Deputy Commissioner of Income-tax, Pune V. Cummins Inc., Pune

ITA 2097/PUN/2016

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 2315 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 2 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-12-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 03-12-2019
• Assessment Year: 2007-2008
• Appeal Filed On: 09-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T VIJAYA BHASKAR REDDY
• Section: 201; 274

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, PUNE BEFORE SHRI R.S.SYAL, VP AND SHRI PARTHA SARATHI CHAUDHURY , JM . / I TA NO. 2097 /PUN/20 16 / ASSESSMENT YEAR : 2007 - 08 THE DEPUTY COMMISSIONER OF INCOME TAX, INTERNATIONAL TAXATION - 1, PUNE. ....... / APPELLANT / V/S. CUMMINS INC. C/O. CUMMINS INDIA LTD., 5 TH FLOOR, TOWER - A, CUMMINS INDIA OFFICE, CAMPUS, SURVEY NO.1, BALEWADI, PUNE - 411 045. PAN:AABCC6225D / RESPONDENT A SSESSEE BY : SHRI KETAN VED REVENUE BY : SHRI T. VIJAYA BHASKAR REDDY / DATE OF HEARING : 0 3 .12 .2019 / DATE OF PRONOUNCEMENT : 05 .12 .2019 / ORDER PER PARTHA SARATHI CHAUDHU RY, JM : THIS APPEAL PREFERRED BY THE REVENUE EMANATES FROM THE ORDER OF THE LD. CIT(APPEALS) - 13, PUNE DATED 20.06.2016 FOR THE ASSESSMENT YEAR 2007 - 08 AS PER THE GROUNDS OF APPEAL ON RECORD. 2 ITA NO. 2097 /PUN/20 16 A.Y. 2007 - 08 2. THE CRUX OF THE GRIEVANCE OF THE REVENUE IN THIS APPEAL IS WITH REGARD TO THE DELETION OF PENALTY BY THE LD. CIT(APPEALS) IMPOSED U/S.271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). THE LD. CIT(APPEALS) WHILE DELETING THE PENALTY HAS HELD AS FOLLOWS: 2.7 I AGREE WITH THE APPELLANT. AS ON TODAY, THERE ARE DECISIONS IN FAVOUR OF THE ASSESSEE AS WELL AS AGAINST THE ASSESSEE WHICH IS INDICATIVE OF THE FACT TH AT THE ISSUE IS DISPUTED AND ALSO OF THE FACT THAT APPELLANT MAY HAVE BONA FIDE BELIEF THAT SUCH PAY IS NOT TAXABLE. FURTHER, THE CONDITIONS MENTIONED EITHER CLAUSE (A) OR CLAUSE (8) OF THE EX PLANATION - 1 TO SECTION 271 (1 )(C) ARE NOT SATISFIED WHEN THE ISSUE IS DISPUTED IN NATURE. IN TERMS OF THE EXPLANATION - 1, THE APPELLANT'S EXPLANATION OF ITS BELIEF ON NON - TAXABILITY OF THE RECEIPT CANNOT BE CONSIDERED EITHER FALSE OR UNSUBSTANTIATED OR NOT BONA FIDE. IT ALSO CANNOT BE STATED THAT THE APPELLANT HAS FAILED TO DISCLOSE A' PARTICULARS OF ITS INCOME. THEREFORE, PENALTY U/S.271 (1)(C) CANNOT BE LEVIED IN ABSENCE OF ESTABLISHING THE CHARGE OF EITHER 'CONCEALMENT' OR OF 'FURNISHING OF INACCURATE PARTICULARS OF INCOME. 3. TH AT FURTHER, THE LD. AR OF THE ASSESSEE SUBMITTED THAT THE VERY QUANTUM FOR WHICH PENALTY HAS BEEN IMPOSED THAT ITSELF HAS BEEN DELETED IN ASSESSEES OWN CASE IN MA NO.46/PUN/2019 (ARISING OUT OF ITA NO.1663/PUN/2011 FOR THE ASSESSMENT YEAR 2007 - 08 , MA NO.4 7/PUN/2019 (ARISING OUT OF ITA NO.2181/PUN/2013) FOR ASSESSMENT YEAR 2005 - 06 AND IN ITA NO.1663/PUN/2011 FOR ASSESSMENT YEAR 2007 - 08 DECIDED ON 11.09.2019 WHEREIN THE TRIBUNAL HAS HELD AS FOLLOWS: 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RE CORD. IN THE FIRST INSTANCE, THE MISCELLANEOUS APPLICATIONS WHICH ARE FILED BY APPLICANT ARE AGAINST SEPARATE ORDERS OF TRIBUNAL AND UNDER BOTH THE ORDERS, THE TRIBUNAL HAD DECIDED THE ISSUE ON ACCOUNT OF ASSESSEE FILING THE APPLICATION UNDER SECTION 158A OF THE ACT, WITHOUT DECIDING THE ISSUE ON MERITS AND FOLLOWING ITS DECISION IN EARLIER YEARS I.E. ASSESSMENT YEARS 2004 - 05 AND 2007 - 08, ON THE GROUND THAT THE APPEALS OF APPLICANT WERE ADMITTED BY THE HONBLE HIGH COURT. HOWEVER, ON A LATER DATE, VIDE ORDE R DATED 06.12.2017 IN MISCELLANEOUS APPLICATION THE TRIBUNAL HAD RECALLED ITS EARLIER ORDER AND APPEALS WERE LISTED FOR HEARING. IN SUCH SCENARIO, WHERE THE APPEALS FOR THE INSTANT ASSESSMENT YEARS WERE DECIDED ON THE BASIS OF APPEALS DECIDED FOR ASSESSMEN T YEARS 2004 - 05 AND 2006 - 07 AND WHERE THE ORDERS STAND RECALLED BY THE TRIBUNAL, WE FIND MERIT IN THE MISCELLANEOUS APPLICATIONS MOVED BY THE APPLICANT AND WE RECALL OUR ORDER IN THE SAID APPEALS. HENCE, THE MISCELLANEOUS APPLICATIONS ARE ALLOWED. HOWEVER, SINCE THE ISSUES HAVE ALREADY BEEN ATTAINED FINALITY AND HAVE BEEN DECIDED BY THE TRIBUNAL VIDE ITS ORDER 3 ITA NO. 2097 /PUN/20 16 A.Y. 2007 - 08 DATED 05.07.2019. HOWEVER, FOR THE SAKE OF BREVITY, WE ARE NOT REPRODUCING THE SAME BUT FOLLOWING THE SAME, WE HOLD THAT THE RECEIPTS FROM FACILITATI NG GRANT OF USER CHARGES IN SOFTWARE TO INDIAN ENTITIES IS NOT ROYALTY AND HENCE, NOT TAXABLE IN THE HANDS OF APPLICANT. THIS IS THE ONLY ISSUE RAISED IN THE PRESENT APPEALS AND HENCE, BOTH THE APPEALS OF APPLICANT STANDS ALLOWED. WE OBSERVE THAT THE QUANTUM ADDITION OF THE ASSESSEE HAS BEEN DELETED AND THEREFORE PENALTY DOES NOT HAVE ANY LEG TO STAND. IT WAS HELD BY HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. COSMOPOLITAN TRADING CORPORATION REPORTED AS 274 ITR 640 AND HONO URABLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. PRAKASH INDUSTRIES LTD REPORTED AS 322 ITR 622 THAT WHEN THE ENTIRE ADDITION HAD BEEN DELETED IN THE QUANTUM APPEAL, NO REASON SURVIVES FOR SUSTAINING THE PENALTY. 4. IN VIEW OF THE AFORESAID EXAMINATION OF FACTS AND JUDICIAL PRONOUNCEMENTS, WE ARE OF THE CONSIDERED VIEW THAT THE DELETION OF PENALTY U/S.271(1)(C) OF THE ACT IS VALID AND JUSTIFIED WITHIN THE FRAMEWORK OF INCOME TAX ACT. WE ARE IN CONFORMITY WITH THE FINDINGS OF THE LD. CIT(APPEA LS) IN THIS REGARD. 5. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRO NOUNCED ON 05 TH DAY OF DEC EMBER , 201 9 . SD/ - SD/ - R.S.SYAL PARTHA SARATHI CHAUDHURY VICE PRESIDENT JUDICIAL MEMBER / PUNE; / DATED : 05 TH DECE MBER , 2019 . SB 4 ITA NO. 2097 /PUN/20 16 A.Y. 2007 - 08 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(APPEALS) - 13, PUNE. 4. THE PR. CIT - 5, PUNE. 5 . , , , / DR, ITAT, C BENCH, PUNE. 6 . / GUARD FILE. // TRUE COPY // / BY ORDER, / PRIVATE SECRETARY , / ITAT, PUNE . 5 ITA NO. 2097 /PUN/20 16 A.Y. 2007 - 08 DATE 1 DRAFT DICTATED ON 0 3 . 12 .2019 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 03 .12 .201 9 SR.PS/PS 3 DRAFT PROPOSED AND PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/JM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 DATE OF UPLOADING OF ORDER SR.PS/PS 8 FILE SENT TO BENCH CLERK SR.PS/PS 9 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 10 DATE ON WHICH FILE GOES TO THE A.R 11 DATE OF DISPATCH OF ORDER