DDIT, New Delhi V. M/s. British Airways Plc., New Delhi

ITA 1313/DEL/2014

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 2895 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 9 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-01-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 06-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Double taxation relief; Retrospective amendment; Question of law; Reasonable cause; Onus to prove
• Section: 273B; 143(3); 260A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: E NEW DELHI BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA, JUDI CIAL MEMBER ITA NOS. 583 TO 585/DEL/ 2007 A.YS: 1996-97, 1997 - 98 AND 1998-99 ITA NOS. 586 TO 588/DEL/2007 A. YS: 1999-2000, 200 0- 01 AND 2001-02 ITA NOS. 4504/DEL/2007 A. Y.: 2002-03 M/S BRITISH AIRWAYS PLC VS. DCIT DLF PLAZA TOWER, CIRCLE-2(1), NEW DELHI PHASE 1, GURGAON -122002 (APPELLANT) (RESPONDENT) ITA NOS. 1 312,1313, 1314 /DEL/2014 A.Y : 2003 -04, 2004-05, 2005-06 ITA NO. 19 01/DEL/2015 A.Y 2006-07 DCIT VS. M/S. BRITISH AIRWAYS PLC CIRCLE 2(1), DLF, QUTUB ENCLAVE, PHASE 1, NEW DELHI GURGAON 122002 (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI HIMANSHU SINHA, A DVOCATE SHRI K. SWAMINAT HAN, CA SHRI SIDDHARTHA NAUTIYAL, CA RESPONDENT BY : SHRI ANUJ ARORA, CIT (DR) SHRI P. DAM KANUNJNA, SR. DR DATE OF HEARING : 08.10.2015 DATE OF PRONOUNCEMENT : 0 1.01.2016 ITA NOS.583 TO 588/DEL/2007, ITA NO.4504/DEL/ 2007, & ITA NOS. 1312,1313,1 314/DEL/2014 ITA NO. 1901/DEL/2 015 2 'V* ' O R D E R PER INTURI RAMA RAO, ACCOUNTANT MEMBER ITA NOS. 583 TO 588/DEL/2007 ARE SIX APPEALS PREFERRED BY THE ASSESSEE AGAINST A COMMON ORDER DATED 30.10.2006 PASSED BY T HE LD. CIT(A)-XXIX NEW DELHI CONFIRMING THE PENALTY IMPOSED U/S 271(1)(C) OF THE ACT FOR ASSESSMENT YEARS 1996- 97 TO 2005-06. ITA NO. 4504/DEL/2007 PERTAINS TO AS SESSMENT YEAR 2002-03 AND HAS AGAIN BEEN PREFERRED BY THE ASSESSEE AGAINST THE OR DER DATED 3.9.2007 PASSED BY THE LD. CIT(A) CONFIRMING THE PENALTY IMPOSED U/S 2 71(1)(C) OF THE ACT. ITA NOS. 1312 TO 1314/DEL/2014 ARE THE APPEALS PREFERRED BY THE DEPARTMENT AGAINST A COMBINED ORDER DATED 28.12.2013 PASSED BY LD. CIT(A ) DELETING THE PENALTY IMPOSED U/S 271(1)(C) FOR ASSESSMENT YEARS 2003-04 TO 2005-06. ITA NO. 1901/DEL/2015 PERTAINS TO ASSESSMENT YEAR 2006-07 AND HAS BEEN PREFERRED BY THE DEPARTMENT AGAINST ORDER DATED 19.01.2015 PASSED BY THE LD. CIT(A) DELETING THE PENALTY IMPOSED U/S 271(1)(C) OF THE ACT. THUS, THE RE ARE ELEVEN APPEALS BEFORE US AND SINCE THE ISSUE INVOLVED IS COMMON, THE SAME AR E BEING DISPOSED OF BY THIS COMMON ORDER. 2. THE FACTS AS GATHERED FROM THE RECORDS AND AS ACCEPTED BY BOTH THE PARTIES ARE THAT BRITISH AIRWAYS PLC., I.E. THE ASSESSEE, I S A NON-RESIDENT AIRLINE COMPANY, HEADQUARTERED IN THE UNITED KINGDOM, HAVING BRANCHE S IN INDIA. IT HAS BEEN OPERATING AIRCRAFTS IN INTERNATIONAL TRAFFIC INCLUD ING TO AND FROM INDIA FOR PAST SEVERAL YEARS. IT IS NOT IN DISPUTE THAT THE INCOME EARNED FROM THE OPERATION OF AIRCRAFT IN ITA NOS.583 TO 588/DEL/2007, ITA NO.4504/DEL/ 2007, & ITA NOS. 1312,1313,1 314/DEL/2014 ITA NO. 1901/DEL/2 015 3 'V* ' INTERNATIONAL TRAFFIC IS NOT TAXABLE IN INDIA IN VI EW OF ARTICLE 8 OF THE DOUBLE TAXATION AVOIDANCE AGREEMENT BETWEEN INDIA AND THE UNITED KI NGDOM (INDIA- UK TAX TREATY). DURING THE FINANCIAL YEAR 1996-97, THE ASS ESSING OFFICER (AO) INITIATED AN ENQUIRY ON THE ISSUE AS TO WHETHER THE ASSESSEE-AIR LINES HAD ANY TAXABLE PROFITS IN INDIA. AFTER SOME DISCUSSIONS, THE ASSESSEE AGREED TO OFFER TO TAX SOME INCOME AND ACCORDINGLY FILED RETURNS OF INCOME FOR THREE ASSES SMENT YEARS VIZ. 1996-97, 1997-98 AND 1998- 99. THE AO INITIATED PROCEEDINGS UNDER SE CTION 143(2) OF THE INCOME-TAX ACT, 1961 (THE ACT) AND PASSED AN ORDER DATED 15. 3.1999 UNDER SECTION 143(3) FOR ALL THE THREE ASSESSMENT YEARS. HE HELD THAT THE PR OFIT DERIVED BY THE ASSESSEE FROM RENDERING OF ENGINEERING AND GROUND HANDLING SERVIC ES TO OTHER AIRLINES IN INDIA WAS NOT COVERED WITHIN THE AMBIT OF ARTICLE 8 OF DTAA A ND, THEREFORE, SUCH PROFIT WAS NOT ELIGIBLE FOR TAX EXEMPTION IN INDIA UNDER THE SAID ARTICLE. AO COMPLETED THE ASSESSMENT PROCEEDINGS AND GAVE INSTRUCTIONS THAT N OTICE BE ISSUED FOR INITIATING PENALTY PROCEEDINGS UNDER SECTION 271(1) (C) OF THE ACT. 3. THE ASSESSEE STARTED TO FILE INCOME TAX RETURNS FOR SUBSEQUENT ASSESSMENT YEARS (AY 2009-10 AND ONWARDS) DECLARING NIL INCOME BASED ON THE VIEW THAT INCOME FROM GROUND HANDLING AND ENGINEERING SERVICE S WAS EXEMPT UNDER ARTICLE 8 OF THE INDIA-UK TAX TREATY. THE ASSESSEE ALSO APPEA LED TO THE COMMISSIONER OF INCOME TAX (APPEALS) AGAINST THE ORDERS PASSED FOR THREE ASSESSMENT YEARS 1996- 97, 1997-98 AND 1998- 99. THE CIT (A) UPHELD THE OR DER PASSED BY THE ASSESSING OFFICER FOR ALL THREE ASSESSMENT YEARS 1996-97, 199 7-98 AND 1998-99. ON SECOND APPEAL, THE INCOME TAX APPELLATE TRIBUNAL (ITAT) CONFIRMED THE CHARGEABILITY OF ITA NOS.583 TO 588/DEL/2007, ITA NO.4504/DEL/ 2007, & ITA NOS. 1312,1313,1 314/DEL/2014 ITA NO. 1901/DEL/2 015 4 'V* ' THESE PROFITS TO TAX IN INDIA BUT REMANDED THE MATT ER TO THE FILE OF THE AO TO DETERMINE TAXABLE PROFITS AFTER CONSIDERING THE EXP ENSES CLAIMED BY THE ASSESSEE. 4. THE ASSESSEE SUBSEQUENTLY FILED AN APPEAL B EFORE THE HONBLE DELHI HIGH COURT AGAINST ITATS ORDER CONFIRMING TAXABILITY OF GROUND HANDLING AND ENGINEERING SERVICES INCOME. THE HONBLE DELHI HIGH COURT ADMIT TED THE ASSESSEES APPEAL VIDE ORDER DATED 02.04.2008 AND FRAMED THE QUESTION OF L AW AS UNDER: WHETHER ON THE FACTS AND ON A TRUE AND CORRECT INT ERPRETATION OF ARTICLE 8(1) AND 8(2) OF THE DOUBLE TAXATION AVOIDA NCE AGREEMENT BETWEEN INDIA AND THE UNITED KINGDOM, RECEIPTS FROM ENGINEERING AND GROUND HANDLING SERVICES ARE TAXABLE IN INDIA. 5. MEANWHILE, THE ASSESSEE KEPT FILING ITS IN COME TAX RETURNS DECLARING NIL TAXABLE INCOME CLAIMING EXEMPTION OF ITS INCOME (IN CLUDING INCOME FROM GROUND HANDLING AND ENGINEERING SERVICES) UNDER THE INDIA- UK TAX TREATY AND THE MATTERS WERE PENDING AT VARIOUS APPELLATE LEVELS. THE AO RE COMPUTED THE TAXABLE PROFITS FOR ASSESSMENT YEARS 1996-1997, 1997-98 AND 1998-99 AS PER THE ITATS DIRECTIONS. THE APPEALS AGAINST THIS ORDER TRAVELLED AGAIN UP T O THE ITAT IN ITS SECOND ROUND AND WERE PENDING ON THE ISSUE OF DETERMINING ONLY T HE QUANTUM OF INCOME CHARGEABLE TO TAX. 6. IN THE MEANTIME, THE ASSESSEE APPROACHED THE COM PETENT AUTHORITIES OF THE UK UNDER MUTUAL AGREEMENT PROCEDURE (MAP) FOR SET TLING THE DISPUTE ARISING IN RESPECT OF INTERPRETATION OF THE INDIA-UK TAX TREAT Y. THE COMPETENT AUTHORITIES DESIGNATED UNDER THE INDIA-UK TAX TREATY SETTLED TH E DISPUTE UNDER MAP FOR ITA NOS.583 TO 588/DEL/2007, ITA NO.4504/DEL/ 2007, & ITA NOS. 1312,1313,1 314/DEL/2014 ITA NO. 1901/DEL/2 015 5 'V* ' THIRTEEN ASSESSMENTS YEARS, VIZ. AY 1996-97 THROUGH 2008-09, VIDE NOTIFICATION F NO. 430/08/2011-FTD.I DATED NIL (RECEIVED ON 28.12. 2011). ONE OF THE CONDITIONS WAS THAT THE ASSESSEE SHOULD WITHDRAW ALL ITS APPEA LS ON THE ISSUE OF EXEMPTION UNDER ARTICLE 8 OF INDIA-UK TAX TREATY. ACCORDINGLY , ALL QUANTUM APPEALS PENDING AT VARIOUS APPELLATE STAGES WERE WITHDRAWN FOR ALL THE THIRTEEN YEARS COVERED BY THE MAP ORDER. 7. MEANWHILE, THE AO HAD ALREADY IMPOSED PENALTIES UNDER SECTION 271(1) (C) FOR SIX YEARS, VIZ. AY 1996-97 THROUGH AY 2001-02. ON APPEAL, CIT (A) CONFIRMED THE PENALTIES IMPOSED BY THE ASSESSING OFFICER. ON FURTHER APPEAL TO THE ITAT AGAINST THE ORDER OF CIT (A) ON PENALTY UNDER SECTI ON 271(1)(C) OF THE ACT, ONE OF CONTENTIONS OF ASSESSEE WAS THAT THE AO HAD AT THE END OF THE ASSESSMENT ORDERS MERELY STATED THAT PENALTY PROCEEDINGS UNDER SECTIO N 271(1)(C) WERE BEING INITIATED SEPARATELY, WITHOUT RECORDING AS TO WHY AND HOW HE HAD REACHED THE SATISFACTION WARRANTED BY SECTION 271 OF THE ACT. THE ITAT AGRE EING WITH THE ARGUMENTS TAKEN BY THE ASSESSEE ALLOWED THE APPEALS AND VIDE ITS OR DER DATED 23.11.2007 DELETED LEVY OF PENALTY BY AO FOR ALL THE SIX YEARS. 8. THE DEPARTMENT FILED APPEALS BEFORE THE DELH I HIGH COURT CHALLENGING THE ORDERS PASSED BY ITAT WHEREIN THE LEVY OF PENALTY W AS QUASHED. DURING THE PENDENCY OF THESE APPEALS, THE LAW WAS AMENDED BY T HE LEGISLATURE, AND SUB- SECTION (1B) WAS INTRODUCED IN SECTION 271 BY THE F INANCE ACT, 2008 WITH RETROSPECTIVE EFFECT FROM 1-4- 1989. IN VIEW OF THE AMENDMENT, THE DELHI HIGH COURT SET ASIDE THE ORDER DATED 23.11.2007 PASSED BY THE ITAT. ITA NOS.583 TO 588/DEL/2007, ITA NO.4504/DEL/ 2007, & ITA NOS. 1312,1313,1 314/DEL/2014 ITA NO. 1901/DEL/2 015 6 'V* ' 9. NOW OUT OF THE PRESENT APPEALS BEFORE US, APPE AL NOS. 583 TO 588/DEL/ 2007 COVERING ASSESSMENT YEARS 1996-97 THR OUGH 2001-02 ARISE FROM BEING REMANDED BY THE DELHI HIGH COURT TO THE ITAT. ALL OTHER APPEALS ARISE FROM THE ORDERS OF LD. CIT (A) FOR THE RESPECTIVE A SSESSMENT YEARS. 10. THE PENALTIES IMPOSED U/S 271(1) (C) FOR THE D IFFERENT ASSESSMENT YEARS AND IN DISPUTE BEFORE US ARE AS UNDER:- S. NO. ASSESSMENT YEAR PENALTY AMOUNT 1. 1996 - 97 1,85,24,386/ - 2. 1997 - 98 2,08,67,424/ - 3. 1998 - 99 1,30,61,700/ - 4. 1999 - 00 1,82,84,191/ - 5. 2000 - 01 2,82,83,175/ - 6. 2001 - 0 2 3,76,71,321/ - 7. 2002 - 03 3,97,19,000/ - 8. 2003 - 04 90,06,526/ - 9. 2004 - 05 2,92,78,131/ - 10. 2005 - 06 3,34,34,507/ - 11. 2006 - 07 1,66,82,105/ - 11. THE LD. AR FOR THE ASSESSEE SUBMITTED T HAT SECTION 271(1) (C) PROVIDES FOR THE IMPOSITION OF PENALTY BY THE AO IN CASES WHERE HE IS SATISFIED THAT THE PERSON HAS CONCEALED THE PARTICULARS OF HI S INCOME OR HAS FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. HE FURTHER S UBMITTED THAT SECTION 273B PROVIDES THAT NO PENALTY SHALL BE IMPOSABLE WHERE T HE PERSON PROVES THAT THERE WAS A REASONABLE CAUSE FOR HIS FAILURE TO DIS CLOSE THE PARTICULARS OF HIS ITA NOS.583 TO 588/DEL/2007, ITA NO.4504/DEL/ 2007, & ITA NOS. 1312,1313,1 314/DEL/2014 ITA NO. 1901/DEL/2 015 7 'V* ' INCOME OR TO FURNISH ACCURATE PARTICULARS OF SUCH I NCOME. THE LD. AR SUBMITTED THAT THE ASSESSEE HAS NEITHER CONCEALED A NY PARTICULARS OF INCOME NOR FURNISHED ANY INACCURATE PARTICULARS OF INCOME. PENALTY HAS BEEN LEVIED ON THE ASSESSEE IN RESPECT OF INCOME BROUGHT TO TAX BY REJECTING ITS BONA FIDE CLAIM OF EXEMPTION UNDER ARTICLE 8 OF THE INDIA-UK DTAA IN RESPECT OF ENGINEERING AND GROUND HANDLING SERVICES PROVIDED B Y IT. THE LD. AR SUBMITTED THAT FULL AND ADEQUATE DISCLOSURE OF FACT S ALONG WITH THE RETURN OF INCOME AND DURING THE COURSE OF ASSESSMENT PROCEEDI NGS HAD BEEN MADE BY THE ASSESSEE ALONG WITH RETURNS OF INCOME. HE SUBMI TTED THAT ALONG WITH THE ABOVE DISCLOSURE OF ITS POSITION, THE ASSESSEE ALSO SUBMITTED THE LEGAL OPINIONS OF JUSTICE S. RANGANATHAN, FORMER JUDGE OF THE SUPR EME COURT AND SHRI G.N. GUPTA, ADVOCATE, EX- CHAIRMAN, CBDT OPINING THAT SU CH INCOME EARNED BY THE APPELLANT WAS NOT TAXABLE IN INDIA AND WHICH HA VE FORMED THE BASIS OF ITS BELIEF. ARGUING ON THE BONA FIDES OF THE ASSESSEE , THE LD. AR SUBMITTED THAT THE ENGINEERING AND GROUND HANDLING ACTIVITIES ARE ANCILLARY, AUXILIARY, CLOSELY RELATED, SUPPLEMENTARY AND INCIDENTAL TO THE ASSESS EES MAIN BUSINESS OF OPERATION OF ITS AIRCRAFTS IN INTERNATIONAL TRAFFIC TO AND FROM INDIA. NO SEPARATE ACCOUNTING IS DONE FOR SUCH RECOVERIES AND THEY ARE NORMALLY NETTED OFF AGAINST OPERATIONAL COSTS OF THE RESPECTIVE BRANCHE S. SUCH RECOVERIES ARE MADE OUTSIDE INDIA THROUGH THE LATA CLEARING HOUSE MECHANISM. THE ASSESSEE DOES NOT OPERATE THESE ACTIVITIES AS A SEP ARATE BUSINESS. THE LD. AR CONTENDED THAT PARAGRAPH (2) OF ARTICLE 8 OF DTAA P ROVIDES THAT THE PROVISIONS OF PARAGRAPH (1) OF THIS ARTICLE SHALL L IKEWISE APPLY TO PARTICIPATION ITA NOS.583 TO 588/DEL/2007, ITA NO.4504/DEL/ 2007, & ITA NOS. 1312,1313,1 314/DEL/2014 ITA NO. 1901/DEL/2 015 8 'V* ' IN POOLS OF ANY KIND BY ENTERPRISES ENGAGED IN AIR TRANSPORT. HE SUBMITTED THAT BRITISH AIRWAYS HAS BEEN AND IS OF THE VIEW TH AT ALL ITS INCOME FROM THE OPERATION OF AIRCRAFT IN INTERNATIONAL TRAFFIC, INC LUDING ANY INCOME FROM THE PROVISION OF ITS FACILITIES OF ENGINEERING AND OTHE R GROUND HANDLING SERVICES UNDER POOLING ARRANGEMENTS TO OTHER AIRLINES IS EXE MPT FROM TAX IN INDIA. THIS IS CONSISTENT WITH THE INDUSTRY POSITION, AND CONTE MPORARY DTAA INTERPRETATION TO INCLUDE ANCILLARY, AUXILIARY, CLO SELY RELATED, SUPPLEMENTARY AND INCIDENTAL ACTIVITIES, WHICH IS APPLIED BY WORL DWIDE TAXING AUTHORITIES. THE LD. AR FURTHER SUBMITTED THAT AS A MEMBER OF TH E IATP, THE ASSESSEE HAS BEEN PROVIDING ENGINEERING AND GROUND HANDLING SERV ICES IN INDIA TO SEVERAL OTHER AIRLINES, MOST OF WHICH ARE MEMBERS OF THE IA TP AND ARE RECEIVING SIMILAR SERVICES FROM OTHER AIRLINES ALL OVER THE W ORLD. THE LD. AR FURTHER SUBMITTED THAT AS INCOME FROM SUCH SERVICES RENDERE D TO MEMBERS OF IATP HAS ARISEN FROM ACTIVITIES, WHICH ARE BASICALLY OF THE NATURE OF POOLING AND SHARING OF RESOURCES AMONG AIRLINES ON THE GLOBAL A IRLINE NETWORK ON THE BASIS OF RECIPROCITY, IT IS EXEMPT FROM TAX, UNDER THE PR OVISIONS OF CLAUSE (2) OF ARTICLE 8 OF THE DTAA. THE LD AR ALSO SUBMITTED THA T THE OECD COMMENTARY ON ARTICLE 8 OF THE MODEL TAX CONVENTION UPDATED IN 2005 (DULY ACKNOWLEDGED BY THE AO) ALSO HOLDS SUCH INCOME AS E XEMPT. HE DREW OUR ATTENTION TO THE RELEVANT EXTRACTS WHICH ARE AS UND ER: ACTIVITIES THAT THE ENTERPRISE DOES NOT NEED TO CA RRY ON FOR THE PURPOSES OF ITS OWN OPERATION OF SHIPS OR AIRCRAFT IN INTERNATI ONAL TRAFFIC BUT WHICH MAKE A MINOR CONTRIBUTION RELATIVE TO SUCH OPERATION AND A RE SO CLOSELY RELATED TO SUCH OPERATION THAT THEY SHOULD NOT BE REGARDED AS A SEPARATE BUSINESS OR SOURCE OF INCOME OF THE ENTERPRISE SHOULD BE CONSID ERED TO BE ANCILLARY TO THE ITA NOS.583 TO 588/DEL/2007, ITA NO.4504/DEL/ 2007, & ITA NOS. 1312,1313,1 314/DEL/2014 ITA NO. 1901/DEL/2 015 9 'V* ' OPERATION OF SHIPS AND AIRCRAFT IN INTERNATIONAL TR AFFIC. AN ENTERPRISE THAT HAS ASSETS OR PERSONNEL IN A FOREIGN COUNTRY FOR PURPOS ES OF OPERATING ITS SHIPS OR AIRCRAFT IN INTERNATIONAL TRAFFIC MAY DERIVE INCOME FROM PROVIDING GOODS OR SERVICES IN THAT COUNTRY TO OTHER TRANSPORT ENTERPR ISES. THIS WOULD INCLUDE (FOR EXAMPLE) THE PROVISION OF GOODS AND SERVICES BY ENG INEERS, GROUND AND EQUIPMENT-MAINTENANCE STAFF, CARGO HANDLERS, CATERI NG STAFF AND CUSTOMER SERVICES PERSONNEL. WHERE THE ENTERPRISE PROVIDES S UCH GOODS TO, OR PERFORMS SERVICES FOR, OTHER ENTERPRISES AND SUCH ACTIVITIES ARE DIRECTLY CONNECTED OR ANCILLARY TO THE ENTERPRISE'S OPERATION OF SHIPS OR AIRCRAFT IN INTERNATIONAL TRAFFIC, THE PROFITS FROM THE PROVISION OF SUCH GOO DS OR SERVICES TO OTHER ENTERPRISES WILL FALL UNDER THE PARAGRAPH. FOR EXAM PLE, ENTERPRISES ENGAGED IN INTERNATIONAL TRANSPORT MAY ENTER INTO POOLING ARRA NGEMENTS FOR THE PURPOSES OF REDUCING THE COSTS OF MAINTAINING FACILITIES NEE DED FOR THE OPERATION OF THEIR SHIPS OR AIRCRAFT IN OTHER COUNTRIES. FOR INSTANCE, WHERE AN AIRLINE ENTERPRISE AGREES, UNDER THE INTERNATIONAL AIRLINES TECHNICAL POOL AGREEMENT, TO PROVIDE SPARE PARTS OR MAINTENANCE SERVICES TO OTHER AIRLIN ES LANDING AT A PARTICULAR LOCATION (WHICH ALLOWS IT TO BENEFIT FROM THESE SER VICES AT OTHER LOCATIONS), ACTIVITIES CARRIED ON PURSUANT TO THAT AGREEMENT WI LL BE ANCILLARY TO THE OPERATION OF AIRCRAFT IN INTERNATIONAL TRAFFIC. 12. THE LD. AR FURTHER SUBMITTED THAT THE CONCEPT O F RECIPROCITY (AS A MEMBER OF IATP) HAS BEEN UPHELD BY THE JURISDICTION AL TRIBUNAL IN THE CASE OF LUFTHANSA GERMAN AIRLINES VS. DCIT (ITA NO. 4939/DE L/99). HE SUBMITTED THAT THE DELHI TRIBUNAL HAS HELD THAT THE INCOME DERIVED BY LUFTHANSA GERMAN AIRLINES FROM GROUND HANDLING AND ENGINEERING SERVI CES UNDER IATP POOL ARRANGEMENTS IS NOT TAXABLE IN INDIA SINCE THIS INC OME HAS ARISEN ON ACCOUNT OF 'PARTICIPATION IN A POOL' COVERED UNDER ARTICLE 8(4) OF INDO GERMAN DTAA. HE POINTED OUT THAT ONE OF THE KEY OBSERVATIONS MAD E BY DELHI ITAT, WHILE PRONOUNCING THIS JUDGEMENT, IS THAT IATP IS THE ONL Y 'POOL' OF AIRLINE COMPANIES, WHICH IS RECOGNIZED ALL OVER THE WORLD. THE LD. AR SUBMITTED THAT THE ASSESSEES BONA FIDES CANNOT BE QUESTIONED IN L IGHT OF THESE FACTS. ITA NOS.583 TO 588/DEL/2007, ITA NO.4504/DEL/ 2007, & ITA NOS. 1312,1313,1 314/DEL/2014 ITA NO. 1901/DEL/2 015 10 'V* ' 13. WITHOUT PREJUDICE TO THE EARLIER SUBMISSIONS, THE LD. AR FURTHER SUBMITTED THAT IN CONSONANCE WITH THE DECISION OF T HE DELHI ITAT DIRECTING THAT THE AO SHOULD ALLOW EXPENSES AGAINST INCOME FR OM GROUND HANDLING AND ENGINEERING SERVICES, THE ASSESSEE HAD FILED A NET COST STATEMENT IN RELATION TO ENGINEERING AND GROUND HANDLING SERVICES WHICH H IGHLIGHTED THE REVENUE AND RESPECTIVE COSTS, THE AO WHILE PASSING THE ASSE SSMENT ORDER DID NOT QUESTION THE QUANTUM, GENUINENESS AND BASIS OF ALLO CATION OF EXPENSES ADOPTED BY THE ASSESSEE. THE INCOME OF THE APPELLAN T FROM ENGINEERING AND GROUND HANDLING SERVICES HAS BEEN ESTIMATED AT 20% OF THE TOTAL REVENUES AND MUTUALLY AGREED AS PER THE MAP SETTLEMENT. THE APPELLANT HAD FULLY DISCLOSED ALL RELEVANT DETAILS REGARDING ITS COMPUT ATION OF INCOME. THE APPELLANT HAS NOT FURNISHED ANY DETAILS WHICH HAVE BEEN FOUND TO BE FACTUALLY INCORRECT. FURTHER, THE AO NEITHER IN THE ASSESSMEN T ORDER NOR IN THE PENALTY ORDER HAS ALLEGED THAT ANY PARTICULARS OF INCOME HA S BEEN CONCEALED OR INACCURATELY FURNISHED. IN FACT, THE PARTICULARS OF INCOME FURNISHED BY THE APPELLANT WERE CONSIDERED AND FORMED THE BASIS OF T HE INCOME AS FINALLY ASSESSED BY THE AO ON AN ESTIMATED BASIS AND AS SU CH THE PENALTY U/S 271(1) (C ) WAS NOT ATTRACTED. 14. WITHOUT PREJUDICE TO THE ABOVE, THE LD. AR FU RTHER SUBMITTED THAT IN ORDER TO BUY PEACE OF MIND AND TO AVOID PROLONGED L ITIGATION, THE ASSESSEE HAD FILED AN APPLICATION BEFORE THE COMPETENT AUTHO RITY OF UK TO INVOKE MUTUAL AGREEMENT PROCEDURE ('MAP') UNDER ARTICLE 27 OF INDIA-UK DTAA IN ORDER TO RESOLVE ITS LONG STANDING DISPUTE IN INDIA ON TAXABILITY OF RECEIPTS ITA NOS.583 TO 588/DEL/2007, ITA NO.4504/DEL/ 2007, & ITA NOS. 1312,1313,1 314/DEL/2014 ITA NO. 1901/DEL/2 015 11 'V* ' FROM RENDERING ENGINEERING AND GROUND HANDLING SERV ICES. HE SUBMITTED THAT AS PER THE MAP ORDER, IT HAS BEEN MUTUALLY AGREED T HAT THE ASSESSEE SHALL NOT CLAIM EXEMPTION IN RESPECT OF ITS ENGINEERING AND G ROUND HANDLING RECEIPTS IN INDIA UNDER ARTICLE 8 OF THE INDIA-UK DTAA EVEN THO UGH THE QUESTION OF LAW HAS BEEN ADMITTED BY THE HIGH COURT. FURTHER, WHILE COMPUTING THE TAXABLE INCOME FROM GROUND HANDLING & ENGINEERING SERVICES IN INDIA, A DEDUCTION FOR EXPENSES WOULD BE ALLOWED AT ONLY 79.47% OF GROSS R EVENUES TO BRITISH AIRWAYS EVEN THOUGH THERE WAS NO DISPUTE IN TERMS O F GENUINENESS AND QUANTUM OF OVERALL EXPENSES. IT WAS FURTHER DECIDED THAT THE ASSESSEE WOULD WITHDRAW THE APPEALS, IF ANY, FILED BEFORE THE APPE LLATE AUTHORITIES IN RESPECT OF ENGINEERING AND GROUND HANDLING RECEIPTS. HE SUB MITTED THAT THE DEPARTMENT ALSO WITHDREW THE APPEAL FILED BY IT BEF ORE THE ITAT FOR AY 2005- 06 AND DID NOT PRESS ITS GROUNDS ON TAXABILITY OF R ECEIPTS FROM GROUND HANDLING & ENGINEERING SERVICES AND THE ALLOW ABILI TY OF EXPENSES AGAINST THE SAID RECEIPTS, IN VIEW OF THE MAP SETTLEMENT. HE SU BMITTED THAT IN LIGHT OF ABOVE FACTUAL MATRIX, IT IS ESTABLISHED THAT THE MA P SETTLEMENT IS AN ALTERNATE MODE OF DISPUTE RESOLUTION TO SETTLE TAX DISPUTES A RISING IN RELATION TO APPLICATION AND ENJOYMENT OF DTAA SIGNED BETWEEN IN DIA AND UK AND ONE THEREFORE HAS TO RESPECT THE SPIRIT AND INTENT OF E NTERING INTO SUCH A SETTLEMENT REACHED BETWEEN THE TWO GOVERNMENTS I.E. IS TO END THE TAX DISPUTE AND NOT START A FRESH LINE OF DISPUTE IN TE RMS OF LEVY OF INTEREST AND PENALTY WHICH WILL AGAIN BE AGITATED AT APPELLATE F ORUMS. IN THE PRESENT CONTEXT, THE LEARNED AO HAS FAILED TO APPRECIATE AN D TAKE INTO CONSIDERATION ITA NOS.583 TO 588/DEL/2007, ITA NO.4504/DEL/ 2007, & ITA NOS. 1312,1313,1 314/DEL/2014 ITA NO. 1901/DEL/2 015 12 'V* ' THAT SUCH A SETTLEMENT HAS BEEN REACHED BETWEEN THE COMPETENT AUTHORITIES OF INDIA AND UK WHICH IS BINDING ON HIM, WENT AHEA D AND LEVIED THE PENALTY DEFEATING THE SPIRIT AND INTENT OF ENTERING INTO SU CH A SETTLEMENT. 15. THE LD. AR FURTHER SUBMITTED THAT THE ASSESSEE HAD ALSO FILED AN APPEAL FOR PRIOR ASSESSMENT YEARS BEFORE THE HON'BL E HIGH COURT OF DELHI FOR CLAIMING EXEMPTION UNDER ARTICLE 8 OF THE DTAA WHIC H HAD BEEN DULY ADMITTED BY THE HON'BLE HIGH COURT AS A QUESTION OF LAW. ACCORDINGLY, IT IS EVIDENT THAT THE ISSUE IS DEBATABLE AND IS SUBJECT TO INTERPRETATION AND THE VIEW ADOPTED BY THE ASSESSEE IS BASED ON BONA-FIDE REASONS. RELIANCE HAS BEEN PLACED ON THE DECISION OF THE HONBLE DELHI HI GH COURT IN THE CASE OF CIT - II VS. LIQUID INVESTMENT AND TRADING CO. (ITA 240 /2009). THE LD. AR SUBMITTED THAT IN VIEW OF THE ISSUE BEING A DEBATAB LE ISSUE, THE PENALTY WAS NOT SUSTAINABLE AND AS SUCH THE SAME SHOULD BE CANC ELLED. 16. THE LD. DR, ON THE OTHER HAND, JUSTIFYING THE LEVY OF PENALTY FOR ALL THE YEARS SUBMITTED THAT I N THE CASE OF CIT VS. GURBACHAN LAL, 250 ITR 157 (DELHI), IT WAS HELD BY THE HON'BLE DELHI HIGH COUR T THAT THE PRINCIPAL LOGICAL IMPORT OF THE ORIGINAL EXPLANATION AS INSERTED BY T HE FINANCE ACT, 1964 AS WELL AS THE EXPLANATION 1 AS SUBSTITUTED BY THE TAXATION LAWS (AMENDMENT) ACT, 1975 IS TO SHIFT THE BURDEN OF PROOF FROM THE REVEN UE TO THE ASSESSEE AND THE PRINCIPLE REGARDING BURDEN OF PROOF LAID DOWN IN CI T VS. ANWAR ALI, 76 ITR 696(SC), IS NO LONGER VALID AFTER INSERTION OF THES E EXPLANATIONS. HE SUBMITTED THAT THERE WAS NO DISCRETION CONFERRED ON THE ASSES SING OFFICER AS TO WHETHER ITA NOS.583 TO 588/DEL/2007, ITA NO.4504/DEL/ 2007, & ITA NOS. 1312,1313,1 314/DEL/2014 ITA NO. 1901/DEL/2 015 13 'V* ' HE CAN INVOKE THE EXPLANATION OR NOT AND THE EXPLAN ATION AUTOMATICALLY COMES INTO OPERATION WHEN IN RESPECT OF ANY FACTS MATERIA L TO THE COMPUTATION OF THE TOTAL INCOME, THE ASSESSEE FAILS TO OFFER AN EXPLAN ATION OR THE EXPLANATION OFFERED BY HIM IS FOUND TO BE FALSE OR THE EXPLANAT ION OFFERED IS NOT SUBSTANTIATED BY HIM AND FAILS TO PROVE THAT SUCH E XPLANATION IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MATERIA L TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM. AS PER EXP LANATION 1, THERE IS A PRESUMPTION THAT THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME SHALL BE DEEMED TO BE THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. THE ONUS IS PLACED ON THE ASSESSEE TO PROVE THAT THERE WAS NO CONCEALMENT OF INCOME. IF THE ASSESSEE FAILS TO DISCHARGE HIS BURDEN OF PROOF, IT WILL BE CONCLUDED THAT HE HAD CONCEALED T HE PARTICULARS OF HIS INCOME. HE SUBMITTED THAT THE EXPLANATION FURNISHED BY THE ASSESSEE TO DISCHARGE HIS BURDEN OF PROOF MUST BE AN EXPLANATION ACCEPTABLE T O THE FACT-FINDING AUTHORITY AND THE BURDEN OF PROOF CANNOT BE DISCHAR GED MERELY BY FURNISHING ANY FANTASTIC OR FANCIFUL EXPLANATION. THE LD. DR A LSO PLACED RELIANCE ON THE DECISION OF HONBLE APEX COURT IN THE CASE OF MAK D ATA P. LTD. VS. CIT IN CIVIL APPEAL NO. 9772 OF 2013 WHEREIN THE HONBLE APEX CO URT HAS HELD THAT EXPLANATION TO SECTION 271(1) RAISES A PRESUMPTION OF CONCEALMENT, WHEN A DIFFERENCE IS NOTICED BY THE AO, BETWEEN REPORTED A ND ASSESSED INCOME. THE BURDEN IS THEN ON THE ASSESSEE TO SHOW OTHERWISE, B Y COGENT AND RELIABLE EVIDENCE. WHEN THE INITIAL ONUS PLACED BY THE EXPLA NATION, HAS BEEN DISCHARGED BY HIM, THE ONUS SHIFTS ON THE REVENUE T O SHOW THAT THE AMOUNT ITA NOS.583 TO 588/DEL/2007, ITA NO.4504/DEL/ 2007, & ITA NOS. 1312,1313,1 314/DEL/2014 ITA NO. 1901/DEL/2 015 14 'V* ' IN QUESTION CONSTITUTED THE INCOME AND NOT OTHERWIS E. HE ACCORDINGLY PLEADED FOR UPHOLDING THE PENALTY IMPOSED IN ALL THE YEARS. 17. WE HAVE HEARD THE RIVAL CONTENTIONS AT LENGTH AND HAVE ALSO PERUSED THE RECORDS. THE RELEVANT FACTS ARE THAT THE ASSES SEE HAD TAKEN A POSITION THAT INCOME FROM ENGINEERING AND GROUND HANDLING SE RVICES WAS COVERED BY ARTICLE 8 OF THE INDIA-UK DTAA AND HENCE, WAS NOT T AXABLE IN INDIA. IT IS SEEN THAT THE ASSESSEE HAD MADE APPROPRIATE DISCLOSURES ON ITS POSITION BY SUBMITTING NOTES TO COMPUTATION WITH THE RETURN OF INCOME. THE AO HAS HOWEVER NOT ACCEPTED THE SAID POSITION AND BROUGHT THE REVENUES TO TAX UNDER ARTICLE 7 OF THE DTAA. IT IS NOTED THAT THE A O HAS NOT QUESTIONED THE QUANTUM, GENUINENESS AND BASIS OF ALLOCATION OF EXP ENSES ADOPTED BY THE ASSESSEE. THE ASSESSEE HAS EXPLAINED THAT AS A MEM BER OF THE IATP, IT HAS BEEN PROVIDING ENGINEERING AND GROUND HANDLING SERV ICES IN INDIA TO SEVERAL OTHER AIRLINES, MOST OF WHICH ARE MEMBERS OF THE IA TP AND ARE RECEIVING SIMILAR SERVICES FROM OTHER AIRLINES ALL OVER THE W ORLD. AS INCOME FROM SUCH SERVICES RENDERED TO MEMBERS OF IATP HAS ARISEN FRO M ACTIVITIES, WHICH ARE BASICALLY OF THE NATURE OF POOLING AND SHARING OF R ESOURCES AMONG AIRLINES ON THE GLOBAL AIRLINE NETWORK ON THE BASIS OF RECIPROC ITY, IT IS EXEMPT FROM TAX, UNDER THE PROVISIONS OF CLAUSE (2) OF ARTICLE 8 OF THE DTAA. THE LD. AR HAS ALSO RELIED ON THE DECISION OF LUFTHANSA GERMAN AIR LINES VS. DCIT (ITA NO. 4939/DEL/99) WHEREIN THE CO-ORDINATE BENCH OF THIS TRIBUNAL HAS HELD THAT THE INCOME DERIVED BY LUFTHANSA GERMAN AIRLINES FROM GR OUND HANDLING AND ENGINEERING SERVICES UNDER IATP POOL ARRANGEMENTS I S NOT TAXABLE IN INDIA ITA NOS.583 TO 588/DEL/2007, ITA NO.4504/DEL/ 2007, & ITA NOS. 1312,1313,1 314/DEL/2014 ITA NO. 1901/DEL/2 015 15 'V* ' SINCE THIS INCOME HAS ARISEN ON ACCOUNT OF 'PARTICI PATION IN A POOL' COVERED UNDER ARTICLE 8(4) OF INDO GERMAN DTAA. FURTHER, MA P SETTLEMENT HAS BEEN REACHED BETWEEN THE COMPETENT AUTHORITIES OF INDIA AND UK IN THE CASE OF ASSESSEE WHEREIN IT HAS BEEN AGREED TO ALLOW EXPENS ES TO THE ASSESSEE AT A SPECIFIED PERCENTAGE AND THE INCOME WAS TO BE TAXED ON AN ESTIMATE BASIS. THE DEPARTMENT ALSO WITHDREW ITS APPEAL FOR THE AY 2005-06 AND DID NOT PRESS ITS GROUNDS ON TAXABILITY OF RECEIPTS FROM GR OUND HANDLING & ENGINEERING SERVICES AND THE ALLOW ABILITY OF EXPENSES AGAINST THE SAID RECEIPTS, IN VIEW OF THE MAP SETTLEMENT. REGARDING ASSESSEES CLAIM UND ER ARTICLE 8 OF INDIA-UK DTAA, IT IS NOTED THAT CO-ORDINATE BENCH OF THE ITA T HAS DECIDED THE ISSUE AGAINST THE ASSESSEE IN THE EARLIER YEARS. FURTHER, THERE ARE CONFLICTING DECISIONS IN CASE OF LUFTHANSA GERMAN AIRLINES AND KLM ALTHOUGH INDIA HAS RESERVED ITS POSITION ON COMMENTARY UNDER ARTICLE 8 ON WHICH ASSESSEE HAS RELIED UPON. HOWEVER, IT HAS ALSO BEEN BROUGHT TO O UR NOTICE THAT QUESTION OF LAW ON ASSESSEES ELIGIBILITY UNDER ARTICLE 8 WAS F RAMED AND ADMITTED BY THE DELHI HIGH COURT. HENCE, IT CANNOT BE SAID THAT THE VIEW ADOPTED BY THE APPELLANT WAS NOT A PLAUSIBLE VIEW. FURTHER, MAKING OF A CLAIM NOT ACCEPTED BY ASSESSING OFFICER DOES NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS OF INCOME WHICH CAN FORM THE BASIS FOR LEVY OF PENALTY AS HELD BY THE HONBLE SUPREME COURT IN CASE OF RELIANCE PETROPRODUCTS PRI VATE LIMITED 322 ITR 158 2010 (SC). NO PENALTY CAN BE LEVIED WHERE TWO VIEWS ARE POSSIBLE OR WHERE THERE ARE DEBATABLE ISSUES SPECIALLY WHERE A QUESTI ON OF LAW HAS BEEN FRAMED AND ADMITTED BY THE HIGH COURT AS HELD IN CASE OF C IT-II VS. LIQUID ITA NOS.583 TO 588/DEL/2007, ITA NO.4504/DEL/ 2007, & ITA NOS. 1312,1313,1 314/DEL/2014 ITA NO. 1901/DEL/2 015 16 'V* ' INVESTMENT AND TRADING CO. (ITA 240/2009) (DEL.) (H C). NONE OF THE RELEVANT TERMS NAMELY, CONCEALMENT, INACCURATE PARTICULARS O R REASONABLE CAUSE ARE DEFINED UNDER THE INCOME-TAX ACT. NEEDLESS TO SAY, THAT A PERSON HAS THEREFORE TO RELY ON THE SEVERAL DECISIONS DELIVERE D BY THE COURTS FOR ASSIGNING TRUE MEANING TO THE SAID TERMS. OVER A PERIOD, A JU DICIAL CONSENSUS HAS EMERGED WHERE UNDER A DECISION TAKEN UNDER A BONA F IDE BELIEF IS CONSIDERED TO BE NOT A CASE OF CONCEALMENT OR A CASE OF FURNIS HING INACCURATE PARTICULARS OF INCOME. LIKEWISE, SELECTING ONE OF THE POSSIBLE VIEWS ON A SUBJECT THAT IS CAPABLE OF TWO VIEWS IS HELD TO BE PROVIDING THE PE RSON WITH A REASONABLE CAUSE FOR HIS FAILURE TO DISCLOSE OR FURNISH ACCURA TE PARTICULARS OF HIS INCOME. 18. THE ISSUE ALSO AROSE BEFORE THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. NAYAN BUILDERS, 368 ITR 722 WHEREIN THE COURT FOUND THAT THE APPEAL OF THE REVENUE DEPARTMENT COULD NOT BE ENTER TAINED AS IT DID NOT RAISE ANY SUBSTANTIAL QUESTION OF LAW. IN THE SAID CASE T HE ADDITION OF INCOME OF RS. 1,04,76,050 AND DISALLOWANCE OF EXPENSES OF RS.10,7 9,221 ON BROKERAGE AND RS. 2,00,000 ON LEGAL FEES MADE BY THE AO WERE SUST AINED BY THE TRIBUNAL AND THE APPEAL OF THE ASSESSEE U/S. 260A WAS ADMITT ED BY THE HIGH COURT ON GROUND THAT THE SAID ADDITION AND THE DISALLOWANCES REPRESENTED A SUBSTANTIAL QUESTION OF LAW. THE AO, PENDING THE DISPOSAL OF TH E APPEAL BY THE HONBLE HIGH COURT, HAD LEVIED A PENALTY OF RS. 37,32,777 U /S. 271(1)(C) OF THE ACT WHICH WAS CONFIRMED BY THE COMMISSIONER(APPEALS). O N A FURTHER APPEAL BY THE ASSESSEE TO THE TRIBUNAL, CHALLENGING THE LEVY OF THE PENALTY, THE TRIBUNAL HELD THAT, WHEN THE HIGH COURT ADMITTED A SUBSTANTI AL QUESTION OF LAW ON THE ITA NOS.583 TO 588/DEL/2007, ITA NO.4504/DEL/ 2007, & ITA NOS. 1312,1313,1 314/DEL/2014 ITA NO. 1901/DEL/2 015 17 'V* ' MERITS OF AN ADDITION/DISALLOWANCE, IT BECAME APPAR ENT THAT THE ISSUE UNDER CONSIDERATION ON THE BASIS OF WHICH PENALTY WAS LEV IED, WAS DEBATABLE. IT HELD THAT THE ADMISSION BY THE HIGH COURT LENT CREDENCE TO THE BONA FIDES OF THE ASSESSEE IN CLAIMING DEDUCTION. IT HELD THAT THE ME RE FACT OF CONFIRMATION OF AN ADDITION/DISALLOWANCE WOULD NOT PER SE LEAD TO T HE IMPOSITION OF PENALTY, ONCE IT TURNED OUT THAT CLAIM OF THE ASSESSEE COULD HAVE BEEN CONSIDERED BY A PERSON PROPERLY INSTRUCTED IN LAW AND WAS NOT COMPL ETELY DEBARRED IN LAW. RELYING ON THE DECISIONS IN THE CASES OF RUPAM MERC ANTILE LTD. VS. DCIT, 91 ITD 237(AHD.) (TM) AND SMT. RAMILABEN RATILAL SHAH VS. ACIT, 60 TTJ 171(AHD.), THE TRIBUNAL HELD THAT NO PENALTY WAS EX IGIBLE U/S. 271(1) (C), ONCE THE HIGH COURT HAD HELD THAT THE ISSUE OF ADDI TION/DISALLOWANCE REPRESENTED A SUBSTANTIAL QUESTION OF LAW. ON AN AP PEAL BY THE REVENUE, THE HONBLE BOMBAY HIGH COURT HELD THAT THE IMPOSITION OF THE PENALTY WAS NOT JUSTIFIED. THE COURT NOTED THAT THE TRIBUNAL, AS A PROOF THAT THE PENALTY WAS DEBATABLE AND INVOLVED AN ARGUABLE ISSUE, HAD REFER RED TO THE ORDER OF THE COURT PASSED IN THE ASSESSEE'S APPEAL IN QUANTUM PR OCEEDINGS AND HAD ALSO REFERRED TO THE SUBSTANTIAL QUESTIONS OF LAW WHICH HAD BEEN FRAMED THEREIN. IT HELD THAT WHERE THE HIGH COURT ADMITTED AN APPEAL O N THE GROUND THAT IT INVOLVED A SUBSTANTIAL QUESTION OF LAW, IN RESPECT OF WHICH PENALTY WAS LEVIED, IMPUGNED ORDER OF PENALTY WAS TO BE QUASHED. IT HEL D THAT THE APPEAL CHALLENGING THE ORDER OF THE TRIBUNAL PASSED FOR DE LETING THE PENALTY LEVIED, RAISED NO SUBSTANTIAL QUESTION OF LAW AND AS A CONS EQUENCE DISMISSED IT WITH NO ORDER AS TO COSTS. ITA NOS.583 TO 588/DEL/2007, ITA NO.4504/DEL/ 2007, & ITA NOS. 1312,1313,1 314/DEL/2014 ITA NO. 1901/DEL/2 015 18 'V* ' 19. AN APPEAL U/S 260A OF THE INCOME TAX ACT, 1961 LIES TO THE HIGH COURT FROM AN ORDER OF THE TRIBUNAL ONLY WHERE THE HIGH C OURT IS SATISFIED THAT THE CASE INVOLVES A SUBSTANTIAL QUESTION OF LAW. A FULL BENCH OF THE HONBLE SUPREME COURT IN THE CASE OF SANTOSH HAZARI VS. PUR SHOTTAM, 251 ITR 84 (SC) HELD THAT TO BE A SUBSTANTIAL, A QUESTION OF LAW MU ST BE DEBATABLE, NOT PREVIOUSLY SETTLED BY LAW OF THE LAND OR A BINDING PRECEDENT ...THAT IT WAS NOT FREE FROM DIFFICULTY OR THAT IT CALLED FOR A DISCUS SION FOR AN ALTERNATE VIEW. IT FURTHER HELD THAT THE WORD 'SUBSTANTIAL' QUALIFYING 'QUESTION OF LAW' MEANT HAVING SUBSTANCE, ESSENTIAL, REAL, OF SOUND WORTH, IMPORTANT OR CONSIDERABLE. RECENTLY, THE HONBLE PATNA HIGH COURT IN THE CASE OF DCIT VS. SULABH INTEMATIONAL SOCIAL SERVICE ORGANISATION, 350 ITR 1 89 (PATNA) HAS HELD THAT A SUBSTANTIAL QUESTION OF LAW MUST BE ONE WHICH WAS D EBATABLE AND NOT PREVIOUSLY SETTLED UNDER THE LAW OF THE LAND OR A B INDING PRECEDENT. 20. IN THE CONTEXT OF THE APPEALS OF THE ASSESSEE W E ARE OF THE CONSIDERED OPINION THAT THE ISSUE ON HAND IS DEBATABLE, OPEN A ND CAPABLE OF HAVING AN ALTERNATE VIEW AS THE SAME IS HELD TO BE REPRESENTI NG A SUBSTANTIAL QUESTION OF LAW BY THE JURISDICTIONAL HIGH COURT AT THE TIME OF ADMISSION OF APPEAL. ACCORDINGLY, IT IS APPROPRIATE FOR US TO HOLD, THAT THE ASSESEE WAS UNDER A BONA FIDE BELIEF FOR STAKING ITS CLAIM AND IN THE P RESENCE OF THESE FACTORS, NO PENALTY UNDER SECTION 271(1)(C ) IS LEVIABLE. THE H ON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. LIQUID INVESTMENT LIMITED (I.T. A.NO. 240/2009 VIDE ITS ORDER DATED 5.10.2010) HAS CLEARLY HELD THAT WHERE HIGH COURT HAS ACCEPTED SUBSTANTIAL QUESTION OF LAW U/S 260A, THIS ITSELF S HOWS THAT ISSUE IS DEBATABLE ITA NOS.583 TO 588/DEL/2007, ITA NO.4504/DEL/ 2007, & ITA NOS. 1312,1313,1 314/DEL/2014 ITA NO. 1901/DEL/2 015 19 'V* ' AND IN SUCH A CASE NO PENALTY WAS IMPOSABLE U/S 271 (1)(C) OF THE INCOME-TAX ACT, 1961. IN VIEW OF THE ABOVE, RESPECTFULLY FOLLO WING THE PROPOSITION LAID DOWN BY HON'BLE DELHI HIGH COURT AND HONBLE BOMBAY HIGH COURT, AS NARRATED ABOVE, WE CANCEL THE PENALTY IMPOSED U/S 2 71(1) (C) IN THE SEVEN APPEALS PREFERRED BY THE ASSESSEE VIZ. ITA NOS. 583 TO 588/DEL/2007 AND 4504/DEL/2007. HENCE THE SEVEN APPEALS OF THE ASSES SEE ARE ALLOWED. 21. ON THE SAME ANALOGY AS THE ASSESSEES APPEA LS, WE UPHOLD THE ORDER OF THE LD. CIT (A) IN THE FOUR APPEALS PREFERRED BY THE DEPARTMENT VIZ. ITA NOS. 1312, 1313, 1314 /DEL/2014 AND ITA NO. 1901/DE L/2015. HENCE THE FOUR APPEALS OF THE DEPARTMENT ARE DISMISSED. 22. ALL THE ELEVEN APPEALS ARE DISPOSED OF ACCO RDINGLY. SD/- SD/- (SUDHANSHU SRIVASTAVA) (I NTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: THE 1 ST JANUARY, 2016 VEENA COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR 6. GUARD FILE BY ORDER DY. REGISTRAR