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Income Tax Appellate Tribunal, “E” BENCH, MUMBAI
Before: SHRI SHAMIM YAHYA, AM & SHRI RAM LAL NEGI, JM
O R D E R Per Shamim Yahya, A. M.:
This appeal by the Revenue is directed against the order of the ld. Commissioner of Income Tax (Appeals) dated 05.11.2014 and pertains to assessment year 2008-09.
2. The issue raised is that the ld. Commissioner of Income Tax (Appeals) erred in deleting the penalty imposed u/s. 271(1)(c) of the Act. The grounds raised
in this regard are as under:
1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the penalty imposed in respect of the EDP expense, without appreciating that in the quantum appeal the Ld. CIT(A) had himself found the expenditure to be capital in nature thereby endorsing the AO's findings that the assessee had claimed excessive and undue deduction by claiming the said expenditure as revenue in nature.
2 M/s. Total Lubricants India Ltd.
2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in not following the ratio laid down by the Hon'ble Rajasthan High Court in the case of CIT vs. Arawali Construction Co. Pvt. Ltd.(259 ITR 30) wherein the Hon'ble High Court observed that acquisition of computer software is akin to acquisition of technical know-how.
3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the penalty imposed in respect of the disallowance of advertisement expenses, and interest paid to HDFC on behalf of its employees without appreciating that in the quantum appeal the Ld. CIT(A) had himself endorsed the AO's findings.
4. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the penalty levied u/s 271(l)(c), relying on the Supreme Court's Judgment in the case of CIT v/s Reliance Petro Products Pvt. Ltd.(322 ITR 158)(SC) without appreciating that the principles laid down by the Apex Court in the judgment cited supra are not applicable to the facts of the case of the assessee.
5. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in ignoring the ratio laid down by the Hon'ble Delhi High Court in the case of CIT vs. Zoom communications Pvt. Ltd.(327 ITR 510)(Del).
6. The appellant prays that the order of the CIT(A) on the above grounds be set aside and that of the A.O. be restored,
In this case, the penalty has been levied for the two additions which are as under:
disallowance of EDP expenses of Rs.8,42,189/-; and
advertisement expenditure of Rs.10,31,614/-.
The penalty levied on EDP expenses and advertisement expenses has been deleted by the ld. Commissioner of Income Tax (Appeals).
Against this order, the Revenue is in appeal before us.
We have heard both the counsel and perused the records. The learned departmental representative relied upon the orders of the assessing officer.
Per Contra, the learned counsel of the assessee supported the order of the ld. Commissioner of Income Tax (Appeals). He further submitted that this ITAT in the 2008-09 vide order dated 20.12.2017 has deleted the first addition and remitted the second issue to the file of the Assessing Officer.
Upon careful consideration we find that since on the issue of disallowance of EDP expenses of Rs.8,42,189/-, the ITAT had relied on the decision of the Hon'ble Bombay High Court in the case of CIT vs. Raychem RPG Ltd. (2012) 346 ITR 138 (Bom) and deleted the said addition, the penalty levied u/s. 271(1)(c) does not survive. Hence, we uphold the deletion of addition on this account.
As regards the disallowance of advertisement expenses of Rs.10,31,614/-, the issue has been remitted to the file of the assessing officer, the issue of levy of penalty in this connection also deserves to be remitted to the file of the assessing officer.
Accordingly, the issue levy of penalty in this regard is remitted to the file of the assessing officer. The same shall be considered by the Assessing Officer upon the adjudication of the issue pursuant to the remand by the ITAT.
In the result, this appeal by the Revenue stands partly allowed.
Order pronounced in the open court on 30.07.2018