DDIT (IT) 2(1), MUMBAI vs. RELIANCE GLOBALCOMM LTD, MUMBAI

This appeal by the Revenue is preferred against the order of the Ld. CIT(A)-11,Mumbai dated 28.2.2013 pertaining to Assessment year 2007-08.

The sole grievance of the revenue is that the Ld. CIT(A) erred in deleting the penalty u/s. 271(1)(c) of the Act.

The roots for the levy of penalty lie in the assessment order dated 5.2.2010 made u/s. 143(3) r.w. Sect. 144C(3) of the Act. While scrutinizing the return of income, the Assessing Officer found that the assessee has received $21,64,114 from Videsh Sanchar Nigam Ltd on account of provisions of Standby Maintenance Activities. The AO further found that the assessee has claimed this amount as its income from normal ‘Business Activities’ and not ‘Fees for Technical Services’.

After considering the reply of the assessee, the AO completed the assessment by determining the total taxable income in respect of the impugned amount as fees for technical services.

The assessee carried the matter before the Ld. CIT(A) and the CIT(A) was convinced that this is not a fit case for the levy of penalty.

Before us, the Ld. Counsel for the assessee straight away drew our attention to the decision of the Tribunal in quantum proceedings and pointed out that the Tribunal has deleted the impugned disallowance/additions vide order dated 15.6.2015 in ITA No. 4685/M/2011.

The Ld. Departmental Representative could not bring any distinguishing decision in favour of the Revenue.

We have carefully perused the order of the Tribunal vide impugned assessment year in ITA No. 4685/M/2011. We find that the Tribunal at para-11 on page-12 of its order has followed earlier years proceedings and held that the receipt on account of stand by maintenance charges is not chargeable as fees for technical services within the scope of Sec. 9(1)(vii) of the Act and set aside the findings of the Ld. CIT(A).

Sublato fundaments credit Opus meaning – in the case the foundation is removed, super structure falls. As the impugned addition have been removed by the order of the Tribunal, the super structure, the levy of penalty falls.

In the result, the appeal filed by the Revenue is dismissed.