DELTA AIR LINES . INC, MUMBAI V. DDIT (IT) RG 1(2), MUMBAI

ITA 2627/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9100 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 23-08-2012
• Assessment Year: 2001-2002
• Appeal Filed On: 06-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SURINDER JIT SINGH
• Assessee Lawyers: VIVEK DAMANI
• Keywords: Double taxation relief
• Section: 143(3); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D, MUMBAI BEFORE SHRI D.K. AGARWAL, JUDICIAL MEMBER & SHRI P.M.JAGTAP, ACCOUNTANT MEMBER. I.T.A. NO.2627/MUM/2011 ASSESSMENT YEAR : 2001-02. DELTA AIR LINES, INC, DY. DIRECTOR OF INCOME-TAX, GSA INTERGLOBE AIR TRANSPORT, VS . (INTERNATIONAL TAXATION), GROUND FLOOR, PODAR SITARAM D MARG, RANGE-1(2), MARINE DRIVE, MUMBAI. MUMBAI 400 020. PAN AAACD 4092N APPELLANT. RESPONDENT . APPELLANT BY : SHRI NISHANT THAKKAR & SHRI VIVEK DAMANI. RESPONDENT BY : SHRI SURINDER JIT SINGH. DATE OF HEARING : 03-12-2012 DATE OF PRONOUNCEMENT : 14-12-2012. O R D E R PER P.M. JAGTAP, A.M. : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF LEARNED CIT(APPEALS)-10, MUMBAI DATED 27-01-2011 WHEREBY HE CONFIRMED THE PENALTY OF RS.2,56,353/- IMPOSED BY THE AO U/S 271(1)(C). 2. THE ASSESSEE IN THE PRESENT CASE IS CONNECTED WI TH OPERATION OF AIRCRAFTS. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION W AS FILED BY IT ON 18-10-2001 DECLARING TOTAL INCOME AT NIL AFTER CLAIMING EXEMPT ION FOR THE ENTIRE INCOME UNDER ARTICLE 8 OF INDO-US DTAA. THE SAID RETURN WAS INIT IALLY PROCESSED BY THE AO U/S 143(1) OF THE ACT ON 02-01-2003. SUBSEQUENTLY HE NO TICED FROM THE PERUSAL OF THE 2 ITA NO.2627/MUM/2011. RECORD THAT INTEREST INCOME OF RS.17,09,023/- WAS E ARNED BY THE ASSESSEE ON FIXED DEPOSIT AND SINCE THE SAID INCOME WAS NOT CONNECTED WITH THE OPERATION OF AIRCRAFTS, THE ASSESSEE WAS NOT ENTITLED FOR EXEMPT ION UNDER ARTICLE 8 OF INDO-US DTAA IN RESPECT OF THE SAID INTEREST INCOME. ACCORD ING TO THE AO, THE SAID INTEREST WAS CHARGEABLE TO TAX IN THE HANDS OF THE ASSESSEE IN INDIA AS PER ARTICLE 11 OF INDO-US DTAA AT THE RATE OF 15%. HE, THEREFORE, REO PENED THE ASSESSMENT AFTER RECORDING THE REASONS AND COMPLETED THE ASSESSMENT U/S 143(3) READ WITH SECTION 147 VIDE AN ORDER DATED 23-11-2006 BRINGING TO TAX INTEREST INCOME OF RS.17,09,023/- IN THE HANDS OF THE ASSESSEE AT THE RATE OF 15%. 3. ON APPEAL, THE LEARNED CIT(APPEALS) UPHELD THE V ALIDITY OF THE SAID ASSESSMENT MADE BY THE AO U/S 143(3) READ WITH SECT ION 147 AND ALSO CONFIRMED THE ADDITION MADE THEREIN ON ACCOUNT OF INTEREST IN COME. THEREAFTER, A NOTICE WAS ISSUED BY THE AO REQUIRING THE ASSESSEE TO SHOW CAU SE WHY PENALTY U/S 271(1)(C) SHOULD NOT BE IMPOSED U/S 271(1)(C) IN RESPECT OF T HE ADDITION MADE ON ACCOUNT OF INTEREST INCOME. THE EXPLANATION OFFERED BY THE ASS ESSEE IN RESPONSE TO THE SAID SHOW CAUSE NOTICE WAS NOT FOUND ACCEPTABLE BY THE A O WHO IMPOSED A PENALTY OF RS.2,56,353/- U/S 271(1)(C) BEING 100% OF THE TAX S OUGHT TO BE EVADED BY THE ASSESSEE IN RESPECT OF ADDITION MADE ON ACCOUNT OF INTEREST INCOME. ON APPEAL, THE LEARNED CIT(APPEALS) CONFIRMED THE SAID PENALTY AND AGGRIEVED BY THE SAME, THE ASSESSEE IS NOW IN APPEAL BEFORE THE TRIBUNAL. 4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. AS SUBMITTED BY THE LEARNED COU NSEL FOR THE ASSESSEE, THE TRIBUNAL VIDE ITS ORDER DATED 30-11-2012 PASSED IN ITA NO. 3476/MUM/2008 HAS ALREADY QUASHED THE ASSESSMENT MADE U/S 143(3) READ WITH SECTION 147 FOR THE YEAR UNDER CONSIDERATION HOLDING THE SAME TO BE BAD IN L AW AND THIS POSITION CLEARLY EVIDENT FROM THE COPY OF THE SAID ORDER PLACED ON R ECORD BEFORE US HAS NOT BEEN 3 ITA NO.2627/MUM/2011. DISPUTED BY THE LEARNED DR. IN THE CASE OF K.C. BUI LDERS AND ANOTHER REPORTED IN 135 TAXMAN 461, THE HONBLE SUPREME COURT HAS HELD THAT IF THE CORRESPONDING ASSESSMENT ITSELF IS CANCELLED OR SET ASIDE IN THE QUANTUM PROCEEDINGS, PENALTY IMPOSED U/S 271(1)(C) IN SUCH ASSESSMENT CANNOT BE SUSTAINED. RESPECTFULLY FOLLOWING THE SAID DECISION OF HONBLE SUPREME COUR T, WE CANCEL THE PENALTY IMPOSED U/S 271(1)(C) HAVING NO LEGS TO STAND AND A LLOW THIS APPEAL OF THE ASSESSEE. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED ON THIS 14 TH DAY OF DEC., 2012. SD/- SD/- (D.K.AGARWAL) (P.M. JAGTAP) JUDICIAL MEMBER ACCO UNTANT MEMBER MUMBAI, DATED: 14 TH DEC., 2012. COPY TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR, D-BENCH. (TRUE COPY) BY ORD ER ASSTT. REGI STRAR, ITAT, MUMBAI BENCHES, MUMB AI. WAKODE