ITO, NEW DELHI vs. M/S. QUANTUM CODERS LTD., NEW DELHI

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ITA 176/DEL/2014Status: DisposedITAT Delhi27 May 2016AY 2007-083 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the CIT(A)'s order deleting the penalty. This was because the High Court had dismissed the Revenue's appeal against the ITAT's decision on the quantum appeal, rendering the penalty unsustainable.

What were the facts?

The assessee claimed deduction under Section 10A for the full year, but the STPI approval was granted mid-year. The AO restricted the deduction and initiated penalty proceedings. The CIT(A) deleted the penalty based on the ITAT's deletion of the addition in the quantum appeal.

What were the issues?

Whether penalty under Section 271(1)(c) can be levied when the addition in the quantum appeal has been deleted and the Revenue's appeal against that deletion is dismissed by the High Court.

Which sections of the Income-tax Act were involved?

Section 10A,Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH “F” NEW DELHI

For Appellant: Ms. Rakhi Bimal Sr DR
For Respondent: Shri Ved Jain CA
Hearing: 12/05/2016

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “F” NEW DELHI BEFORE SHRI S.V. MEHROTRA : ACCOUNTANT MEMBER AND SHRI C.M. GARG: JUDICIAL MEMBER Asstt. Yr: 2007-08 Income-tax Officer, Vs. quantum Coders Ltd., Ward-14(4), New Delhi. 501-502, Plot no. 1, DDA Bldg. Distt. Center, Janakpuri, New Delhi. PAN: AAaCQ 1197 M ( Appellant ) (Respondent) Appellant by : Ms. Rakhi Bimal Sr DR. Respondent by : Shri Ved Jain CA Date of hearing : 12/05/2016. Date of order : 27/05/2016. O R D E R PER S.V. MEHROTRA, A.M:

This is revenue’s appeal against the order dated 23.10.2013, passed by the ld. CIT(A)-XVII, New Delhi, relating to A.Y. 2007-08.

2.

Brief facts of the case are that during the year the assessee company was engaged in the business of software exports. It had claimed deduction of Rs. 38,98,220/- u/s 10A for the yer under assessment. The AO noticed that assessee company got approval from software Technology Parks of India (STPI) on 8.12.2006, whereas it had claimed deduction for the complte year viz. from 1.4.2006 to 31.3.2007. He pointed out that as per the approval from STPI dated 8.12.2006, letter of permission was valid for 3 years from its dae of issue within which the project was to be implemented and commercial production commenced. The AO, therefore, allowed deduction u/s 10A of Rs. 12,17,526/- for the period from 8.12.2006 to 31.3.2007 and disallowed the deduction claimed to the extent of Rs. 26,80,695/-(Rs. 38,98,220 – Rs. 12,17,526). He initiated penalty proceedings u/s 271(1)(c) and after considering the assessee’s submissions levied a penalty of Rs. 13,12,154/-.

3.

Ld. CIT(A) deleted the penalty by observing that in quantum appeal the ITAT vide its order dated 30.4.2013 had deleted the addition and therefore no ground for levy of penalty remained.

4.

Aggrieved the department is in appeal before us and has taken following grounds of appeal: “1. On the facts & in the circumstances of the case, the Ld. CIT(A) has erred in deleting the penalty of Rs. 13,12,134/- imposed by the assessing officer u/s 271( 1)( c) of the Act on the account of disallowance of deduction u/s 10A of the Act. 1.1 On the facts & in the circumstances of the case, the Ld. CIT(A) has erred in deleting the penalty of Rs. 13,12,134/- keeping in view the favorable decision made by the Hon'ble ITAT in respect of quantum appeal but ignoring the fact that Revenue is in appeal in the Hon'ble High Court against the said decision of the ITAT. Hence the issue has not attained its finality.

2. The appellant craves to be allowed to add any fresh grounds of appeal and/or delete or amend any of the grounds of appeal.

5.

At the time of hearing ld. counsel for the assessee referred to grounds of appeal

and pointed out that the department had specifically taken a ground that against Tribunal’s order in quantum, the matter was pending before Hon’ble High Court. He filed before us a copy of Hon’ble High Court’s decision dated 4.2.2014 in wherein the Hon’ble High Court has dismissed the department’s appeal and the review petition also filed by the department was dismissed on 1.8.2014. In view of these facts, the penalty levied by the revenue has no legs to stand. Accordingly, order of ld. CIT(A), deleting the penalty levied u/s 271(1)(c) is upheld.

6. In the result, revenue’s appeal is dismissed. Order pronouncement in open court on 27/05/2016.

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