COMMISSIONER OF INCOME TAX Vs. VIBROS ORGANICS LTD

JUDGEMENT

(1.) THE Revenue is aggrieved by an order dt. 28th Feb., 2006 passed by the Tribunal, Delhi Bench T in ITA No. 3806/Del/2005 relevant for the asst. yr. 2001 -02.

(2.) THE assessed is a company engaged in the business of manufacturing Chemicals. For the year under consideration it declared a loss and also claimed depreciation to the tune of Rs. 32,83,710. The AO was of the view that the claim for depreciation could not be allowed since there was no manufacturing activity carried on by the assessed during the relevant previous year.

(3.) SUBSEQUENTLY penalty proceedings were initiated against the assessed under the provisions of Section 271(1)(c) of the IT Act. In response, the assessed contended that there was a bona fide difference of opinion between the assessed and the AO on the question whether depreciation should be allowed or not and, thereforee, no cause for imposition of penalty was made out. This contention was rejected by the AO as well as by the CIT(A). However, in second appeal the Tribunal accepted the contention and that is why the Revenue has filed this appeal under Section 260A of the Act.