The Commissioner Of Income Tax – 9, Mumbai v. Shirpur Gold Refinery Limited

IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.2607 OF 2011 The Commissioner of Income Tax – 9, Mumbai..Appellant. Versus Shirpur Gold Refinery Limited ..Respondent. Mr.Suresh Kumar for the appellant.None for the respondent. CORAM : J.P. Devadhar &M.S. Sanklecha, JJ. DATE : 13[th] March 2013 P.C. : 1.In this appeal by the Revenue for assessment year 2007-08, following question of law has been proposed for our consideration. “Whether on the facts and in the circumstances of the case and in law, the Tribunal is right in deleting the penalty imposed on the assessee under Section 271(1)(c) of the Income Tax Act, 1961 ?” 2.The Tribunal by the impugned order has deleted penalty levied under Section 271(1)(c) of the Act. In the present facts there is no dispute that the respondent – assessee had not concealed any income. The only dispute raised by the Revenue is that the depreciation was claimed in respect of the plant and machinery which was not put to use. The Tribunal recorded a finding of fact that for the earlier assessment years namely assessment years 2005-06 and 2006-07, the assessing officer by an order passed under Section 143(3) of the Income Tax Act, 1961 ('Act' for short) allowed the depreciation. The Tribunal records the fact that there is no dispute that the respondent – assessee had commenced its business and the assets were put to use. The denial was only on the ground that the assets were not put to use for commercial productions. In such a situation, the Tribunal held that where plant and machinery was put to use in the past and even though the same has not been put to commercial production in the assessment year in question, the claim of depreciation could not be denied. Moreover, in the impugned order reliance is placed upon the decision of the Delhi High Court in the matter of Capital Bus Service Private Limited V/s. Commissioner of Income Tax reported in 123 ITR 404, wherein it has been held that for purposes of depreciation “used for the purposes of business” should receive a liberal interpretation and being ready for use in business would satisfy the test. Therefore, the Tribunal finds there was some basis for the claim. As held by the Apex Court in the matter of Commissioner of Income Tax V/s. Reliance Petroproducts (P) Limited reported in (2010) 322 ITR 158 (S.C.) that mere denial of a claim would not ipso facto lead to imposition of penalty under Section 271(1)(c) of the Act. (c) of the Act cannot be faulted. Accordingly, the appeal is dismissed with no order as to costs. (M.S. Sanklecha, J.)(J.P. Devadhar, J.)