JOINT COMMISSIONER OF INCOME-TAX vs. TATA TECHNOLOGIES LTD.,, PUNE

The Revenue has raised the following grounds of appeal:- 1. On the facts and circumstances of this case, the Ld. CIT(A) erred in holding that no penalty u/s 271C is leviable. 2. On the facts and circumstances of this case, the Ld. CIT(A) erred in holding that no penalty u/s 271C is leviable despite holding that tax and interest u/s 201(1) and 201(1A) was correctly levied by the AO.

The appeal filed by Revenue is against deletion of penalty levied under section 271C of the Act. The Revenue is aggrieved by the order of CIT(A) in holding that no penalty under section 271C of the Act was leviable despite upholding charge of tax and interest under section 201(1) and 201(1A) of the Act.

The learned Authorized Representative for the assessee pointed out that the issue on merits has been decided by the Tribunal in favour of assessee and the assessee has been held not to have defaulted under section 201(1) of the Act and consequently, interest charged under section 201(1A) of the Act has been deleted. Hence, no merit in levy of penalty.

The learned Departmental Representative for the Revenue fairly accepted that the issue on merits has been decided by the Tribunal vide order dated 05.04.2018 in the case of assessee.

We have heard the rival contentions and perused the record. The limited issue which arises in the present appeal is in respect of levy of penalty under section 271C of the Act. The assessee was held to have defaulted in deduction of tax at source on purchase of software licence as per provisions of section 9(1)(vi) of the Act. The Assessing Officer thus, held the assessee to be in default and charged tax under section 201(1) of the Act and interest under section 201(1A) of the Act.

The Tribunal in ITA No.1433/PUN/2014, relating to assessment year 2007-08, vide order dated 05.04.2018 held the assessee not to have defaulted in non-deduction of tax at source out of payment made for purchase of software from different entities. Consequently, the Tribunal held the assessee not to be in default under section 201(1) of the Act and also that there was no merit in charging interest under section 201(1A) of the Act. Once the demand under section 201(1) of the Act and interest under section 201(1A) of the Act has been deleted, then there is no merit in levy of penalty under section 271C of the Act. The CIT(A) however, decided the issue on merits whether penalty under section 271C of the Act is leviable even if the assessee is held to be in default under section 201(1) / 201(1A) of the Act. The Revenue is in appeal against the order of CIT(A) in this regard. However, since the dispute has been decided in favour of assessee, there is no merit in holding the assessee to be in default. We thus, dismiss the grounds of appeal raised by the Revenue.

In the result, the appeal of Revenue is dismissed.