RAYTHEON EBASCO OVERSEAS LTD,BANGALORE vs. DDIT (IT) 2(1), MUMBAI

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ITA 2609/MUM/2013Status: DisposedITAT Mumbai20 May 2016AY 1998-993 pages

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

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that since the assessee's main appeal regarding the taxability of the impugned receipt was allowed by the Tribunal, the penalty under Section 271(1)(c) would not survive. The penalty order was accordingly set aside.

What were the facts?

The assessee contested a penalty levied under Section 271(1)(c) of the Income Tax Act. The penalty was confirmed by the CIT(A) for the assessment year 1998-99.

What were the issues?

The primary issue was whether a penalty under Section 271(1)(c) could be sustained when the underlying assessment appeal had been decided in favour of the assessee.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, “L” BENCH, MUMBAI

Before: SHRI SANJAY ARORA, AM & SHRI RAMLAL NEGI, JM

For Appellant: Shri Dhanesh Bafna, Shri Jahir Chauhan
For Respondent: Shri Jahir Chauhan
Hearing: 20.5.2016

Order आदेश / O R D E R Per Sanjay Arora, A. M.: This is an Appeal by the Assessee contesting the confirmation of penalty u/s. 271(1)(c) of the Income Tax Act, 1961 (‘the Act’ hereinafter) by the Commissioner of Income Tax (Appeals)-11, Mumbai (‘CIT(A)’ for short) in the assessee’s case for the assessment year (A.Y.) 1998-99 vide order dated 28.2.2013.

2.

At the very outset, it was submitted by the ld. Authorized Representative (AR), the assessee’s counsel, Shri Dinesh Bafna, that the matter stands since settled in the assessee’s favour in-as-much as the Tribunal has, accepting the assessee’s case that the impugned receipt, i.e., against the services rendered, is not a fees for included services (FIS) as per the provisions of Article 12 of Double Taxation Avoidance (A.Y. 1998-99) Raytheon Ebasco Overseas Ltd. vs. Dy. DIT (IT) Agreement (DTAA) between India and USA, held that the same was not FTS, being linked inextricably to the setting up of the (power) project, and essentially in the nature of start-up services and sale of equipment. The twin test required to satisfy the condition of ‘make available’ specified in Article 12 afore-referred, as laid down in the decision in CIT vs. De Beers India Minerals (P.) Ltd. [2012] 346 ITR 467 (Kar), is not met. The impugned receipt is accordingly not taxable. Toward this, he would take us to the relevant part (para 6 onwards) of the tribunal’s order, placing a copy of the same on record (in dated 11.3.2016). The appeal of the assessee having been allowed by the tribunal thus, the penalty would not survive. The ld. DR conceded to this being the position.

3.

We have heard the parties, and perused the material on record. Without doubt, the assessee’s appeal agitating its’ assessment having been since allowed by the tribunal, no question of penalty u/s. 271(1)(c) of the Act survives. The impugned order is accordingly set aside, deleting the penalty. We may though clarify that if any subsequent stage the tribunal’s order, being appealable, is reversed or modified – to any extent, the Revenue shall; we having not decided the appeal on merits, be at liberty to move the tribunal for the restoration of the instant appeal for a decision on merits. We decide accordingly.

4.

In the result, the assessee’s appeal is allowed. प�रणामतः �नधा�रती क� अपील �वीकृत क� जाती है । Order pronounced in the open court on May 02, 2016

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