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Income Tax Appellate Tribunal, MUMBAI BENCHES “A”, MUMBAI
Before: Shri Joginder Singh & Shri Rajendra
आदेश / O R D E R Per Joginder Singh (Judicial Member) The assessee is aggrieved by the impugned order dated 02/02/2015 of the Ld. First Appellate Authority, Mumbai, challenging imposition/confirmation of penalty of Rs.28,09,585/- u/s 271(1)(c) of the Income Tax Act, 1961 (hereinafter the Act).
During hearing of this appeal, Shri Rishav Shah, ld. Counsel for the assessee, contended that quantum appeal in the case of the assessee was decided in its favour vide order dated 08/07/2015, by the Tribunal (ITA No.1550/Mum/2012). The ld. Counsel also produced the photocopy of the order of the Tribunal. This factual matrix was not controverted by the Ld. DR, Shri Rajesh Kumar Yadav.
2.1. We have considered the rival submissions and perused the material available on record. In view of the above, we are reproducing hereunder the relevant portion from the aforesaid order of the Tribunal dated 08/07/2015 for ready reference and analysis:-
“This is an appeal filed by the assessee against the order of CIT(A) for the assessment year 2008-09.
2. The only grievance of the assessee relates to allowability of claim of deduction u/s.80IA(4)(iii) of the Act in respect of IT Park.
M/s Amenity Software Pvt. Ltd.
We found that in assessee’s own case for the assessment year 2009-10 and 2010-11, the Tribunal has held that IT Park of assessee is eligible for claim of deduction u/s.80IA(4) of the Act. The precise observation of the Tribunal was as under :-
“13. The undisputed fact is that the property in question is an I.T. Park, with all infrastructure facilities and services. This is not a simple building. The Ministry of Commerce and Industries, notifies certain building as I.T. Park only if various facilities and infrastructure, as specified by the Department, are provided. It is an undisputed fact that all the technical requirements, infrastructures, facilities and services are being provided in this building and it was only for this reason that not only the Ministry of Commerce & Industries, but also the CBDT notified the same as an I.T. Park which entitles the assessee to earn certain incentives. The intention of the assessee while purchasing the property is to participate in the I.T. Park and it cannot be said that the intention is only to invest in property. The Hon'ble Supreme Court in Shanbhu Investments P. Ltd. (supra), clearly lays down that what is to be seen was the primary object of the assessee while exploiting the property. If it is found by applying such test, that the main intention is to let out the property, it must be considered as rental income or income from property. In case it is found that the main intention is to exploit the property by way of complex commercial activities, in that event, it must be held as business income. In the case before us, the assessee is offering complex services by way of providing operation place in a notified I.T. Park, with all services and amenities such as infrastructure facilities, waiting room, conference room, valet parking, reception, canteen, 24 hours securities, internal facilities, high speed lift, power back-up, etc. Just because a sister concern incurred this expenditure and claims reimbursement from the assessee, it cannot be said that the facilities are not provided by the assessee. Whoever maintains them, the fact remains that it is the assessee who ultimately bears such expenditure for the services and undertakes to provide such services. The facilities are made available by the assessee to the person occupying the premises. Coming to the case laws in Saptarshi Services td. (supra), the Hon’ble Gujarat High Court held that the income earned from business centre is to be assessed under the head “Income From Business & Profession”. The Special Leave Petition filed by the Revenue against this judgment was rejected by the Hon'ble Supreme Court which is reported as 264 ITR (St.) 36. Coming to the decision of the Mumbai Bench of the Tribunal in Harvindarpal Mehta (supra), the Tribunal, in this decision, after considering the judgment in Shambhu Investments P. Ltd., held that the income earned from business centre is to be assessed under the head “Income From Business & Profession”. The decision of Mumbai Bench of the Tribunal in Shanaya Enterprises (supra) held that when the property is used for specific purposes and in the nature of providing complex services, the income is taxable under the head “Income From Business & Profession”. Applying the propositions laid down in these case laws, we hold that the property can be used only for a specific purpose i.e.,
M/s Amenity Software Pvt. Ltd.
I.T. operation and the assessee has provided complex service facilities and infrastructure for operating such business and on this factual matrix, we uphold the contention of the assessee that the income in question should be assessed under the head “Income From Business & Profession”. Consequently, we set aside the order passed by the Commissioner (Appeals) and allow the ground raised by the assessee.
14. Coming to grounds no.2 and 3, the Assessing Officer is directed to allow the claim of expenses as the disallowance was made only on the ground that the income is assessable under the head “House Property”. Consequent to our decision in ground no.1, we direct the Assessing Officer to allow both the expenditure claimed as well as the claim for deduction under section 80IA(4)(iii). Consequently, we set aside the order passed by the Commissioner (Appeals) and allow the ground no.2 and 3 raised by the assessee.”
5. As the facts and circumstances during the year under consideration are pari materia, respectfully following the aforesaid order of the Tribunal, we confirm the action of the CIT(A) for allowing deduction u/s.80IA(4) in respect of income from IT Park.”
4. As the facts and circumstances during the year under consideration are same, respectfully following the order of the Tribunal, we do not find any merit for declining of assessee’s claim of deduction u/s.80IA(4) of the Act in respect of its IT Park.
In the result, appeal of the revenue is dismissed.” 2.2. We find that the Tribunal, in the aforesaid order, on quantum addition, vide dated 08/07/2015 deleted the addition on the basis of which penalty was initiated/confirmed. In view of this factual matrix, we are of the view that penalty imposed u/s 271(1)(c) will not survive. Our view find support from the decision in K.C. Builders vs ACIT (2004) 265 ITR 562 (SC) and the ratio laid down in CIT vs S.P. Viz, 176 ITR 76 (Patna). Even otherwise, when the quantum addition is deleted, there remains no basis at all for levying the penalty for concealment or furnishing inaccurate particulars. The penalty cannot stand on its legs when addition on the basis of which the penalty was M/s Amenity Software Pvt. Ltd.
imposed remains no more in existence, thus, the appeal of the assessee is allowed and the ld. Assessing Officer is directed to delete the penalty.
Finally, the appeal of the assessee is allowed.
This order was pronounced in the open in the presence of ld. representatives from both sides at the conclusion of the hearing on 11/04/2017.