For the year under consideration, the assessee had incurred expenditure for development of base designs for a project and claimed 100% depreciation treating the aforesaid expenditure to result in creating of intangible asset. The AO noticed that as per AS 26 such expenditure was eligible for depreciation at 25% as against 100% claimed by the assessee. Accordingly, the AO recomputed depreciation claimed by assessee pursuant to which assessee did not prefer any appeal before CIT(A). Thereafter, AO initiated penalty proceedings under section 271(1)(c) of the Act for making a wrong claim of expenditure.
The Tribunal held that it may be true that the intangible asset might have been eligible for depreciation only at the rate of 25% if it was considered in the same class as of patents, however the same cannot be considered as furnishing inaccurate particulars of income. Accordingly, relying on the decision of CIT v .Reliance Petro Products Ltd (2010) 322 ITR 158 (SC), the Tribunal upheld the decision of CIT(A) and thereby deleted the penalty. (AY. 2010-11)