they were added/reduced from the block of asset of "Building". The assessee had claimed depreciation of Rs.7,13,725/- on the closing WDV of Rs.29,41,568/-, which was arrived at after making the above said addition/deduction. The AO further noticed that the assessee had not put the new building on use and, on pointing out of the said fact, the assessee agreed for disallowance of depreciation of Rs.7,13,725/-. The AO levied penalty of Rs.2,61,170/- on the said disallowance on the reasoning that the offer made by the assessee was not voluntary one, but a forced one. The Ld CIT(A) also confirmed the penalty, apparently under the impression that the assessee had sold off entire block during the year.

3. There should not be any dispute that the question whether the condition of "usage of asset for the purpose of business" is relevant or not after the asset has entered the block is a debatable question. Even though the assessee had agreed for disallowance of the depreciation on the block of asset of "building", yet the claim of depreciation put forth by the assessee cannot be considered as altogether wrong claim in view of the debatable nature of the claim. It is well settled proposition that the penalty u/s 271(1)(c) of the Act shall not lie on debatable claims. Accordingly, we are unable to agree with the orders passed by Ld CIT(A). Accordingly, we set aside the order of Ld CIT(A) and direct the assessing officer to delete the impugned penalty.

3 ITA No.6239/Mum/2012 4. In the result, the appeal filed by the assessee is allowed.

The above order was pronounced in the open court on 14th Jan,2015.

घोषणा खुले यायालय म दनांकः 14 th Jan 2015 को क गई ।

sd sd

(एच.एल. कावा/ H.L. KARWA) (बी.आर. बा करन,/ B.R. BASKARAN) अ य / PRESIDENT लेखा सद य/Accountant Member मब ंु ई Mumbai: 14 th Jan, 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 आयु त(अपील) / The CIT(A)- concerned

4. आयकर आयु त / CIT concerned

5. वभागीय त न ध, आयकर अपील य अ धकरण, मब ंु ई / DR, ITAT, Mumbai concerned

6. गाड फाईल / Guard file.

आदे शानस ु ार/ BY ORDER, true copy सहायक पंजीकार (Asstt. Registrar) आयकर अपील य अ धकरण, मुंबई /ITAT, Mumbai