M/s. Adidas Sourcing Ltd., Gurgaon V. DCIT, New Delhi

CO 285/DEL/2015

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5392 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 3 month(s) 1 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 29-01-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 28-10-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Transfer pricing; Bonafide belief; Revised return; Reassessment proceedings
• Section: 271(1)(c); 45(2); 143(3); 234B; 147; 148; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : A , NEW DELHI BEFORE SHRI AMIT SHUKLA , JUDICIAL M EMBER AND SH RI O.P. KANT , ACCOUNTANT MEMBER ITA NO S .2667 & 2668 /DE L/ 2015 ASSESSMENT YEAR S : 2004 - 05 & 2007 - 08 DCIT, CIRCEL - 1(1)(1), INTL. TAXATION, NEW DELHI VS. M/S. ADIDAS SOURCING LTD., C/O - SRBC & ASSOCIATES LLP, 6 TH FLOOR, H.T. BLDG., 18 - 20 K.G. MARG, NEW DELHI PAN : AADCA7661D (APPELLANT) (RESPONDENT) AND C.O. NO.285/DEL/2015 [IN ITA NO .2667 /DEL/ 2015 ] ASSESSMENT YEAR S : 2004 - 05 M/S. ADIDAS SOURCING LTD., C/O - SRBC & ASSOCIATES LLP, GOLF VIEW CORPORATE TOWER - B, SECTOR - 42, SECTOR ROAD, GURGAON VS. DCIT, CIRCEL - 1(1)(1), INTL. TAXATION, NEW DELHI PAN : AADCA7661D (APPELLANT) (RESPONDENT) ASSESSEE BY NONE DEPARTMENT BY SHRI PRAVEEN KUMAR, SR.DR ORDER PER O.P. KANT, A .M. : OUT OF THE ABOVE CAPTIONED THREE APPEALS, THE APPEAL HAVING ITA NO. 2667/DEL/2015 FILED BY THE R EVENUE AND THE CROSS DATE OF HEARING 16.01.2019 DATE OF PRONOUNCEMENT 29.01.2019 2 ITA NO. 2667 & 2668/DEL/2015 & C.O. NO. 285/DEL/2015 OBJECTION , BEARING C.O. NO.285/D EL/2015 ARE ARISING FROM THE ORDER OF THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) - 42, NEW DELHI [IN SHORT THE LD. CIT(A) ] FOR ASSESSMENT YEAR 2004 - 05 IN RELATION TO QUANTUM OF ADDITIONS INVOLVED IN A SSESSMENT ORDER. THE APPEAL HAVING ITA NO. 2668/DEL/2015 HAS BEEN PREFERRED BY THE R EVENUE AGAINST THE ORDER PASSED BY THE LD. CIT(A) FOR ASSESSMENT YEAR 2007 - 08 IN RELATION TO PENALTY LEVIED FOR CONCEALMENT OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME. AS THE APPEALS ARE RELATED TO ONE ASSESSEE , HAVING IDENTICAL FACTS AND CIRCUMSTANCES, THESE WERE HEARD TOGETHER AND DISPOSED OF BY WAY OF THIS CONSOLIDATED ORDER FOR CONVENIENCE AND AVOIDING OF REPETITION OF FACTUAL DISCUSSION. ITA NO.2667/DEL /2015 & C.O. NO. 285/DEL/2015 2. THE GROUNDS OF APPEAL RAISED IN ITA NO. 2667/DEL/2015 BY THE R EVENUE AND THE GROUNDS RAI SED IN CROSS OBJECTION NO. 285/D EL/2015 BY THE ASSESSEE IN RESPECT OF THE ASSESSMENT YEAR 2004 - 05 ARE REPRODUCED AS UNDER: GROUNDS OF APPEAL: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN DETERMINING THE APPLICABLE DATE OF AGREEMENT OF BUYING AGENCY SERVICES. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN JUSTIFYING THE DIFFERENCE OF COST ALLOCATION. 3. ON THE FACTS AND CIRCUMSTANCES OF THECASE, THE CIT(A) HAS ERRED IN HOLDING THAT THE CONSIDERATION RECEIVED BY THE ASSESSEE FROM AIMPL UNDER THE BUYING AGENCY SERVICES AGREEMENT IS NOT IN NATURE OF FEE FOR TECHNICAL SERVICES U/S 9(1)(VII ) OF THE ACT AND THEREFORE, NO TAXABLE U/S 115A OF THE ACT. 3 ITA NO. 2667 & 2668/DEL/2015 & C.O. NO. 285/DEL/2015 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED BY DELETING INTEREST U/S 234B OF THE IT ACT. 5. THE APPELLANT CRAVES TO ADD, AMEND, MODIFY, OR ALTER ANY GROUNDS OF APPEAL AT TH E TIME OR BEFORE THE HEARING OF THE APPEAL. G ROUNDS OF CROSS OBJECTION. THE FOLLOWING GROUNDS OF CROSS OBJECTIONS ARE MUTUALLY EXCLUSIVE AND WITHOUT PREJUDICE TO EACH ANOTHER. 1 . THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) [ CIT(A) ] AND/OR LD. ASSESSING OFFICER ( ASSESSING OFFICER ) GROSSLY ERRED ON FACTS AND IN LAW IN AFFIRMING LEGALITY AND VALIDITY OF INITIATION OF REASSESSMENT PROCEEDINGS UNDER SECTION 147/148 OF THE INCO ME TAX ACT, 1961 ( ACT ) FOR THE RELEVANT ASSESSMENT YEAR. 1 . 1 THAT LD. CIT(A)/AO OUGHT TO HAVE APPRECIATED THAT NO NEW MATERIAL OR INFORMATION HAD COME INTO THE POSSESSION OF LD. ASSESSING OFFICER NOR THERE IS ANY ALLEGATION THAT THERE IS FAILURE TO DISCLOSED FULLY AND TRULY ALL MATERIAL FACTS IN THE RETURN OF INCOME TO JUSTIFY INITIATION OF REASSESSMENT PROCEEDINGS FOR THE RELEVANT ASSESSMENT YEAR. THE ABOVE GROUNDS ARE WITHOUT PREJUDICE TO EACH OTHER. THE APPELLANT CRAVES LEAVE TO ALTER, AMEND OR WITHDRAW ALL OR ANY OF THE GROUNDS OF CROSS - OBJECTION CONTAINED HEREIN OR ADD ANY FURTHER GROUNDS AS MAY BE CONSIDERED NECESSARY EITHER BEFORE OR DURING THE HEARING. 3. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSESSEE, ADIDAS SOURCING LTD (ASL) , IS A NON - R ESIDENT COMPANY INCORPORATED UNDER THE LAWS OF THE HONG KONG. THE ASSESSEE COMPANY PROVIDED BUYING AGENCY SERVICES TO ITS RELATED COMPANY ADIDAS MARKETING PRIVATE LIMITED (AIMPL) AND OTHER UNRELATED CUSTOMERS. THE COMPANY ALSO PROVIDED MARKETING AND ADMINI STRATIVE SUPPORT TO 4 ITA NO. 2667 & 2668/DEL/2015 & C.O. NO. 285/DEL/2015 AIMPL AND OTHER GROUP COMPANIES. THE ASSESSEE FILED RETURN OF INCOME ON 30/03/200 6 DECLARING TOTAL INCOME OF RS.13, 11 , 540/ - WHICH INCLUDED REIMBU RSEMENT OF MARKETING EXPENSES (RS.8,17,970); TAX BORNE BY AIMPL (RS.2,06, 976 / - ) AND INTEREST I NCOME FOR DELAYED PAYMENTS (RS.2,86, 592/ - ). IN THE CASE OF THE ASSESSEE FOR ASSESSMENT YEAR 2007 - 08 , THE BUYING AGENCY COMMISSION RECEIVED BY THE ASSESSEE FOR SOURCING OF GOODS FOR INDIAN ENTITIES WAS HELD AS TAXABLE IN INDIA AS FEE FOR TECHNICAL SERVICES(FTS) BY THE ASSESSING OFFICER AND IN VIEW OF THE SAME BUYING AGENCY COMMISSION RECEIVED BY THE ASSESSEE IN THE YEAR UNDER CONSIDERATION, THE ASSESSING OFFICER REOPEN ED THE ASSESSMENT PROCE EDING UNDER SECTION 147 OF THE INCOME - TA X A CT, 1961 (IN SHORT THE A CT) BY WAY OF ISSUE OF NOTICE DATED 30/03/2011 UNDER SECTION 148 OF THE A CT. THE ADDITIONS MADE IN REASSESSMENT COMPLETED ON 15/04/2013 BY THE ASSESSING O FFICER INCLUDED ADDITION OF RS.62,46, 552/ - FOR BUYING A GENCY COMMISSION I NCOME AND RS.1,75, 425/ - FOR DIFFERENCE IN RECEIPT ON ACCOUNT OF COST ALLOCATION REPORTED IN RETURN OF INCOME VIS - - VIS REPORTED IN TRANSFER PRICING CE RTIFICATE IN FORM NO. 3 CEB OF INCOME - TAX FORMS. ON FURTHER APPEAL, THE LD. CIT(A) REJECTED THE OBJECTION S OF THE ASSESSEE AGAINST INVOKING JURISDI CTION UNDER SECTION 147 OF THE A CT, HOWEVER DELETED ADDITION OF BUYING AGENCY COMMISS ION FOLLOWING THE ORDER OF THE INCOME - TAX A PPELLATE T RIBUNAL (IN SHORT THE T RIBUNAL ) FOR ASSESSMENT YEAR 2007 - 08. THE ADDITION I N RELATION TO DIFFERENCE OF COST ALLOCATION WAS ALSO DELETED AFTER FACTUAL VERIFICATION OF THE RETURN OF INCOME AND FORM NO. 3 CEB. AGGRIEVED, THE R EVENUE IS IN APPEAL AGAINST THE DELETION OF THE ADDITIONS, WHEREAS THE ASSESSEE IS IN CROSS 5 ITA NO. 2667 & 2668/DEL/2015 & C.O. NO. 285/DEL/2015 OBJECTION AGAINST UPHOLDING THE VALIDITY OF INITIATION OF REASSESSMENT PROCEEDING UNDER SECTION 147 OF THE A CT. 4. AT THE OUTSET, WE MAY LIKE TO MENTION THAT NEITHER ANYONE APPEARED ON BEHALF THE ASSESSEE DESPITE NOTIFYING THE DATE OF HEARING NOR AN APPLICATION FOR ADJOURNMENT WAS FILED. THE APPEAL BEING OLD AND NON - COMPLIANCE BY THE ASSESSEE, IT WAS FELT THAT THE ASSESSEE IS NOT INTERES TED IN PURSUING THE APPEALS AND, THUS , W E PROCEEDED TO HEAR THE APPEAL, EX - PARTY QUA THE ASSESSEE. 5. THE LD. DR RELIED ON THE ORDER OF THE ASSESSING OFFICER, THOUGH HE COULD NOT CONTROVERT THAT ISSUE IN DISPUTE INVOLVED IS COVERED BY THE DECISION OF THE T RIBUNAL IN THE CASE OF THE ASSESSEE ITSELF FOR ASSESSMENT YEAR 2007 - 08. 6. WE HAVE HEARD THE SUBMISSION OF THE LD. DR AND PERUSED THE ORDER OF THE LOWER AUTHORITIES AND ALSO THE ORDER OF THE TRIBUNAL IN ITA NO. 5300/ D EL/2010 FOR ASSESSMENT YEAR 2007 - 08 IN THE CASE OF THE ASSESSEE ITSELF. 7. AS FAR AS APPEAL OF THE R EVENUE IS CONC ERNED, ON THE FIRST ISSUE OF BUYING AGENCY COMMISSION , THE ASSESSING OFFICER HIMSELF HAS FOLLOWED THE ORDER OF HIS PREDECESSOR FOR ASSESSMENT YEAR 2007 - 08. THE RELEVANT PART OF THE ORDER OF THE ASSESSING OFFICER IS REPRODUCED AS UNDER: 6. I HAVE CONSID ERED THE CONTENTIONS RAISED BY THE ASSESSEE VIDE ITS VARIOUS REPLIES INCLUDING THE REPLY DATED 20.07.2012 AND FIND THAT THESE ARE SIMILAR TO THE CONTENTIONS RAISED DURING THE ASSESSMENT PROCEEDINGS FOR AY 2007 - 08. AS SUCH, GIVEN THAT THE FACTUAL MATRIX OF THE CASE AS WELL AS THE BUSINESS MODEL DURING THE SUBJECT ASSESSMENT YEAR IS CLEARLY THE SAME AS IN AY 2007 - 08, AND GIVEN THAT THE CONTENTIONS RAISED BY THE ASSESSEE ARE ALSO SIMILAR TO THOSE RAISED DURING AY 2007 - 08,1 FIND THAT THE ISSUES INVOLVED HAVE BE EN ADEQUATELY DISCUSSED BY THE AOS IN THE ASSESSMENT ORDER FOR AY 2007 - 08 .. 6 ITA NO. 2667 & 2668/DEL/2015 & C.O. NO. 285/DEL/2015 7.1 FURTHER , IN PARA 7 OF THE ORDER, HE HIMSELF HAS ACCEPTED THAT ISSU E HAS BEEN DECIDED AGAINST THE R E VENUE BY THE T RIBUNAL (SUPRA), BUT FOR KEEPING THE ISSUE ALIVE TILL FINALIZATION FROM HIGHER COURT, THE ADDITION WAS MADE. 7.2 THE LD. CIT(A) ALSO AFTER CONSIDERING THE DETAILED SUBMISSION OF THE ASSESSEE ALLOWED THE APPEAL OF THE ASSES SEE FOLLOWING THE ORDER OF THE T RIBUNAL FOR ASSESSMENT YEAR 2007 - 08. WE NOTE THAT THE T RIBUNAL (SUPRA) AFTER CONSIDERING DETAILED SUBMISSION OF BOTH THE PARTIES AND VARIOUS DECISIONS OF THE COURTS ON THE ISSUE IN DISPUTE HELD THAT BUYING AGENCY COMMISSION CANNOT BE CONSIDERED AS FEE FOR TECHNICAL SERVICES. THE RELEVANT FINDING OF THE T RIBU NAL IS REPRODUCED AS UNDER: WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE SUBMISSIONS MADE BY THE PARTIES IN DETAIL. THE MAIN ISSUE FOR CONSIDERATION IS WHETHER THE CONSIDERATION RECEIVED BY THE ASSESSEE FROM AIMPL UNDER THE BUYING AGENCY SERVICES AGREEMENT ( BAS ) COULD BE CHARACTERIZED AS FEES FOR TECHNICAL SERVICES UNDER SECTION 9(L)(VII) OF THE ACT AND ACCORDINGLY BY TAXED UNDER THE PROVISIONS OF SECTION 115A OF THE ACT. EXPLANATION 2 TO SECTION 9(1 )(VII) DEFINES FEES FOR TECHNICAL SERVICES AS UNDER: EXPLANATION 2. FOR THE PURPOSES OF THIS CLAUSE, 'FEES FOR TECHNICAL SERVICES' MEANS ANY CONSIDERATION (INCLUDING ANY LUMP SUM CONSIDERATION) FOR THE RENDERING OF ANY MANAGERIAL TECHNICAL OR CONSULTANCY SERVICES (INCLUDING THE PROVISION OF SERVI CES OF TECHNICAL OR OTHER PERSONNEL) BUT DOES NOT INCLUDE CONSIDERATION FOR ANY CONSTRUCTION, ASSEMBLY, MINING OR LIKE PROJECT UNDERTAKEN BY THE RECIPIENT OR CONSIDERATION WHICH WOULD BE INCOME OF THE RECIPIENT CHARGEABLE UNDER THE HEAD 'SALARIES'. 5.1. I T IS EVIDENT THAT FOR A PARTICULAR STREAM OF INCOME TO BE CHARACTERIZED AS FEES FOR TECHNICAL SERVICES , IT IS NECESSARY THAT SOME SORT OF MANAGERIAL , TECHNICAL OR CONSULTANCY SERVICES SHOULD HAVE BEEN RENDERED IN CONSIDERATION. THE TERMS MANAGERIA L , TECHNICAL OR CONSULTANCY DO NOT FIND A DEFINITION IN THE INCOME - TAX 7 ITA NO. 2667 & 2668/DEL/2015 & C.O. NO. 285/DEL/2015 ACT, 1961 AND IT IS A SETTLED LAW THAT THEY NEED TO BE INTERPRETED BASED ON THEIR UNDERSTANDING IN COMMON PARLANCE. LET US EXAMINE THE MEANING OF EACH OF THESE WORDS: MANAGERIAL : THE DELHI HIGH COURT IN THE CASE OF J.K. (BOMBAY) LTD. VS. CBDT & ANR. (1979) 118 ITR 312 (DEL) REFERRED TO AN ARTICLE ON MANAGEMENT SCIENCES IN ENCYCLOPAEDIA 747, WHEREIN IT IS STATED THAT THE MANAGEMENT IN ORGANIZATIONS INCLUDE AT LEAST THE FOLLOWING: (A) DISCOVERING, DEVELOPING, DEFINING AND EVALUATING THE GOALS OF THE ORGANIZATION AND THE ALTERNATIVE POLICIES THAT WILL LEAD TOWARDS THE GOALS; (B) GETTING THE ORGANIZATION TO ADOPT THE POLICIES; (C) SCRUTINIZING THE EFFECTIVENESS OF THE POLICIES THAT A RE ADOPTED AND (D) INITIATING STEPS TO CHANGE POLICIES WHEN THEY ARE JUDGED TO BE LESS EFFECTIVE THAN THEY OUGHT TO BE. MANAGEMENT THUS PERVADES ALL ORGANIZATIONS. TECHNICAL : IN THE CASE OF SKYCELL COMMUNICATIONS LTD. VS. DCIT (251 TTR 53) (MADRAS), THE HON BLE HIGH COURT HAS HELD THAT THE POPULAR MEANING ASSOCIATED WITH THE WORD TECHNICAL IS INVOLVING OR CONCERNING APPLIED AND INDUSTRIAL SCIENCE . CONSULTANCY : CONSULTANCY IS GENERALLY UNDERSTOOD TO MEAN AN ADVISORY SERVICES. FURTHER, IT MAY BE FAIR TO STATE THAT NOT ALL KIND OF ADVISORY COULD QUALIFY AS TECHNICAL SERVICES. FOR ANY CONSULTANCY TO BE TREATED AS A TECHNICAL SERVICES, IT WOULD BE NECESSARY THAT AN TECHNICAL ELEMENT IS INVOLVED IN SUCH ADVISORY. THUS, THE CONSULTANCY SHOULD BE RENDERED BY SOMEONE WHO HAS SPECIAL SKILLS AND EXPERTISE IN RENDERING SUCH ADVISORY. 5.2. OUR ATTENTION WAS ALSO BROUGHT TO THE DECISION OF THE MUMBAI BENCH OF THE ITAT IN THE CASE OF LINDE AG VS ITO (62 ITD 330) WHEREIN IT IS OBSERVED THAT: 'IN THE DEFINITION FOR FEES FOR TECHNICAL SERVICES THE CONSIDERATION HAS TO BE FOR RENDERING TECHNICAL , MANAGERIAL OR CONSULTANCY SERVICES. BY MAKING PURCHASE FOR THE INDIAN CONCERN NO CONSULTANCY SERVICES IS PROVIDED AS NO ADVISE IS GIVEN TO THEM. IT IS A SIMPLE PROCUREMENT OF EQUIPMENTS BY THE ASSESSEE FOR THEM. IT IS ALSO NOT A TECHNICAL SERVICE IN THE SENSE OF TECHNICAL EDUCATION IS CONCERNED WITH TEACHING APPLIED SCIENCES AND SPECIAL TRAINING IN APPLIED SCIENCES, TECHNICAL PROCEDURES AND SKILLS REQUIRED FOR PRACTICE OF TRADE OR PROFESSION, ESPECIALLY THOSE INVOLVING THE USE OF MACHINERY OR SCIENTIFIC E QUIPMENT. IF THE INFORMATION IS GIVEN FOR THE USE OF THE MACHINERY OR SCIENTIFIC EQUIPMENT IT WOULD PARTAKE THE CHARACTER OF FEES FOR TECHNICAL SERVICES HUT WHEN IT IS ONLY FOR THE PROCUREMENT OF THE SCIENTIFIC EQUIPMENTS IT WOULD BE A 8 ITA NO. 2667 & 2668/DEL/2015 & C.O. NO. 285/DEL/2015 SIMPLE SERVICE OF CO MMERCIAL AND INDUSTRIAL NATURE. IT, THEREFORE, CANNOT BE TERMED AS A TECHNICAL SENDEE FOR WHICH THE PROCUREMENT FEES CHARGED BY THE ASSESSEE CANNOT BE A CONSIDERATION FOR TECHNICAL SERVICES. THE THIRD CATEGORY IS MANAGERIAL SERVICE. THE MANAGERIAL SERVICE, AS AFORESAID, IS TOWARDS THE ADOPTION AND CARRYING OUT THE POLICIES OF A ORGANIZATION . IT IS OF PERMANENT NATURE FOR THE ORGANIZATION AS A WHOLE. IN MAKING THE STRAY PURCHASES, IT CANNOT BE SAID THAT THE ASSESSEE HAS BEEN MANAGING THE AFFAIRS OF THE INDIA N CONCERN OR WAS RENDERING MANAGERIAL SERVICES TO THE ASSESSEE. 5.3. THE COPIES OF THE BUYING AGENCY SERVICES AGREEMENT ARE PLACED ON RECORD, THE NATURE OF SERVICES HAVE NOT BEEN DISPUTED. DEPARTMENT HAS ONLY INTERPRETED THEM TO BE AMOUNTING TO FEES F OR TECHNICAL SERVICES , IN OUR CONSIDERED OPINION THESE ARE NOT TECHNICAL SERVICES BUT ROUTINE SERVICES OFFERED IN THE PROCUREMENT ASSISTANCE . THE AGREEMENTS DEMONSTRATE THAT THE ASSESSEE WAS TO RECEIVE COMMISSION FOR PROCURING THE PRODUCTS OF AIMPL AND R ENDERING INCIDENTAL SERVICES FOR PURCHASES. THE PRIMARY SERVICES PROVIDED BY THE ASSESSEE TO AIMPL IN TERMS OF THE BUYING AGENCY SERVICES AGREEMENT ARE AS UNDER: (I) CO - ORDINATE BETWEEN AIMPL AND MANUFACTURERS FOR THE PURPOSE OF BUYING THE MERCHANDISE, (I I) ASSISTING IN NEGOTIATIONS, (III) ASSIST IN PROCUREMENT OF SAMPLES AND SENDING THEM TO AIMPL, 23(IV) MAINTAIN RELATIONSHIP WITH THE MANUFACTURERS AND SEARCH FOR NEW MANUFACTURERS, (V) SUPPLY CREDIT REPORTS AND OTHER MARKETING INFORMATION CONCERNING MANUF ACTURERS AND (VI) PROVIDE TRANSLATION SERVICES AS REQUIRED FOR COMMUNICATION BETWEEN AIMPL AND THE MANUFACTURERS. 5.4. APPLYING THE PRINCIPLES AND CASE LAWS DISCUSSED ABOVE TO THE FACTS OF THE PRESENT CASE, WE ARE OF THE VIEW THAT THE SERVICES RENDERED BY THE ASSESSEE IN THIS CASE WERE PURELY IN THE NATURE OF PROCUREMENT SERVICES AND CANNOT BE CHARACTERIZED AS MANAGERIAL TECHNICAL OR CONSULTANCY SERVICES. ACCORDINGLY, THE CONSIDERATION RECEIVED BY THE ASSESSEE WAS APPROPRIATELY CLASSIFIED AS COMMISSI ON AS AGAINST FEES FOR TECHNICAL . 7.3 IN VIEW OF THE ABOVE, RESPECTFULL Y FOLLOWING THE FINDING OF THE T RIBUNAL (SUPRA), THE ISSUE IN DISPUTE IS DECIDED IN FAVOUR OF THE ASSESSEE AND THE GROUND S NO. 1 AND 3 OF THE APPEAL OF THE R EVENUE ARE DISMISSED. 9 ITA NO. 2667 & 2668/DEL/2015 & C.O. NO. 285/DEL/2015 8. ON THE ISSUE OF ADDITION OF RS. 1,75,425/ - ON ACCOUNT OF DIFFERENCE OF COST ALLOCATION, THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE HAS DELETED THE ADDITION. THE RELEVANT FINDING OF THE LD. CIT(A) IS REPRODUCED AS UNDER: 15.0 FINDING: I HAVE DULY CONSIDERED SUBMISSIONS OF THE APPELLANT. IT IS SEEN THAT THE APPELLANT HAS IN ITS RETURN OF INCOME, DECLARED MARKETING EXPENSES REIMBURSEMENTS UNDER TWO HEADS AS RS 8,17,970 AND RS 2,06,976. THIS SHOWS THAT MARKETING EXPENSES HAVE BEEN GROSSED UP WITH TAXES PAID BY ALMPL TO THE TUNE OF RS. 2,06,976. THE AO HAS CONSIDERED THE FIGURE OF RS. 9,93,395 AS REPORTED IN 3CEB AND HAS ADDED DIFFERENCE BETWEEN RS. 9,93,395 AND RS. 8,17,970 IE. 1,75,425 TO THE ASSESSED INCOME. THE APPELLANT HAS EXPLAINED T HAT FIGURE OF MARKETING EXPENSES REIMBURSEMENT WAS INCORRECTLY REPORTED IN 3CEB WHEREAS THE ACTUAL FIGURE WAS RS. 10,24,946 (8,17,970 + 2,06,976). CONSIDERING THIS, IT IS CLEAR THAT THE APPELLANT HAS PROPERLY DECLARED ITS MARKETING EXPENSES REIMBURSEMENT A FTER GROSSING UP. THE AO IS THEREFORE DIRECTED TO DELETE THE ADDITION OF RS. 1,75,425. THE GROUND OF APPEAL IS ACCORDINGLY ALLOWED. 8.1 IN OUR OPINION, THE MATTER IS OF FACTUAL VERIFICATION ONLY. THE ASSESSEE IN THE RETURN OF INCOME FILED HAS OFFERED MAR KETING EXPENSES REIMBURSEMENT OF RS.8,17, 970/ - AND TAXES BORNE BY AIMPL AMOUNTING TO RS.2,06, 976/ - A ND GROSSED UP THE AMOUNT TO RS.10,24, 946/ - . WHEREAS THE ASSESSING OFFIC ER CONSIDERED THE FIGURE OF RS.9,93, 395/ - REPORTED AS MARKETING EXPENSES REIMBURSEMENT IN FORM NO. 3 CEB AND MADE ADDIT ION FOR THE DIFFERENCE AMOUNT (9,93,395 8,17,970) = RS. 1,75,425/ - . THE ASSESSEE EXPLAINED THE AMOUNT OF MARKETING EXPENSES REIMBURSEMENT AND TAX COMPONENT BORNE BY THE INDIAN ENTITY AND OFFERED BOTH THE AMOUNT FOR TAX. IN VIEW OF THE ABOVE FACTUAL FINDING, WHICH HAS NOT BEEN CONTROVERTED BY THE LD. DR, WE DO NOT FIND ANY ERROR IN THE ORDER OF THE LD. CIT(A) ON TH E ISSUE IN 10 ITA NO. 2667 & 2668/DEL/2015 & C.O. NO. 285/DEL/2015 DISPUTE, ACCORDINGLY , WE UPHOLD THE SAME AND DISMISS THE GRO UND NO. 2 OF THE APPEAL OF THE R EVENUE. 9. THE G ROUND NO. 4 BEING CONSEQUENTIAL AND G ROUND NO. 5 BEING GENERAL IN NATURE, WE ARE NOT REQUIRED TO ADJUDICATE UPON THE SAME. 10. AS REGARD THE CROSS OBJECTION OF THE ASSESSEE, WE FIND THAT SAME HAVE BEEN FILED BY THE AUTHORISED SIGNATORY OF THE COMPANY. WE FIND THA T AS PER SECTION 253(4) OF THE A CT, THE CROSS OBJECTION TO THE APPEAL HAVE TO BE VERIFIED IN THE PRESCRIBED MANNER. THE R ULE 47(2) OF INCOME - TAX R ULES, 1962 HAS PRESCRIBED THE FORM AND VERIFICATION OF CROSS OBJECTION, AS UNDER: FORM O F APPEAL AND MEMORANDUM OF CROSS - OBJECTIONS TO APPELLATE TRIBUNAL. 47. (1) .. (2) A MEMORANDUM OF CROSS - OBJECTIONS UNDER SUB - SECTION (4) OF SECTION 253 TO THE APPELLATE TRIBUNAL SHALL BE MADE IN FORM NO. 36A [, AND WHERE THE MEMORANDUM OF CROSS - OBJECTION IS MADE BY THE ASSESSEE, THE FORM OF MEMORANDUM OF CROSS - OBJECTIONS, THE GROUNDS OF CROSS - OBJECTIONS AND THE FORM OF VERIFICATION APPENDED THERETO SHALL BE SIGNED BY THE PERSON SPECIFIED IN 1 [SUB - RULE (3)] (2) OF RULE 45]. 1 0 . 1 THE R ULE 45(2) AND 45(3) HAS PRESCRIBED VERIFICATION BY A PERSON, WHO IS REQUIRED TO FURNISH RETURN OF INCOME. THE SECTION 140 OF THE ACT HAS PROVIDED THE PERSON AUTHORISED TO FILE RETURN OF INCOME. THE RELEVANT PART OF THE SAID SECTION RELATED TO COMPANIES IS REPRODUCED AS UNDER: RETURN BY WHOM TO BE VERIFIED. 140. THE RETURN UNDER SECTION 115WD OR SECTION 139 SHALL BE VERIFIED (A) (B) . (C) IN THE CASE OF A COMPANY, BY THE MANAGING DIRECTOR THEREOF, OR WHERE FOR ANY UNAVOIDABLE REASON SUCH MANAGING DIRECTOR IS NOT ABLE TO VERIFY 11 ITA NO. 2667 & 2668/DEL/2015 & C.O. NO. 285/DEL/2015 THE RETURN, OR WHERE THERE IS NO MANAGING DIRECTOR, BY ANY DIRECTOR THEREOF : PROVIDED THAT WHERE THE COMPANY IS NOT RESIDENT IN INDIA, THE RETURN MAY BE VERIFIED BY A PERSON WHO HOLDS A VALID POWER OF ATTORNEY FROM SUCH COMPANY TO DO SO, WHICH SHALL BE ATTACHED TO THE RETURN 80 : PROVIDED FURTHER THAT, (A) WHERE THE COMPANY IS BEING WOUND UP, WHETHER UNDER THE ORDERS OF A COURT OR OTHERWISE, OR WHERE ANY PERSON HAS BEEN APPOINTED AS THE RECEIVER OF ANY ASSETS OF THE COMPANY, THE RETURN SHALL BE VERIFIED BY THE LIQUIDATOR REFERRED TO IN SUB - SECTION (1) O F SECTION 178 ; (B) WHERE THE MANAGEMENT OF THE COMPANY HAS BEEN TAKEN OVER BY THE CENTRAL GOVERNMENT OR ANY STATE GOVERNMENT UNDER ANY LAW, THE RETURN OF THE COMPANY SHALL BE VERIFIED BY THE PRINCIPAL OFFICER THEREOF; [ OR ] [ (C) WHERE IN RESPECT OF A COMPANY, AN APPLICATION FOR CORPORATE INSOLVENCY RESOLUTION PROCESS HAS BEEN ADMITTED BY THE ADJUDICATING AUTHORITY UNDER SECTION 7 OR SECTION 9 OR SECTION 10 OF THE INSOLVENCY AND BANKRUPTCY CODE, 2016 (31 OF 2016), THE RETURN SHALL BE VERIFIED BY THE INSOLVENCY PROFESSIONAL APPOINTED BY SUCH ADJUDICATING AUTHORITY. 1 0.2 THUS , IT IS EVIDENT THAT THE COMPA NY BEING NON - RESIDENT ENTITY , THE CROSS OBJECTION MIGHT HAVE BEEN VERIFIED BY PERSON HOLDING A VALID POWER OF ATTORNEY FROM SUCH COMP ANY AND SAID POWER OF ATTORNEY WAS REQUIRED TO BE ATTACHED WITH THE SAID CROSS OBJECTION. 10.3 BUT ON THE PERUSAL OF THE CROSS OBJECTION, IT IS FOUND THAT IT HAS BEEN FILED BY AUTHORISED SIGNATORY WITHOUT ENCLOSING A VALID POWER OF ATTORNEY, AND THUS THE CROSS OBJECTION IS NOT MAINTAINABLE, ACCORDINGLY , IT IS DISMISSED IN LIMINE. 11. IN RESULT, THE APPEAL OF THE R EVENUE IS DISMISSED WHEREAS CROSS OBJECTION FILED BY THE ASSESSEE IS NOT ADMITTED . 12 ITA NO. 2667 & 2668/DEL/2015 & C.O. NO. 285/DEL/2015 ITA NO. 2668/DEL/2015 12 . NOW, WE PROCEED TO DECIDE THE APPEAL BEARING ITA NO. 2668/DEL/2015 FOR ASSESSMENT YEAR 2007 - 08. THE GROUNDS RAISED IN ITA NO. 2668/D EL/2015 ARE REPRODUCED AS UNDER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN DELETING THE PENALT Y IMPOSED BY THE AO U/S 271(1)(C) OF THE ACT. 2. THE APPELLANT CRAVES TO ADD, AMEND, MODIFY, OR ALTER ANY GROUNDS OF APPEAL AT THE TIME OR BEFORE THE HEARING OF THE APPEAL. 13 . BRIEFLY STATED FACTS OF THE CASE ARE THAT IN THE ASSESSMENT ORDER DATED 03/09 /2010 COM PLETED UNDER SECTION 143(3) R.W.S. 144C(1) OF THE A CT AFTER COMP LYING THE DIRECTION OF THE LD. DISPUTE R ESOLUTION P ANEL(DRP), THE INCOME WAS A SSESSED AT RS. 6,11,58,283/ - ALONGWITH INITIA TION OF PENALTY UNDER SECTION 271 ( 1 )(C) OF THE ACT. ON FURTHER APPEAL, AGAINST THE QUANTUM ADDITIONS, THE T RIBUNAL DELETED PART OF THE ADDITIONS. AFTER GIV ING EFFECT OF THE ORDER OF THE T RIBUNAL , THE ASSESSING OFFICER R EVISE D THE INCOME TO RS.4,98,03, 320/ - . THE ASSESSING OFFICER ISSUED SHOW CAUSE FOR PENALTY IN RELATION TO THE ADDITION OF RS.1,01,39, 303/ - RELATED TO THE REIMBURSEMENT AND AMOUNT OF RS.3,69,47, 415/ - RELATED TO REIMBURSEMENT FOR MANAGEMENT SERVICES. ON THE ISSUE OF RE IMBURSEMENT OF RS.1,01,39, 303/ - , THE ASSESSEE EXPLAINED THAT I SSUE IS DEBATABLE/CONTENTIOUS AND NOT TAXABLE, HOWEVER TO BUY PEACE OF MIND AND AVOID PROLONGED LITIGATION, IT OFFERED VOLUNTARY TO TAX IN THE REVISE D RETURN OF INCOME, WHICH HAS NOT BEEN NOTICED BY THE ASSESSING OFFICER. THE ASSESSING OFFICER REJECTED THI S CONTENTION OBSERVING THAT A BELATED RETURN OF INCOME CANNOT BE REVISED. ACCORDING TO THE ASSESSING 13 ITA NO. 2667 & 2668/DEL/2015 & C.O. NO. 285/DEL/2015 OFFICER , THE EXPLANATION OF THE ASSESSEE NOT BEING BONAFIDE , IT WAS NOT ACCEPTABLE. THE ASSESSEE ALSO CONTENDED THAT INFORMATION IN RELATION TO REIMBURSEME NT OF COSTS INCURRED ON THE HALF OF AIMPL WAS PROVIDED IN THE NOTES TO COMPUTATION FILED ALONGWITH THE RETURN OF INCOME AND THUS THERE WAS NO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THIS CONTENTION WAS ALSO REJECTED BY THE ASSESSING OFFICER THAT A MINISCULE PERCENTAGE OF RETURNS OF INCOME ARE TAKEN FOR SCRUTINY AND HAD THE ASSESSEE S CASE NOT TAKEN FOR SCRUTINY, THERE WOULD HAVE BEEN AN OBVIOUS REVENUE LOSS TO THE GOVERNMENT. THE ASSESSEE S EXPLANATION REGARDING ADDITION OF RS. 3,69,47, 415/ - IN RESPECT OF REIMBURSEMENT OF MANAGEMENT SERVICES ( MARKETING AND ADMINISTRATIVE SUPPORT FEE), OF AN INADVERTENT ERROR DUE TO CALCULATION MISTAKE AND SAME RECTIFIED BY WAY OF REVISE D RETURN OF INCOME OFFERING THE SHORTFALL TO TAX, WAS ALSO NOT ACCEPTED BY THE ASSESSING OFFICER ON THE GROUND THAT HAD THE ASSESSEE S CASE NOT TAKEN UP FURTHER SCRUTINY, THEN THERE WOULD HAVE BEEN AN OBVIOUS REVENUE LOSS TO THE GOVERNMENT. IN THIS MANNER, THE EXPLANATION OF THE ASSESSEE WAS REJECTED AS NOT BEING BONA FIDE AND PENALTY UNDER SECTION 271(1) (C) OF THE A CT , AMOUNTING TO RS. 54,90,958/ - EQUIVALENT TO THE AMOUNT OF TAX SOUGHT TO BE EVADED WAS LEVIED BY THE ASSESSING OFFICER ON 30/07/2013. AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A) AND SUBM ITTED THAT ALL INFORMATION IN RESPECT OF THEIR ADDITION MADE WAS DULY DISCLOSED TO THE ASSESSING OFFICER IN THE NOTES TO COMPUTATION FILED ALONGWITH THE ORIGINAL RETURN OF INCOME . IN SUPPORT OF THE CONTENTION THAT NO PENALTIES TO BE LEVIED IN CASE THE ASSE SSEE HAD DISCLOSED ITS POSITION IN THE DOCUMENTS FILED WITH THE RETURN OF 14 ITA NO. 2667 & 2668/DEL/2015 & C.O. NO. 285/DEL/2015 INCOME, THE ASSESSEE RELIED ON VARIOUS DECISIONS INCLUDING THE DECISION OF THE HON BL E SUPREME COURT IN THE CASE OF R ELIANCE PETRO P RODUCTS PRIVATE LIMITED (322 ITR 158). THE ASSESSEE ALSO REITERATED THE SUBMISSION THAT REIMBURSEMENT OF EXPENSES ACTUALLY INCURRED BY THE RECIPIENT , ON BEHALF OF THE PAYER, DOES NOT CONSTITUTE INCOME IN THE HANDS OF THE RECIPIENT AND, THUS, ISSUE BEING DEBATABLE, PENALTY COULD NOT HAVE BEEN LEVIED IN VIEW OF THE VARIOUS DECISIONS CITED. A LIST OF ALL SUCH DECISIONS HAVE BEEN REPRODUCED IN THE IMPUGNED ORDER. THE ASSESSEE ALSO SUBMITTED THAT THE LD. ASSESSING OFFICER , WHILE COMPUTING THE PENALTY, HAS INADVERTENTLY TAKEN THE ORIGINAL RETURN OF INCOM E AT NIL AS AGAINST INCOME OF RS.3,93,24, 057/ - DECLARED BY THE ASSESSEE AND , THUS , PENALTY WAS LEVIED ON ENTIRE AMOUNT OF RS.4,98,03, 318/ - . AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE, THE LD. CIT(A) DELETED THE PENALTY LEVIED BY THE ASSESSING OFFICER OBSERVING AS UNDER: 5.1 I HAVE DULY CONSIDERED SUBMISSIONS OF THE APPELLANT. THE RELEVANT FACTS ARE THAT THE APPELLANT HAS FILED ITS ORIGINAL RETURN OF INCOME ON 04.03.2008 WHEREIN INTEREST INCOME OF RS. 27.16.600 HAS BEEN OFFERED TO TAX @ 20% AND FEE FOR MARKETING SUPPORT SERVICES OF RS. 3,66,07,457 (MSA REIMBURSEMENTS OF RS. 3,30,84,563 AND TAX BORNE ON MSA REIMBURSEMENTS BY ALMPL OF RS. 35,22,894) HAS BEEN OFFERED TO TAX @ 10%. IN ASSESSMENT ORDER U/S 143(3) DATED 03.09.2010, IT HAS BEEN MENTIONED THAT IN ORIGINAL RETURN OF INCOME, INTEREST INCOME OF RS.27.16.600 HAS BEEN OFFERED TO TAX @ 20% AND FEE FOR MARKETING SUPPORT SERVICES OF RS. 3,30,84,563 HAS BEEN OFFERED TO TAX @ 10%. HOWEVER, IN IMPUGNED PENALTY ORDER DATED 30.07.2013, IT HAS BEEN MENTIONED THAT RETURNED INCOME IS NIL. IN NOTES TO COMPUTATION ANNEXED ALONG WITH RETURN, IN NOTE NO. 4. IT HAS BEEN MENTIONED AS UNDER: APART FROM THE ABOVE, ASL HAS ALSO RECEIVED REIMBURSEMENT OF COST INCURRED ON BEHALF OF ALMPL , OTHER THAN IN RELATION TO PROVISION OF ADMINISTRATIVE AND MARKETING SUPPORT SERVICES. SINCE ALL THE EXPENSES ARE IN NATURE OF REIMBURSEMENT OF COST INCURRED ON BEHALF OF INDIAN ENTITIES (ALMPL). HENCE, NO TAXES HAVE BEEN DEDUCTED ON THE SAME. 15 ITA NO. 2667 & 2668/DEL/2015 & C.O. NO. 285/DEL/2015 THE APPE LLANT REVISED ITS RETURN OF INCOME SECOND TIME ON 18.03.2009 WHEREIN TAX BORNE ON MSA REIMBURSEMENT TO THE TUNE OF RS. 38,62,852 HAS BEEN OFFERED TO TAX AS AGAINST RS. 35,22,894 DECLARED IN ORIGINAL RETURN. ADDITIONALLY, THE APPELLANT ALSO OFFERED TO TAX O THER REIMBURSEMENTS OF RS. 1,01,39,303 (OTHER REIMBURSEMENT OF RS. 90,79,239 AND TAX BORNE ON OTHER REIMBURSEMENTS BY ALMPLS OF RS. 10,60,064) IN ITS REVISED RETURN. THIS REVISED RETURN WAS HELD TO BE VOID AB - INITIO BY THE AO BECAUSE ORIGINAL RETURN WAS BE LATED ONE U/S 139(4) OF THE ACT. IN ASSESSMENT ORDER, THE AO MADE ADDITIONS IN RESPECT OF ITEMS DECLARED BY THE APPELLANT IN ITS REVISED RETURN AND ALSO IN RESPECT OF BUYING AGENCY COMMISSION TREATING IT FTS. HON BLE ITAT DELETED ADDITION IN RESPECT OF BUY ING AGENCY COMMISSION. THE AO LEVIED PENALTY U/S 271(1 )(C) ON AN AMOUNT EQUAL TO 100% OF TAX SOUGHT TO BE EVADED CONSIDERING THAT RETURNED INCOME OF THE APPELLANT IS NIL AND THEREFORE LEVYING PENALTY ON ALL INCOMES WHICH HAVE BEEN EITHER DECLARED BY THE A PPELLANT IN ITS ORIGINAL RETURN OR IN REVISED RETURN. 5.2 I FIND FORCE IN CONTENTION OF THE APPELLANT THAT THE AO HAS NOT ESTABLISHED THAT THE APPELLANT HAS EITHER CONCEALED OR FURNISHED INACCURATE PARTICULARS OF ITS INCOME. THE APPELLANT HAS OFFERED TO T AX MARKETING SUPPORT SERVICES FEE AND INTEREST INCOME IN ITS ORIGINAL RETURN OF INCOME. FURTHER, FACT OF RECEIPTS OF OTHER REIMBURSEMENT HAS BEEN MENTIONED IN NOTE NOJLPF NOTES TO COMPUTATION OF INCOME ANNEXED ALONG WITH RETURN OF INCOME. THE CASE OF THE A PPELLANT ALSO DOES NOT FALL UNDER PROVISIONS OF EXPLANATION 1 TO SECTION 271(L)(C) BECAUSE THE APPELLANT HAD A BONAFIDE BELIEF THAT REIMBURSEMENTS ARE NOT TAXABLE BASED ON JUDICIAL DECISIONS. THE APPELLANT HAS ALSO ARGUED THAT IT HAS OFFERED TO TAX MARKETI NG SUPPORT SERVICES FEE IN ITS REVISED RETURN OF INCOME BEFORE ANY ENQUIRY / DISCUSSION BY THE AO ON THE ISSUE. THE AO IN HIS IMPUGNED PENALTY ORDER HAS NOT REBUTTED THIS CONTENTION OF THE APPELLANT. THE REVISED RETURN HAS BEEN TECHNICALLY HELD TO BE VOID AB - INITIO BECAUSE ORIGINAL RETURN OF INCOME WAS BELATED ONE. 5.3 IT IS ESTABLISHED PRINCIPLE OF LAW THAT ASSESSMENT AND PENALTY PROCEEDINGS ARE ENTIRELY DIFFERENT AND STANDARD OF EVIDENCE WHICH MAY BE GOOD FOR ASSESSMENT PURPOSE MAY NOT BE GOOD FOR LEVYIN G PENALTY U/S 271 (1 )(C). IT HAS BEEN HELD BY HON BLE SUPREME COURT IN RELIANCE PETROPRODUCTS LTD. THAT IF A CLAIM MADE BY THE APPELLANT IS NOT FOUND SUSTAINABLE BY THE AO DURING ASSESSMENT PROCEEDING, IT DOES NOT AUTOMATICALLY LEAD TO CONCEALMENT OF INCO ME. 5.4 IN VIEW OF DISCUSSION SUPRA, I HOLD THAT NONE OF THE PRE - CONDITIONS FOR LEVYING PENALTY AS MENTIONED IN SECTION 271 (1 )(C) AND EXPLANATION 1 TO SECTION 271(1 )(C) ARE SATISFIED IN THE PRESENT CASE. ACCORDING THE IMPUGNED PENALTY ORDER U/S 271(L)( C) IS QUASHED. THE AO IS DIRECTED TO GRANT RELIEF ACCORDINGLY. SINCE ALL THE GROUNDS OF 16 ITA NO. 2667 & 2668/DEL/2015 & C.O. NO. 285/DEL/2015 APPEAL RAISED BY THE APPELLANT CONTAIN ONLY ONE ISSUE, THESE ARE DISPOSED OF ACCORDINGLY. 14 . THE LD. DR RELIED ON THE ORDER OF THE LD. ASSESSING OFFICER AND SUBMITTED THAT PENALTY LEVIED MIGHT BE SUSTAINED IN VIEW OF NO BONAFIDE EXPLANATION IN RESPECT OF THE ADDITIONS SUSTAINED. NONE REPRESENTED ON BEHALF OF THE ASSESSEE. 15 . WE HAVE HEARD THE SUBMISSION OF THE LD. DR AND PERUSED THE REL EVANT MATERIAL ON RECORD INCLUDING THE IMPUGNED ORDER OF THE LOWER AUTHORITIES. WE FIND THAT THE LD. CIT(A) HAS DELETED THE PENALTY MAINLY ON THE GROUND THAT ALL INFORMATION IN RELATION TO REIMBURSEMENT OF COSTS INCURRED ON BEHALF OF THE INDIAN ENTITY AIM PL WAS DULY DISCLOSED IN THE NOTES TO COMPUTATION ANNEXED ALONG WITH THE ORIGINAL RETURN OF INCOME AND IN THE REVISE D RETURN OF INCOME , THE ASSESSEE ALREADY OFFE RED THE SAID REIMBURSEMENT OF RS.1,01,39, 303/ - TO TAX. HE FURTHER OBSERVED THAT THE ASSESSEE D OES NOT FALL UNDER PROVISIONS OF E XPLANATION 1 TO SECTION 27( 1 )(C) OF THE A CT BECAUSE ASSESSEE HAD BONA FIDE BELIEF THAT REIMB URSEMENT ARE NOT TAXABLE BASED O N JUDICIAL DECISIONS. ON THE ISSUE OF MARKETING SUPPORT SERVICE FEE, ALSO THE LD. CIT(A) OBSERVED T HAT SAME WAS OFFERED IN THE REVISE D RETURN OF INCOME, BEFORE AN ENQUIRY/DISCUSSION BY THE AO ON THAT ISSUE. THE LD. CIT(A) FOLLOWED THE DECISION OF THE HON BL E SUPREME COURT IN THE CASE OF RELIANCE PETRO PRODUCT L IMITED (SUPRA) , WHEREIN IT IS HELD THAT IF A CLAIM MADE BY THE APPELLANT IS NOT FOUND SUSTAINABLE BY THE ASSESSING OFFICER DURING ASSESSMENT PROCEEDING, IT DOES NOT AUTOMATICALLY LEAD TO CONCEALMENT OF INCOME. WE AR E ALSO OF THE OPINION THAT THE E XPLANATION BY THE ASSESSEE IN RESPECT OF THE ADDITI ONS MADE ARE BONA FIDE AND THUS NO PENALTY INVOKING 17 ITA NO. 2667 & 2668/DEL/2015 & C.O. NO. 285/DEL/2015 E XPLANATION - 1 TO SECTION 271(1)(C) OF THE A CT COULD HAVE BEEN LEVIED IN THE CASE OF THE ASSESSEE. IN VIEW OF THE AFORESAID DISCUSSION, WE DO NOT FIND ANY ERROR IN THE ORDER OF THE LD. CIT(A) ON THE ISSUE IN DISPUTE AND ACCORDINGLY , WE UPHOLD THE SAME. THE GROUNDS OF THE APPEAL OF THE R EVENUE ARE DISMISSED. 1 6 . IN THE RESULT, THE APPEAL OF THE R EVENUE IS DISMISSED. 17. IN SUMMARY, BOTH THE APPEALS FILED BY THE R EVENUE ARE DISMISSED AND THE CROSS OBJECTION F ILED BY THE ASSESSEE IS NOT ADMITTED. ORDER IS PRONOUN CED IN THE OPEN COURT ON 2 9 T H JANUARY , 201 9 . S D / - S D / - [ AMIT SHUKLA ] [O.P. KANT] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 2 9 T H JANUARY, 2019 . RK / - [D.T.D.S] COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5 . DR ASST. REGISTRAR, ITAT, NEW DELHI