Itxa/2586/2011 Of The Commissioner Of Income Tax - 1 v. Nath Capital And Financial Service Ltd

sas IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL(LOD) NO.1182 OF 2011 The Commissioner of Income Tax-I, Mumbai ..Appellant. V/s. M/s. Nath Capital & Financial Services Ltd. ..Respondent. None for the appellant.None for the respondent. CORAM : J.P. DEVADHAR AND A.R. JOSHI, JJ. DATED : 18TH NOVEMBER, 2011 P.C. :- 1.None for the appellant. 2.Whether the ITAT was justified in deleting the penalty levied under Section 271(1)(c) of the Income Tax Act, 1961, is the question raised in this appeal. 3.In the assessment year in question, the assessee claimed depreciation on the lease transaction with M/s. Nath Pulp and Paper Mills Limited on the ground that it was a operating lease transaction. The assessing officer disallowed the claim of the assessee on the ground that the transaction was a finance lease transaction and not operating lease transaction and hence depreciation was not allowable. The assessing officer thereupon initiated penalty proceedings and imposed penalty under Section 217(1)(c) of the Income Tax Act, 1961. 4.The ITAT has deleted the penalty on the ground that all the facts relating to the claim of depreciation were duly disclosed by the assessee and that the genuineness of the lease has not been doubted by the assessing officer. In these circumstances, the decision of the Tribunal in holding that merely because the claim made by the assessee seeking depreciation has been rejected, the assessee cannot be made liable for penalty, in our opinion, seems to be just and proper. Hence the appeal is dismissed with no order as to costs. (A.R. JOSHI, J.) (J.P. DEVADHAR, J.)