DCIT Coy.Circle 10 (1), V. Daler Singh Mehndi,

ITA 3448/DEL/2007

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 1271 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-11-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 23-06-2009
• Assessment Year: 1998-1999
• Appeal Filed On: 27-07-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y S KAKKAR
• Keywords: Question of law; Difference of opinion
• Section: 271(1)(c)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G : NEW DELHI BEFORE SHRI C.L.SETHI, JM AND SHRI R.C.SHARMA, AM ITA NOS.3448/DEL/2007, 3506/DEL/2007 & 3261/DEL/200 6 ASSESSMENT YEARS : 1998-99, 1999-2000 & 2001-02 DY.COMMISSIONER OF INCOME TAX, COY.CIRCLE-10(1), NEW DELHI. VS. SHRI DALER SINGH MEHNDI, F-55-A, LADO SARAI, NEW DELHI. PAN NO.AAJPM6359B. (APPELLANT) (RESPONDENT) APPELLANT BY : MS.Y.S.KAKKAR, SR.DR. RESPONDENT BY : SHRI AJAY VOHRA, ADVOCATE AND SHRI GAURAV JAIN, CA. ORDER PER R.C.SHARMA, AM : THESE ARE THE APPEALS FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A) FOR AY 1998-99, 1999-2000 & 2001-02, IN THE MATTER OF D ELETION OF PENALTY IMPOSED U/S 271(1)(C) OF THE IT ACT. 2. THE ISSUE IN ALL THE YEARS PERTAINS TO THE ASSES SEES CLAIM FOR DEDUCTION U/S 80RR WHICH WAS REDUCED, AND ON THE AMOUNT OF REDUCT ION, PENALTY WAS IMPOSED U/S 271(1)(C) WHICH WAS DELETED BY THE CIT(A) AND R EVENUE IS IN FURTHER APPEAL BEFORE US. 3. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND FOU ND FROM THE RECORD THAT ASSESSEE IS A POPULAR ARTIST ENGAGED IN THE PROFESS ION OF SINGING MUSIC AND PERFORMS STAGE SHOWS IN INDIA AS WELL AS ABROAD AND ALSO IS ENGAGED IN SOUND RECORDING AND VISUAL WORK ALBUMS. HIS MAIN SOURCE OF INCOME IS FROM SHOWS AS ITA-3448 & 3506/D/2007 & 3261/D/2006 2 WELL AS BY WAY OF ROYALTY ON SOUND RECORDINGS AND V ISUAL WORKS (ALBUMS), ENDORSEMENT FEES ETC. ASSESSEES SOURCE OF INCOME IN FOREIGN COUNTRIES IS ALLEGED TO BE ONLY FROM STAGE SHOWS PERFORMED ABROAD WHILE IN INDIA, HIS SOURCE OF INCOME IS NOT ONLY FROM SHOWS BY WAY OF PROFESSIONA L RECEIPTS BUT ALSO BY WAY OF ROYALTY FROM ALBUMS, ENDORSEMENT FEES, SALARY AND O THER PROFESSIONAL RECEIPTS. DURING THE AY 1998-99, ASSESSEE FILED HIS RETURN OF INCOME CLAIMING DEDUCTION U/S 80RRA AT RS.98,54,447/-. THE AO HOWEVER REDUCED TH E ELIGIBLE CLAIM OF DEDUCTION U/S 80RR FROM RS.98,54,447/- TO RS.79,92, 260/- ONLY BY ALLOCATING ENTIRE EXPENSES TOWARDS FOREIGN SHOWS INCLUDING THO SE EXPENSES WHICH WERE ALLEGED TO BE DIRECTLY INCURRED TO EARN VARIOUS SOU RCE OF INCOME IN INDIA AND HAS NO RELATIONSHIP WHATSOEVER TO THE INCOME FROM FOREIGN SHOWS. IN APPEAL, THE CIT(A) DIRECTED THE AO TO WORK OUT THE DEDUCTION U/S 80RR BY ALLOCATING 25% OF THE EXPENSES TOWARDS FOREIGN SHOWS. ON THE BASIS OF TH IS DIRECTION, THE ALLOWABLE DEDUCTION U/S 80RR WAS WORKED OUT AT RS.95,04,092/- . THUS, THE QUANTUM OF DEDUCTION U/S 80RR FOR WHICH THE PENALTY U/S 271(1) (C) HAS BEEN LEVIED HAS UNDERGONE CHANGE AS A RESULT OF DIFFERENCE OF OPINI ON AT VARIOUS LEVELS AS TO HOW MUCH EXPENDITURE IS TO BE ALLOCATED FOR WORKING OUT THE DEDUCTION U/S 80RR. THUS, THE CLAIM OF DEDUCTION U/S 80RR WHICH HAS BEE N MADE THE BASIS OF LEVY OF PENALTY FOR CONCEALMENT IS ONLY DUE TO DIFFERENCE O F OPINION AT VARIOUS LEVELS ABOUT THE EXTENT OF EXPENDITURE TO BE ALLOCATED FOR FOREIGN SHOWS VIS--VIS THE INDIAN SHOWS ETC. FOR WORKING OUT THE DEDUCTION. T HIS DIFFERENCE OF OPINION CANNOT BE MADE THE BASIS FOR CONCLUDING THAT THERE IS CONCEALMENT OF INCOME AND/OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME ON THE PART OF THE ASSESSEE. THE QUANTUM OF DEDUCTION U/S 80RR IS THE MATTER OF CONTROVERSY AS TO WHETHER THE DEDUCTION IS ALLOWABLE ON THE GROSS REC EIPTS OR ON THE NET INCOME IN VIEW OF HON'BLE DELHI HIGH COURT REFERRING THE MATT ER TO A LARGER BENCH IN THE CASE OF COMMISSIONER OF INCOME TAX VS. CHEMICALS & METALLURGICAL DESIGNS COMPANY LIMITED 161 ITR 317 (DELHI) AND THEREFORE , NO PENALTY COULD HAVE BEEN LEVIED ON THE ISSUE OF DEDUCTION U/S 80RR OF T HE ACT. THE PENALTY SO LEVIED FOR REDUCTION IN CLAIM OF DEDUCTION U/S 80RR DURING THE AY 1998-99 WAS DELETED ITA-3448 & 3506/D/2007 & 3261/D/2006 3 BY THE CIT(A) BY OBSERVING THAT THE ASSESSEE HAD CL AIMED DEDUCTION U/S 80RR OF RS.1,00,62,960/- @ 75% OF RS.1,34,17,280/- WHICH WE RE GROSS RECEIPTS OF FOREIGN SHOWS WHEREAS IN THE RETURN FILED IN RESPONSE TO NO TICE U/S 148, THE ASSESSEE REDUCED THE CLAIM OF DEDUCTION U/S 80RR TO RS.98,54 ,447/-. THE AO ALLOWED DEDUCTION AT RS.79,92,195/- BY ALLOCATING THE EXPEN DITURE MADE ON PRO RATA ON THE BASIS OF FOREIGN RECEIPTS AND RECEIPTS IN INDIA . WHILE DECIDING THE ISSUE OF GRANT OF DEDUCTION U/S 80RR IN THE MAIN APPEAL, THE CLAIM OF THE ASSESSEE HAD BEEN PARTLY ALLOWED CONSEQUENT TO WHICH THE CLAIM U/S 80 RR HAD BEEN RESTRICTED TO RS.95,04,092/- AND WHILE DOING SO, THE CIT(A) HAD F OLLOWED THE EARLIER APPELLATE ORDER DATED 6.7.2006 IN APPEAL NO.41/06-07 AS PER W HICH THE PENALTY FOR CONCEALMENT FOR AN AMOUNT OF RS.6,17,409/- RELATING TO AY 2001-02 HAS BEEN DELETED WITH REASONING THAT, FIRSTLY, THAT THE ADDI TION HAS BEEN MADE BY THE AO ON ESTIMATE BASIS ONLY AND WHICH HAS BEEN SUSTAINED PA RTLY BY CIT(A), AGAIN ON ESTIMATE BASIS WHICH CANNOT BE MADE THE BASIS FOR L EVY OF CONCEALMENT PENALTY AND SECONDLY THAT THE FACTS AND CIRCUMSTANCES OF THE CA SE DO NOT SUGGEST ANY MALAFIDES AND/OR MENS REA ON THE PART OF THE ASSESSEE APART FROM THE FACT THAT THE AO HAS NOT RECORDED ANY REQUISITE SATISFACTION IN THE BODY OF THE ORDER FOR INITIATION AND IMPOSITION OF PENALTY FOR CONCEALMENT. AS THE FACT S AND CIRCUMSTANCES OF THE INSTANT CASE REMAIN THE SAME AS FOR AY 2001-02 WHER E PENALTY WAS DELETED BY CIT(A), THE CIT(A) DIRECTED THE AO TO CANCEL THE PE NALTY FOR CONCEALMENT LEVIED ON THE ASSESSEE. WE ALSO FOUND THAT SUBSTANTIAL QU ESTION HAS BEEN ACCEPTED BY THE HONBLE HIGH COURT IN THE MATTER OF DISALLOWANCE MA DE U/S 80RR VIDE ORDER DATED 28.5.2009. IN VIEW OF THE THIRD MEMBER DECISION OF AHMEDABAD BENCH OF THE TRIBUNAL IN THE CASE OF RUPAM MERCANTILES LTD. 91 ITD 273 FOR CONCEALMENT OF INCOME, WHETHER A PLEA OR CLAIM, WHICH IS HELD BY T HE HIGH COURT TO HAVE GIVEN RISE TO A SUBSTANTIAL QUESTION OF LAW, CANNOT BE TR EATED TO BE FRIVOLOUS OR MALA-FIDE AS TO ATTRACT LEVY OF PENALTY U/S 271(1)(C). IT WA S HELD BY THE BENCH THAT IN THESE CIRCUMSTANCES NO PENALTY IS LEVIABLE U/S 271(1)(C). ITA-3448 & 3506/D/2007 & 3261/D/2006 4 4. IN VIEW OF THE ABOVE DISCUSSION, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) DELETING THE PENALTY IMPOSED U/S 271(1)(C) O F IT ACT. 5. IN THE RESULT, THE APPEALS OF THE REVENUE FOR AL L THE THREE YEARS ARE DISMISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 17 TH NOVEMBER, 2009. SD/- SD/- (C.L.SETHI) (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 21.12.2009. VK. COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT DEPUTY REGISTRAR ITA-3448 & 3506/D/2007 & 3261/D/2006 5