Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, IN THE INCOME TAX APPELLATE TRIBUNAL
Before: SHRI R.S. SYALBEFORE SHRI R.S. SYALBEFORE SHRI R.S. SYALBEFORE SHRI R.S. SYAL
ORDER ORDER ORDER ORDER
This appeal by the assessee is directed against the order dated 12.06.2014 passed by the ld. CIT(A) confirming penalty of `4,06,009/- imposed by the Assessing Officer u/s 271(1)(c) of the Income-tax Act, 1961 in relation to assessment year 2008-09.
Briefly stated, the facts of the case are that the assessee claimed deduction in respect of certain payments made to M/s Maersk India Pvt.Ltd. The Assessing Officer observed that such payments totalling `11,94,498/- were made without deduction of tax at source. He, therefore, invoked the provisions of Section 40(a)(ia) of the Act by holding that the assessee ought to have deducted tax at source. Resultantly, addition was made for the sum which constituted bedrock for the imposition of penalty u/s 271(1)(c) of the Act. The learned
2 ITA-4386/Del/2014 CIT(A) upheld this penalty. The assessee is aggrieved against the confirmation of this penalty.
After considering rival submissions and perusing relevant material on record, it is observed that the instant penalty has been imposed only in respect of disallowance u/s 40(a)(i) of the Act. The assessee entertained a bona fide belief about the non-deduction of tax at source from the amount paid to M/s Maersk India Pvt. Ltd. on the basis of a Circular, as per which, the foreign shipping companies and their agents were governed by the provisions of Section 172 and not by Section 194C of the Act. Though it is an admitted fact that the assessee made the payment to a resident but the fact remains that principal of M/s Maersk India Pvt. Ltd., being M/s A.P. Moller-Maersk A/S, Denmark, was given 100% DIT relief, copy of which letter issued by the office of Deputy Director of Income Tax (International Taxation) dated 23.04.2007, has been placed on record. These facts indicate that the assessee was under a bona fide belief that the amount paid to M/s Maersk India Pvt. Ltd. was not liable for deduction of tax at source. Be that as it may, I am concerned with the imposition and confirmation of penalty u/s 271(1)(c) of the Act which presupposes concealment of income or furnishing of inaccurate particulars of income. Here is a case in which the assessee neither concealed any income nor furnished inaccurate particulars. Deduction on account of M/s Maersk India Pvt.Ltd. was claimed after making due payments. The dispute is only about deduction or non-deduction of tax at source from payments to M/s Maersk India Pvt.Ltd. for which disallowance has been made u/s 40(a)(ia) of the Act. Under no circumstance can such a disallowance be brought within the ambit of Section 271(1)(c) of the Act. The assessee made a proper disclosure about the expense claimed by it as deduction which was neither bogus nor otherwise non-deductible but 3 ITA-4386/Del/2014 for the application of Section 40(a)(ia) of the Act. Overturning the impugned order, I order for the deletion of the instant penalty.
In the result, the appeal is allowed. Decision pronounced in the open Court on 21st October, 2015.