ASSISTANT COMMISSIONER OF INCOME TAX (IT), CIRCLE-1, PUNE vs. FAURECIA SYSTEMS D'ECHAPPEMENT, PUNE

Succinctly, the facts of the case are that the assessee is a tax resident of France. Return was filed declaring total income at Rs.4.94 crore. During the course of assessment proceedings, the AO observed that a sum of Rs.19.98 crore was not offered for taxation. Treating such amount as Royalty, the AO included the same in the total income in the draft order. The Dispute Resolution Panel (DRP) held that the amount of Rs.9.85 crore in relation to the Software Maintenance charges was taxable as royalty. The remaining amount was held to be not chargeable. The AO included such amount in the final assessment order as royalty.

Thereafter, the AO imposed penalty u/s.271(1)(c) of the Act with reference to this addition which came to be deleted in the first appeal.

We have heard both the rival submissions and gone through the relevant material on record. It is seen as an admitted position that the AO imposed penalty on identical ground for the A.Y. 2013-14, which got deleted in the first appeal. The Revenue preferred appeals for both the years, which were clubbed and taken up for hearing in a combined manner. The rival parties made elaborate submissions in the appeal for the A.Y. 2013-14 and adopted such arguments for the instant appeal. We have passed a M/s. Faurecia Systems D’echappement separate order for the A.Y. 2013-14 upholding the deletion of the penalty. Following the same reasons, we uphold the impugned order insofar as its conclusion for the deletion of penalty is concerned.

In the result, the appeal is dismissed.