ITO 10(3)(1), MUMBAI V. E BAY INDIA P. TD, MUMBAI

ITA 2371/MUM/2013

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1791 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 9 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 08-01-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 26-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G N MAKWANA
• Keywords: Bonafide belief; Cost of acquisition
• Section: 143(3); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH E, MUMBAI BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER ITA NO.2371/M/2013 ASSESSMENT YEAR: 2005-06 INCOME TAX OFFICER 10(3)(1), ROOM NO.456, 4 TH FLOOR, AAYAKAR BHAVAN, MAHARSHI KARVE ROAD, MUMBAI - 400020 VS. M/S. EBAY INDIA PVT. LTD., 2020-B, PHONIX HOUSE, 462, SENAPATI BAPAT MARG, LOWER PAREL, MUMBAI 400 013 PAN: AABCB 2307H (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI M.P. LOHIA, A.R. SHRI NIKHIL TIWARI, A.R. MS. PRATIMA RATHI, A.R. REVENUE BY : SHRI G.N. MAKWANA, D.R. DATE OF HEARING : 07.10.2015 DATE OF PRONOUNCEMENT : 31.12.2015 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE REVEN UE AGAINST THE ORDER DATED 24.12.2012 OF THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT Y EAR 2005-06. 2. THE REVENUE HAS AGITATED THE DELETION OF THE PEN ALTY OF RS.55,04,265/- LEVIED BY THE ASSESSING OFFICER (HEREINAFTER REFERR ED TO AS THE AO) UNDER SECTION 271(1)(C) OF THE ACT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E ENTERED INTO AN AGREEMENT WITH EBAY INTERNATIONAL AG, SWITZERLAND FOR SALE OF USER DATA FOR A CONSIDERATION OF US$ 6,50,000/-. THE ASSESSEE DISC LOSED THE ENTIRE DETAILS RELATING TO THE ABOVE SALE OF USER DATA, IN THE R ETURN OF INCOME. THE ASSESSEE ITA NO.2371/M/2013 M/S. EBAY INDIA PVT. LTD. 2 CONSIDERED THE USER DATA AS A SELF GENERATED CAPI TAL ASSET AND ITS COST OF ACQUISITION WAS CONSIDERED AS NOT DETERMINABLE. TH E ASSESSEE ACCORDINGLY ADOPTED THE PROPOSITION OF LAW LAID DOWN BY THE HON BLE SUPREME COURT IN THE CASE OF CIT VS. BC SRINIVASA SETTY (128 ITR 294) A ND ACCORDINGLY DID NOT OFFER ANY CAPITAL GAINS TAX ON THE SAID SALE OF US ER DATA. DURING THE COURSE OF ASSESSMENT PROCEEDINGS UNDER SECTION 143(3) OF THE ACT, THE ASSESSEE SUBMITTED THE ENTIRE DETAILS REGARDING THE SALE OF USER DATA AND ALSO ITS SUBMISSIONS REGARDING THE NON TAXABILITY OF THE SAME. THE AO, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, AGREED THAT THE CONSID ERATION RECEIVED BY THE ASSESSEE ON ACCOUNT OF SALE OF USER DATA WAS NOT TAXABLE. HOWEVER, SUBSEQUENTLY THE ASSESSMENT WAS REOPENED UNDER SECT ION 147 OF THE ACT. IN THE REOPENED ASSESSMENT PROCEEDINGS, THE AO CONSIDERED THE COST OF ACQUISITION OF THE USER DATA AS NIL AND ACCORDINGLY TAXED THE CA PITAL GAINS ON THE SALE OF THE SAID USER DATA. THE ASSESSEE DID NOT CONTEST THE ABOVE TAXATION. HOWEVER, THE AO INITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT AND IMPOSED THE IMPUGNED PENALTY ON ACCOUNT OF CONCEALM ENT OF PARTICULARS OF INCOME. THE ASSESSEE PREFERRED APPEAL BEFORE THE L D. CIT(A) AGAINST THE LEVY OF THE PENALTY. 4. LD. CIT(A) DELETED THE PENALTY OBSERVING THAT TH E ASSESSEE WAS UNDER BONAFIDE BELIEF REGARDING THE NON TAXABILITY OF THE AMOUNT RECEIVED AS CONSIDERATION ON SALE OF USER DATA. EVEN THE AO IN THE ORIGINAL ASSESSMENT PROCEEDINGS HAD ALSO AGREED TO THE CLAIM OF THE ASS ESSEE. THIS FACT ITSELF SHOWS THAT THE ISSUE WAS DEBATABLE. HE FURTHER OBSERVED THAT ALL THE PARTICULARS OF THE SALE AND THE NON TAXABILITY OF THE CAPITAL GAINS WE RE FULLY AND DULY DISCLOSED IN THE RETURN OF INCOME AND ALSO DURING THE ASSESSMENT PROCEEDINGS. HENCE, IT WAS NOT A CASE OF FURNISHING OF INACCURATE PARTICUL ARS OF INCOME OR CONCEALMENT OF INCOME. HE THEREFORE DELETED THE IMPUGNED PENAL TY. ITA NO.2371/M/2013 M/S. EBAY INDIA PVT. LTD. 3 5. AFTER HEARING THE LD. REPRESENTATIVES OF THE PAR TIES AND GOING THROUGH THE RECORD, WE DO NOT FIND ANY INFIRMITY IN THE WEL L REASONED ORDER OF THE LD. CIT(A) ON THE ABOVE ISSUE AND THE SAME IS HEREBY UP HELD. 6. THERE IS NO MERIT IN THE APPEAL OF THE REVENUE A ND THE SAME IS THEREFORE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31.12.2015. SD/- SD/- (N.K. BILLAIYA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 31.12.2015. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.