M/S. KPMG, MUMBAI V. THE ADDL DIT (IT) RG -3, MUMBAI

ITA 4065/MUM/2008

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1039 (ITAT-MUMBAI)
• Duration Of Justice: 8 year(s) 10 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-04-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: L
• Next Hearing Date: 01-11-2016
• Assessment Year: 2003-2004
• Appeal Filed On: 06-06-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M V RAJGURU
• Assessee Lawyers: SHARDDHA SWARUP; ARIJIT CHAKROVARTY
• Keywords: Non-deduction of tax
• Section: 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'L' BENCH, MUMBAI BEFORE SHRI JASON P. BOAZ, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER ITA NOS. 4063 TO 4066/MUM/2008 (ASSESSMENT YEARS: 200-01, 2002-03, 2003-04 & 2004 -05) M/S. KPMG VS. ADDITIONAL C.I.T. LODHA EXCELUS, 1 ST FLOOR APOLLO MILLS COMPOUND N.M. JOSHI MARG, MAHALAXMI MUMBAI 400011 (INTERNATIONAL TAXATION) RANGE-3, MUMBAI PAN AAAFK1415H APPELLANT RESPONDENT APPELLANT BY: SHRI ARIJIT CHAKROVARTY & MS. SHARDDHA SWARUP RESPONDENT BY: SHRI M.V. RAJ GURU DATE OF HEARING: 26.04.2017 DATE OF PRONOUNCEMENT: 28.04.2017 O R D E R PER BENCH THESE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDERS OF THE CIT(A)-XXXIII, MUMBAI DATED 31.03.2008 FOR ASSESSME NT YEARS 2001-02, 2002-03 TO 2004-05, CONFIRMING THE LEVY OF PENALTY UNDER SECTION 271C OF THE INCOME TAX ACT, 1961 (IN SHORT 'THE ACT'). 2. THE FACTS OF THE DISPUTE, BRIEFLY, ARE AS UNDER: - 2.1 THE ASSESSEE FIRM, SET UP IN INDIA UNDER THE IN DIAN PARTNERSHIP ACT, 1932 WITH THE PERMISSION OF THE SECRETARIAT OF INDU STRIAL APPROVALS, MINISTRY OF INDUSTRY, GOVERNMENT OF INDIA AND THE R ESERVE BANK OF INDIA, IS A MEMBER OF THE KPMG INTERNATIONAL, A VEREIN (I. E. AN ASSOCIATION) ESTABLISHED UNDER THE LAWS OF THE SWISS CONFEDERATI ON WITH ITS HEADQUARTERS IN THE NETHERLANDS. THE ASSESSEE HAD E NTERED INTO A LICENCE AGREEMENT AND A MEMBERSHIP AGREEMENT BOTH DATED 01. 10.1998 WITH KPMG INTERNATIONAL AND ALSO ENTERED INTO SEPARATE S UB-LICENCE AGREEMENTS WITH OTHER MEMBER ENTITIES IN INDIA OF KPMG INTERNA TIONAL. PURSUANT TO ITA NOS. 4063 TO 4066/MUM/2008 M/S. KPMG 2 THE AFORESAID LICENCE, SUB-LICENCE AND MEMBERSHIP A GREEMENT THE ASSESSEE MADE REMITTANCES TO KPMG INTERNATIONAL IN RESPECT O F CONTRIBUTION TOWARDS SHARE OF COSTS (I.E. CASH CALLS), REIMBURSE MENT OF CHARGES TOWARDS INTUITION OF COMPUTER BASED BANKING, BANK GUARANTEE S, PROFESSIONAL INDEMNITY INSURANCE, ETC. IN RESPECTIVE YEARS AS TH ESE CHARGES AROSE, WITHOUT DEDUCTION OF TAX AT SOURCE AS THE SAME WERE , IN THE ASSESSEES OPINION, NOT CHARGEABLE TO TAX. THE ASSESSING OFFIC ER (AO) ISSUED SHOW CAUSE NOTICES FOR THE ASSESSMENT YEARS UNDER CONSID ERATION (I.E. 2000-01 AND 2002-03 TO 2004-05) REQUIRING THE ASSESSEE TO E XPLAIN WHY THE SAID AMOUNTS WERE PAID/REMITTED TO THE NRI, KPMG INTERNA TIONAL WITHOUT DEDUCTING TAX AT SOURCE. AFTER CONSIDERING THE ASSE SSEES EXPLANATION, THE AO PASSED ORDERS UNDER SECTION 201(1) AND 201(1A) O F THE ACT ALL DATED 06.03.2007 FOR THE ASSESSMENT YEARS IN QUESTION, HO LDING THE ASSESSEE TO BE AN ASSESSEE IN DEFAULT FOR NOT DEDUCTING TAX AT SOURCE WHILE MAKING THE AFORESAID PAYMENTS TO KPMG INTERNATIONAL WHICH CONS TITUTED ROYALTY. THE AO ALSO SIMULTANEOUSLY ISSUED NOTICES DATED 06.03.2 007 CALLING UPON THE ASSESSEE AS TO WHY PENALTY UNDER SECTION 271C OF TH E ACT SHOULD NOT BE LEVIED IN ITS CASE FOR THE FOUR ASSESSMENT YEARS UN DER CONSIDERATION FOR FAILURE TO DEDUCT TAX AT SOURCE UNDER SECTION 195 O F THE ACT IN RESPECT OF PAYMENTS TO KPMG INTERNATIONAL WHICH WERE IN THE NA TURE OF ROYALTY. ACCORDING TO THE SUBMISSIONS MADE BEFORE US, NO APP EALS WERE PREFERRED BY THE ASSESSEE IN THESE FOUR ASSESSMENT YEARS AGAI NST THE ORDERS PASSED UNDER SECTIONS 201(1) AND 201(1A) OF THE ACT DATED 06.03.2007. SUBSEQUENTLY, THE AO TOOK UP PENALTY PROCEEDINGS UN DER SECTION 271C OF THE ACT AND AFTER CONSIDERING THE ASSESSEES CONTEN TIONS AND EXPLANATIONS, THE AO PROCEEDED TO LEVY PENALTY UNDER SECTION 271C OF THE ACT VIDE ORDERS DATED 19.09.2007 FOR THE FOUR IMPUGNED ASSESSMENT Y EARS. 2.2 AGGRIEVED BY THE ORDER OF ASSESSMENT LEVYING PE NALTY UNDER SECTION 271C OF THE ACT VIDE ORDERS DATED 19.09.2007 FOR AS SESSMENT YEARS 2000- 01 AND 2002-03 TO 2004-05, THE ASSESSEE PREFERRED A PPEALS BEFORE THE CIT(A)-XXXIII, MUMBAI, WHICH WERE DISMISSED VIDE TH E IMPUGNED ORDERS ALL DATED 31.03.2008. ITA NOS. 4063 TO 4066/MUM/2008 M/S. KPMG 3 3. AGGRIEVED BY THE IMPUGNED ORDERS OF CIT(A)-XXXIII, MUMBAI DATED 31.03.2008 CONFIRMING THE LEVY OF PENALTY UNDER SEC TION 271C OF THE ACT FOR ASSESSMENT YEARS 2000-01 AND 2002-03 TO 2004-05 , THE ASSESSEE HAS PREFERRED THESE APPEALS RAISING THE FOLLOWING GROUN DS WHICH ARE EXTRACTED ASSESSMENT YEAR-WISE HEREUNDER: - 3.1.1 A.Y. 2000-01 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW 1) THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED I N UPHOLDING THE PENALTY OF RS.20,13,350 LEVIED BY THE ASSESSING OFF ICER U/S 271C OF THE INCOME TAX ACT, 1961 WITH RESPECT TO CONTRIB UTION TOWARDS THE APPELLANTS AND THE INDIAN MEMBER ENTITIES SHA RE OF COSTS (I.E. CASH CALLS) OF RS.1,00,66,749. 2) THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED I N UPHOLDING THE PENALTY OF RS.1,03,296 LEVIED BY THE ASSESSING OFFI CER U/S 271C OF THE INCOME TAX ACT, 1961 WITH RESPECT TO REIMBUR SEMENT OF CHARGES TOWARDS INTUITION COMPUTER BASED BANKING OF RS.5,16,489. 3.1.2 A.Y. 2002-03 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW 1) THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN UPHOLDING THE PENALTY OF RS.27,71,274 LEVIED BY THE ASSESSING OFF ICER U/S 271C OF THE INCOME TAX ACT, 1961 WITH RESPECT TO CONTRIB UTION TOWARDS THE APPELLANT'S AND THE INDIAN MEMBER ENTITIES' SHA RE OF COSTS (I.E. CASH CALLS) OFRS.2,77,12,743. 2) THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED I N UPHOLDING THE PENALTY OF RS.4,09,411 LEVIED BY THE ASSESSING OFFI CER U/S 271C OF THE INCOME TAX ACT, 1961 WITH RESPECT TO REIMBUR SEMENT OF BANK GUARANTEE CHARGES OF RS.40,94,115. 3) THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED I N UPHOLDING THE PENALTY OF RS.11,87,202 LEVIED BY THE ASSESSING OFF ICER U/S 271C OF THE INCOME TAX ACT, 1961 WITH RESPECT TO REIMBUR SEMENT OF PROFESSIONAL INDEMNITY INSURANCE OF RS. 1,18,72,016 . 4) THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED I N UPHOLDING THE PENALTY OF RS.76,989 LEVIED BY THE ASSESSING OFFICE R U/S 271C OF THE INCOME TAX ACT, 1961 WITH RESPECT TO REIMBURSEMENT OF CHARGES TOWARDS INTUITION COMPUTER BASED BANKING OF RS.7,69 ,886. 5) THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN UPHOLDING THE PENALTY OF RS.6,94,483 LEVIED BY THE ASSESSING OFFI CER U/S 271C OF THE INCOME TAX ACT, 1961 WITH RESPECT TO REMITTA NCES AGGREGATING RS.69,44,830 MADE PURSUANT TO AGREEMENT S ENTERED INTO FOR PROVISION OF PERSONNEL. ITA NOS. 4063 TO 4066/MUM/2008 M/S. KPMG 4 3.1.3 A.Y. 2003-04 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW 1) THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN UPHOLDING THE PENALTY OF RS.24,25,216 LEVIED BY THE ASSESSING OFF ICER U/S 271C OF THE INCOME TAX ACT, 1961 WITH RESPECT TO CONTRIB UTION TOWARDS THE APPELLANT'S AND THE INDIAN MEMBER ENTITIES' SHA RE OF COSTS (I.E. CASH CALLS) OFRS.2,42,52154. 2) THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED I N UPHOLDING THE PENALTY OF RS.2,10,547 LEVIED BY THE ASSESSING OFFI CER U/S 271C OF THE INCOME TAX ACT, 1961 WITH RESPECT TO REIMBUR SEMENT OF BANK GUARANTEE CHARGES OF RS.21,05,472. 3) THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED I N UPHOLDING THE PENALTY OF RS.11,96,246 LEVIED BY THE ASSESSING OFF ICER U/S 271C OF THE INCOME TAX ACT, 1961 WITH RESPECT TO REIMBUR SEMENT OF PROFESSIONAL INDEMNITY INSURANCE OF RS. 1,19,62,461 . 4) THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED I N UPHOLDING THE PENALTY OF RS.1,53,380 LEVIED BY THE ASSESSING OFFI CER U/S 271C OF THE INCOME TAX ACT, 1961 WITH RESPECT TO AN AMOU NT OF RS.15,33,800 WHICH WAS RECORDED AS PAYABLE IN THIS YEAR BUT WAS REVERSED IN SUBSEQUENT YEAR. 3.1.4 A.Y. 2004-05 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW 1) THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN UPHOLDING THE PENALTY OF RS.32,08,312 LEVIED BY THE ASSESSING OFF ICER U/S 271C OF THE INCOME TAX ACT, 1961 WITH RESPECT TO CONTRIB UTION TOWARDS THE APPELLANT'S AND THE INDIAN MEMBER ENTITIES' SHA RE OF COSTS (I.E. CASH CALLS) OF RS.3,20,83,122. 2) THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED I N UPHOLDING THE PENALTY OF RS.30,40,866 LEVIED BY THE ASSESSING OFF ICER U/S 271C OF THE INCOME TAX ACT, 1961 WITH RESPECT TO REIMBUR SEMENT OF PROFESSIONAL INDEMNITY INSURANCE OF RS.3,04,08,658. 3) THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED I N UPHOLDING THE PENALTY OF RS.2,01,411 LEVIED BY THE ASSESSING OFFI CER U/S 271C OF THE INCOME TAX ACT, 1961 WITH RESPECT TO REIMBUR SEMENT OF BANK GUARANTEE CHARGES OF RS.20,14,111. 4) THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED I N UPHOLDING THE PENALTY OF RS.19,18,771 LEVIED BY THE ASSESSING OFF ICER U/S 271C OF THE INCOME TAX ACT, 1961 WITH RESPECT TO REMITTA NCES AGGREGATING RS.1,91,87,705 MADE PURSUANT TO AGREEME NTS ENTERED INTO FOR PROVISION OF PERSONNEL. 3.2.1 ACCORDING TO THE LEARNED A.R. OF THE ASSESSEE , ADMITTEDLY ORDERS UNDER SECTION 201(1) OF THE ACT WERE PASSED BY THE AO FOR ALL FOUR ASSESSMENT YEARS, 2000-01 AND 2002-03 TO 2004-05 VI DE SEPARATE ORDERS, ITA NOS. 4063 TO 4066/MUM/2008 M/S. KPMG 5 ALL DATED 06.03.2007, TREATING THE ASSESSEE AS AN ASSESSEE IN DEFAULT AND THAT NO APPEALS WERE PREFERRED AGAINST THESE ORDERS BY THE ASSESSEE. IT IS SUBMITTED THAT THE PROCEEDINGS FOR THESE FOUR ASSES SMENT YEARS BEFORE THE BENCH WERE INITIATED PURSUANT TO SIMILAR PROCEEDING S TAKEN UP FOR A.Y. 2001-02 IN THE CASE ON HAND ON IDENTICAL ISSUES WHE REIN VIDE ORDER DATED 24.03.2005 PASSED UNDER SECTION 201(1)/201(1A) OF T HE ACT FOR A.Y. 2001- 02, THE ASSESSEE WAS HELD TO BE AN ASSESSEE IN DEFA ULT FOR NON DEDUCTION OF TAX AT SOURCE UNDER SECTION 195 OF THE ACT IN RESPE CT OF PAYMENTS TO KPMG INTERNATIONAL, WHICH WERE TREATED AS ROYALTY. PENAL TY UNDER SECTION 271C OF THE ACT WAS THEN LEVIED. ON APPEAL THIS ORDER WAS U PHELD BY THE LEARNED CIT(A) VIDE ORDER DATED 27.11.2006 AS WAS THE ORDER LEVYING PENALTY UNDER SECTION 271C OF THE ACT. ON FURTHER APPEAL BY THE A SSESSEE, THE COORDINATE BENCH OF THIS TRIBUNAL VIDE ORDER IN ITA NO. 1959/M UM/2007 DATED 27.10.2010 REMANDED THE MATTER TO THE FILE OF THE L EARNED CIT(A) WITH CERTAIN DIRECTIONS IN PARA 9 THEREOF. 3.2.2 THEREAFTER, THE COORDINATE BENCH OF THIS TRIB UNAL IN ITS ORDER IN ITA NO. 6287/MUM/2008 ALSO REMANDED THE ORDER OF THE CIT(A) , UPHOLDING THE PENALTY LEVIED UNDER SECTION 271C OF THE ACT, TO TH E FILE OF THE CIT(A) TO DECIDE THE SAME IN ACCORDANCE WITH THE DECISION TAKEN IN T HE APPEAL AGAINST THE ORDER UNDER SECTION 201 OF THE ACT. IN REMAND PROCE EDINGS, THE LEARNED CIT(A) VIDE ORDER DATED 11.01.2012 HELD THAT KPMG INTERNAT IONAL IS A MUTUAL ASSOCIATION AND IN KEEPING WITH THE PRINCIPLE OF MU TUALITY, ITS RECEIPTS WOULD NOT CONSTITUTE INCOME CHARGEABLE TO TAX AND THEREFO RE THE ASSESSEE WAS NOT OBLIGED BY LAW TO DEDUCT TAX AT SOURCE ON PAYMENTS TO KPMG INTERNATIONAL. CONSEQUENT THERETO, THE CIT(A)-10, MUMBAI VIDE ORDE R DATED 29.02.2012 DELETED THE PENALTY IMPOSED UNDER SECTION 271C OF T HE ACT ON THE GROUND THAT SINCE THE ASSESSEE WAS NOT LIABLE TO DEDUCT TA X AT SOURCE ON PAYMENTS TO KPMG INTERNATIONAL, THE BASIS FOR LEVY OF PENALTY D OES NOT SURVIVE. ACCORDING TO THE LEARNED A.R. OF THE ASSESSEE, NO APPEAL WAS PREFERRED BY REVENUE AGAINST THE ORDER OF THE CIT(A) DELETING THE PENALT Y UNDER SECTION 271C OF THE ACT FOR A.Y. 2001-02 AND FURTHER REVENUES APPEAL I N QUANTUM PROCEEDINGS WAS DISMISSED BY A COORDINATE BENCH OF THIS TRIBUNA L IN ITS ORDER IN ITA NO. 2493/MUM/2013 DATED 07.04.2017. IT IS CONTENDED THA T SINCE THE FACTS AND ITA NOS. 4063 TO 4066/MUM/2008 M/S. KPMG 6 ISSUES INVOLVED IN A.Y. 2001-02 ARE THE SAME AS THO SE FOR THE ASSESSMENT YEARS 2000-01 AND 2002-03 TO 2004-05, EVEN THOUGH T HE ASSESSEE HAS NOT PREFERRED APPEALS IN THE QUANTUM PROCEEDINGS FOR TH ESE ASSESSMENT YEARS THE FINDINGS RENDERED FOR A.Y. 2001-02 BY THE COORDINAT E BENCH OF ITAT IN QUANTUM PROCEEDINGS IN FAVOUR OF THE ASSESSEE (SUPR A) COUPLED WITH THE FACT THAT THE DELETION OF PENALTY UNDER SECTION 271C OF THE ACT FOR A.Y. 2001-02 BY THE LEARNED CIT(A) WAS ACCEPTED AND NOT CHALLENGED BY REVENUE, PENALTY LEVIED UNDER SECTION 271C OF THE ACT FOR THESE FOUR YEARS IS NOT SUSTAINABLE AND REQUIRED TO BE DELETED. 3.3 THE LEARNED D.R. FOR REVENUE WAS UNABLE TO CONT ROVERT THE PROPOSITION PUT FORWARD BY THE ASSESSEE AND FAIRLY CONCEDED THAT THE DISPUTE IN RESPECT OF THE SUSTAINABILITY OR OTHERWI SE OF THE PENALTY UNDER SECTION 271C OF THE ACT MAY HAVE TO BE HELD IN FAVO UR OF THE ASSESSEE IN VIEW OF THE DECISION OF THE COORDINATE BENCH OF THI S TRIBUNAL FOR A.Y. 2001- 02 IN QUANTUM PROCEEDINGS (SUPRA), THE FACTS REMAIN ING THE SAME FOR THE FOUR ASSESSMENT YEARS IN APPEAL AND ALSO DUE TO THE FACT THAT REVENUE HAS NOT PREFERRED ANY APPEAL AGAINST THE ORDER OF THE C IT(A) DELETING THE PENALTY LEVIED UNDER SECTION 271C OF THE ACT FOR A. Y. 2001-02. 3.4.1 WE HAVE HEARD THE COUNSELS FOR BOTH THE PARTI ES AND PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD; INCLUD ING THE JUDICIAL PRONOUNCEMENTS CITED. ON A PERUSAL OF THE FACTS OF THE CASE ON RECORD IN RESPECT OF THE ISSUE OF SUSTAINABILITY OF THE LEVY OF PENALTY UNDER SECTION 271C OF THE ACT FOR THE FOUR ASSESSMENT YEARS 2000- 01 AND 2002-03 TO 2004-05 BEFORE US AND THAT OF A.Y. 2001-02, WE FIND THAT IN ALL THESE YEARS, VIDE ORDERS DATED 06.03.2008 AND 24.03.2005 RESPECT IVELY, THE AO HAD HELD THE ASSESSEE TO BE AN ASSESSEE IN DEFAULT UN DER SECTION 201(1) OF THE ACT FOR NOT DEDUCTING TAX AT SOURCE UNDER SECTION 1 95 OF THE ACT ON PAYMENTS TO KPMG INTERNATIONAL WHICH WERE IN THE NA TURE OF ROYALTY. FOR ASSESSMENT YEARS 2000-01 AND 2002-03 TO2004-05 ADMI TTEDLY THE ASSESSEE DID NOT PREFERRED APPEALS AGAINST THE ORDE RS OF THE AO PASSED UNDER SECTION 201(1)/202(1A) DATED 06.03.2007 AND S UBSEQUENT THERETO, THE AO PROCEEDED TO LEVY PENALTY UNDER SECTION 271C OF THE ACT IN THESE ITA NOS. 4063 TO 4066/MUM/2008 M/S. KPMG 7 FOUR YEARS VIDE SEPARATE ORDERS DATED 19.09.2007, W HICH ON APPEAL WERE UPHELD BY THE CIT(A) VIDE SEPARATE ORDERS DATED 31. 03.2008. 3.4.2 IN PROCEEDINGS FOR A.Y. 2001-02 IN THE CASE O N HAND, ON THE BASIS OF WHICH THE FINDINGS WERE RENDERED IN BOTH QUANTUM AND APPELLATE PROCEEDINGS FOR ASSESSMENT YEARS 2000-01 AND 2002-0 3 TO 2004-05, THE FACTS AS EMERGE FROM THE RECORD ARE THAT AN ORDER W AS PASSED UNDER SECTION 201(1) OF THE ACT DATED 24.03.2005 HOLDING THE ASSESSEE TO BE AN ASSESSEE IN DEFAULT FOR FAILURE TO DEDUCT TAX AT SOURCE UNDER SECTION 195 OF THE ACT IN RESPECT OF PAYMENTS TO KPMG INTERNATI ONAL SINCE THEY WERE IN THE NATURE OF ROYALTY, WHICH WAS UPHELD BY THE C IT(A) VIDE ORDER DATED 27.11.2006. SUBSEQUENTLY, THE AO HAD ALSO LEVIED PE NALTY UNDER SECTION 271C OF THE ACT WHICH WAS UPHELD BY THE CIT(A). ON FURTHER APPEALS BY THE ASSESSEE, A COORDINATE BENCH OF THIS TRIBUNAL V IDE ORDER IN ITA NO. 1959/MUM/2007 DATED 27.10.2010 REMANDED THE MATTER BACK TO THE FILE OF THE CIT(A) TO DECIDE THE TAXABILITY OF THE AMOUN TS PAID BY THE ASSESSEE TO KPMG INTERNATIONAL AFTER CONSIDERING THE PRINCIP LE OF MUTUALITY. SUBSEQUENTLY, A COORDINATE BENCH OF THIS TRIBUNAL A LSO REMANDED AGAINST THE ORDER OF THE CIT(A) CONFIRMING PENALTY UNDER SE CTION 271C OF THE ACT TO THE FILE OF THE CIT(A) VIDE ORDER IN ITA NO. 628 7/MUM/2008 FOR FRESH ADJUDICATION IN ACCORDANCE WITH THE DECISION TAKEN BY THE CIT(A) AGAINST THE ORDER UNDER SECTION 201 OF THE ACT. SUBSEQUENTL Y, ON REMAND, THE LEARNED CIT(A) VIDE ORDER DATED 11.01.2012 DECIDED THE MATTER OF MUTUALITY IN FAVOUR OF THE ASSESSEE. FOLLOWING THAT ORDER, THE CIT(A)-10, MUMBAI VIDE ORDER DATED 29.02.2012 HELD OBSERVING T HAT IN VIEW OF THE CIT(A) ORDER DATED 11.01.2012, WHEREIN THE CIT(A) H AD HELD THAT THE ASSESSEE WAS NOT LIABLE TO DEDUCT TAX AT SOURCE ON PAYMENTS TO KPMG INTERNATIONAL, THE BASIS FOR LEVY OF PENALTY UNDER SECTION 271C OF THE ACT IN THE CASE ON HAND DOES NOT EXIST AND DELETED THE PENALTY IMPOSED UNDER SECTION 271C OF THE ACT. ADMITTEDLY NO APPEAL HAS B EEN PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A)-10, MUMBAI FOR A.Y. 2001-02 DELETING THE PENALTY UNDER SECTION 271C OF THE ACT VIDE ORDER DATED 29.02.2012. REVENUES APPEAL AGAINST THE ORDER OF T HE CIT(A) DATED 11.01.2012 IN QUANTUM PROCEEDINGS FOR A.Y. 2001-02 HAS ALSO BEEN ITA NOS. 4063 TO 4066/MUM/2008 M/S. KPMG 8 DISMISSED BY A COORDINATE BENCH OF THIS TRIBUNAL VI DE ORDER IN ITA NO. 2493/MUM/2012 DATED 07.04.20017. 3.4.3 IN THE FACTUAL AND LEGAL MATRIX OF THE CASE A S NARRATED ABOVE AND TAKING INTO ACCOUNT THE FACT THAT (I) ON IDENTICAL FACTS AS IN THE FOUR ASSESSMENT YEARS BEFORE US, THE COORDINATE BENCH OF ITAT IN THE ASSESSEES OWN CASE FOR A.Y. 2001-02 VIDE ORDER IN ITA 2493/MU M/2012 DATED 07.04.2017 HAS UPHELD THE CIT(A)S FINDING THAT KEE PING IN VIEW THE PRINCIPLE OF MUTUALITY THE ASSESSEE IS NOT REQUIRED TO DEDUCT TAX AT SOURCE ON PAYMENTS TO KPMG INTERNATIONAL AND (II) REVENUE HAS NOT CHALLENGED THE ORDER OF THE CIT(A)-10, MUMBAI DATED 29.02.2012 DEL ETING THE PENALTY LEVIED UNDER SECTION 271C OF THE ACT FOR A.Y. 2001-02; WE ARE OF THE CONSIDERED VIEW THAT SINCE THE VERY BASIS FOR LEVY AND UPHOLDI NG OF PENALTY UNDER SECTION 271C OF THE ACT BY THE AUTHORITIES BELOW FO R ASSESSMENT YEARS 2000- 01 AND 2002-03 TO 2004-05 DOES NOT SURVIVE, THE ORD ERS LEVYING/UPHOLDING THE AFORESAID PENALTY ARE NOT SUSTAINABLE. CONSEQUE NTLY THE SAID PENALTY LEVIED UNDER SECTION 271C OF THE ACT IN THE CASE ON HAND AND UPHELD BY THE CIT(A) IN THE IMPUGNED ORDER IS HEREBY DELETED. IT IS ACCORDINGLY ORDERED. 4. IN THE RESULT, THE ASSESSEES APPEALS FOR ASSESSMEN T YEARS 2000-01 AND 2002-03 TO 2004-05 ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH APRIL, 2017. SD/ - SD/ - (RAM LAL NEGI) (JASON P. BOAZ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 28 TH APRIL, 2017 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) -XXXIII, MUMBAI 4. THE DIT (IT), MUMBAI 5. THE DR, L BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.