THE PR. COMMISSIONER OF INCOME TAX -4 vs. M/S GLOBAL VANTEDGE ,PVT. LTD.

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ITA/332/2018HC DelhiDLHC01077919201820 March 2018Bench: HON'BLE MR. JUSTICE S. RAVINDRA BHAT,HON'BLE MR. JUSTICE A. K. CHAWLA1 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that no question of law arises from the ITAT's order. The Tribunal's reasoning that the matter was debatable was considered reasonable, particularly in light of the fact that the original amounts added by the AO were reduced by the CIT(A) and further affirmed by the Tribunal. The Court found that the overall circumstances supported the Tribunal's view. Consequently, the appeal filed by the Revenue was dismissed. The operative direction was the dismissal of the appeal, meaning the penalty deletion ordered by the ITAT stood. No issue was expressly left undecided.

What were the facts?

The Revenue, represented by the Pr. Commissioner of Income Tax -4, appealed against an order of the Income Tax Appellate Tribunal (ITAT). The appeal challenges the ITAT's direction for the deletion of a penalty imposed under Section 271(1)(c) of the Income Tax Act, 1961. This penalty was levied in relation to an addition of ₹2,19,08,152/- made by the Assessing Officer (AO). The addition was determined during the assessment of Arm's Length Price (ALP) under Section 92C of the Act, following an examination of the transfer pricing report and application of Rule 10B. The AO had made further additions after this analysis. The ITAT had found the matter to be debatable, especially since the original additions were reduced by the Commissioner of Income Tax (Appeals) and subsequently affirmed by the Tribunal.

What were the issues?

1. Whether the Tribunal was justified in directing the deletion of the penalty under Section 271(1)(c) of the Income Tax Act, 1961, by ignoring the mandate of Explanation 7 to Section 271(1)(c)? Assessee's Contentions: The judgment does not record any specific contentions made by the assessee, M/s Global Vantedge Pvt. Ltd. Revenue's Contentions: The Revenue contended that the Tribunal was not justified in directing the deletion of the penalty under Section 271(1)(c) of the 1961 Act. They argued that the Tribunal ignored the mandate of Explanation 7 to Section 271(1)(c). The addition that led to the penalty was made in the course of determining the Arm's Length Price (ALP) under Section 92C of the Act, with further amounts added by the AO after examining the transfer pricing report and applying Rule 10B.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 92C

AI-generated summary — verify with the full judgment below

$~59 * IN THE HIGH COURT OF DELHI AT NEW DELHI + ITA 332/2018 THE PR. COMMISSIONER OF INCOME TAX -4..... Appellant Through : Sh. Ruchir Bhatia, Sr. Standing Counsel.

Versus

M/S GLOBAL VANTEDGE PVT. LTD. ..... Respondent

Through : None.

CORAM: HON'BLE MR. JUSTICE S. RAVINDRA BHAT HON'BLE MR. JUSTICE A. K. CHAWLA

O R D E R %

20.03.2018 The imposition of penalty under Section 271(1)(c) of the Income Tax Act, 1961 [hereafter “the 1961 Act”] by the Assessing Officer (AO) in relation to the assessee, resulting in the addition of `2,19,08,152/-, is a subject matter of present appeal by the Revenue. It is urged that the Tribunal was not justified in directing deletion of penalty as it ignored the mandate of Explanation 7 to Section 271(1)(c). The addition ultimately made by the Revenue authorities [rather the CIT(A)] was in the course of determination of Arm’s Length Price (ALP) under Section 92C of the 1961 Act. The AO added further amounts upon examination and analysis of the transfer pricing report and the application of Rule 10B. Having regard to the overall circumstances, the Tribunal’s reasoning that the question was debatable (more so since the original amounts added were reduced by the CIT(A) and further affirmed by the Tribunal) is reasonable. In the circumstances, no question of law arises. The appeal is accordingly dismissed along with the pending application.

S. RAVINDRA BHAT, J

A. K. CHAWLA, J MARCH 20, 2018/ajk

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