Facts
The assessee is mainly engaged in development, operation and maintenance of Ports & Economic Zone at Mundra, Gujarat. For the Assessment Year 2011-12, the assessee filed its Return of Income declaring total income of Rs. 30,81,75,558/-. Regular scrutiny assessment was completed u/s. 143(3) of the Act on 01-03-2014 determining the total income as Rs. 1,41,39,57,721/- after making various additions/disallowances The A.O. initiated penalty proceedings u/s. 271(1)(c) of the Act for furnishing inaccurate particulars of income against the various disallowances. However on appeal against the assessment order, the Ld. CIT(A) vide its order dated 13-11-2014 confirmed the additions made on account of Amortized value of Leasehold Land of Rs. 5,16,28,097/- and Depreciation claimed on “Right to use” Leasehold Land of Rs. 1,54,11,254/-. Accordingly fresh penalty notice was issued to the assessee, as why not to levy penalty u/s. 271(1)(c) of the Act for furnishing inaccurate particulars of income.
Submissions
The Counsel for the assessee submitted that even on merits, the additions made by the Assessing officer were deleted in the quantum appeal. Hence, there is no question of levying penalty in the cases for furnishing inaccurate particulars of income.
CIT-DR Akhilendra Pratap Yadav appearing for the Revenue supported the order passed by the Assessing Officer and thereby pleaded to sustain the levy of penalty and allow the Revenue appeal.
Decision
The division bench of Annapurna Gupta, Accountant Member and T.R. Senthil Kumar, Judicial Member observed that apart in the quantum appeal of the assessee before the Tribunal, the addition made by the Assessing Officer was also deleted. Further, the Jurisdictional High Court in case of Sun Pharmaceuticals Ind. Ltd. V DCIT have held that such expenditure on right to use leasehold land is allowable as revenue expenditure, which means such issue is also highly debatable and therefore no penalty under Section 271(1)(c) can be levied on it.
The bench held that the grounds raised by the Revenue is devoid of merits and the same is dismissed.
Case title: The DCIT v/s Adani Port & SEZ Ltd.
Citation: ITA No. 541/Ahd/2018
