DCIT, NEW DELHI vs. M/S. MCDONALD'S INDIA PVT. LTD., NEW DELHI

This appeal by the Revenue is preferred against the order of the ld. CIT(A) – 19, New Delhi dated 30.02.201 pertaining to Assessment Year 2005-06.

The sum and substance of the grievance of the assessee is that the TPO erred in deleting the penalty of Rs. 3,32,02,933/- levied u/s 271(1)(c) of the Income-tax Act, 1961 [hereinafter referred to as 'The Act'].

At the very outset, ld. counsel for the assessee pointed out that the competent authorities of India and USA have agreed to resolve the issue of double taxation arising due to the TP adjustments made by Indian Tax Authorities and pursuant to the agreement between the competent authorities, the assessee accepted the MAP resolution. The said acceptance is placed at page 96 of the paper book. The ld. counsel for the assessee further pointed out that while giving effect to the order of the MAP resolution dated 03.08.2017, the assessee filed an application for withdrawal of the appeals before the Tribunal.

Vide notice dated 07.06.2018, the Assessing Officer once again initiated penalty proceedings u/s 271(1)(c) of the Act on the total taxable income post MAP effect order u/s 90 r.w. India – US DTAA. The ld. counsel for the assessee concluded by saying that in the light of these facts, the present appeal by the Revenue becomes infructuous.

The ld. DR fairly conceded to this.

We have carefully considered the relevant evidences brought on record in the form of paper book. Exhibits 91 to 95 of the paper book are extracts of MAP Resolution reached by India and US competent authorities and exhibit at pages 96-97 of the paper book is letter dated 16.10.2017 filed by the assessee for acceptance of MAP resolution and Exhibit 98 to 102 is the order dated 03.11.2017 passed by the Assessing Officer giving effect to the MAP resolution and Exhibit 106 is penalty show cause notice dated 07.06.2018.

Since the Assessing Officer has initiated fresh penalty proceedings subsequent to order giving effect to MAP resolution, we are of the considered view that penalty levied on the basis of previous order, which was deleted by the ld. CIT(A) and against which the Revenue is in appeal before us, becomes infructous.

In the result, the appeal of the Revenue is dismissed.