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Income Tax Appellate Tribunal, MUMBAI BENCH “E”, MUMBAI
Before: SHRI G.S. PANNU, HONBLE & SHRI C.N. PRASAD, HONBLE
Date of Hearing : 06.12.2017 Date of Pronouncement : 05.03.2018 O R D E R PER C.N. PRASAD (JM) 1. This appeal is filed by the Revenue against the order of the Ld.CIT(A)-13, Mumbai dated 25.08.2014 for the Assessment Year 2004-05 in deleting the penalty levied u/s. 271(1)(c) of the Act.
Briefly stated the facts are that, the assessee is a limited Company engaged in the business of trading of Perfumes, Deodorants and Cosmetic products. During the year under consideration assessee paid Royalty/ Licence fee of ₹.31.50 lakhs to M/s. MTV India Pvt. Ltd. which is an Indian entity and the said amount is paid for selling of MTV branded
2 ITA.No.6463/MUM/2014 (A.Y: 2004-05) M/s. Scion Marketing (I) Pvt. Ltd Products in India. In this case there is no dispute as regards the allowability of the expenses i.e Royalty/Licence fee paid to M/s. MTV India Pvt. Ltd., However, the Assessing Officer disallowed the said expenditure for non-deduction of tax at source invoking the provisions of section 40(a)(i) of the Act. Assessee contended that the payment was made to M/s. MTV India Pvt. Ltd for the services rendered by them and the payment was not made to them in a capacity of agent. It is contended that the amount is paid to them in India in Indian currency and is not paid outside India. Further M/s. MTV India Pvt. Ltd is an Indian entity; therefore, it was contended that as the amount is paid to Indian entity in India, provisions of section 40(a)(i) of the Act are not at all applicable. It was further contended that provisions of section 40(a)(i) also not applicable since the provisions of section came into statute w.e.f 01.04.2004 onwards and not for the payments made before that period. Therefore, it was contended that the expenses incurred during the accounting year 2003-04 relevant to Assessment Year 2004-05 cannot be disallowed u/s. 40(a)(i) of the Act. Not convinced with the replies, the Assessing Officer disallowed the said expenses invoking the provisions of section 40(a)(i) of the Act for non-deduction of TDS. He also initiated the penalty proceedings u/s. 271(1)(c) of the Act and passed order on 26.03.2013 observing that the assessee has willfully concealed the 3 ITA.No.6463/MUM/2014 (A.Y: 2004-05) M/s. Scion Marketing (I) Pvt. Ltd particulars of income by furnishing the inaccurate particulars and committed the default.
On appeal the Ld.CIT(A) deleted the penalty observing that penalty cannot be levied for statuary disallowances. Secondly, there is no finding of the Assessing Officer and the satisfaction that the additions/disallowances were made on account of not due to statutory provisions but on account of detecting income concealed or furnishing of inaccurate particulars by the assessee.
Before us, the Ld. Counsel for the assessee reiterated the submissions made before the Assessing Officer as well as the Ld.CIT(A). The Ld. Counsel for the assessee further submitted that assessee has disclosed all the particulars of his income and expenses in the Profit and Loss Account and the return of income and there is no concealment of income or furnishing of inaccurate particulars, the addition/disallowance was made only based on the application of certain provisions for non- deduction of tax at source on a difference of opinion. Therefore, the penalty u/s. 271(1)(c) was rightly deleted by the Ld.CIT(A).
Ld.DR vehemently supported the orders of the Assessing Officer.
We have heard the rival submissions, perused the orders of the authorities below. on a perusal of the orders of the Assessing Officer, we
4 ITA.No.6463/MUM/2014 (A.Y: 2004-05) M/s. Scion Marketing (I) Pvt. Ltd find that the addition/disallowance was made on account of non-deduction of tax at source but not on account of ineligibility of the expenses as business expenditure. We also find that the assessee has completely disclosed all the expenses in its Profit and Loss Account and there is no furnishing of inaccurate particulars by the assessee. The disallowance was made only due to statutory application of the provisions and on account of difference of opinion as to whether the TDS is required to be made or not. In the circumstances, we do not see any infirmity in the order passed by the Ld.CIT(A) in deleting the penalty. We sustain the order of the Ld.CIT(A).
In the result, appeal of the Revenue is dismissed.
Order pronounced in the open court on the 05th March, 2018.