M/s. Syndicate Labels, New Delhi V. ACIT, New Delhi

ITA 4386/DEL/2014

• Counselvise Citation: 438620114 RSA 2014
• Duration Of Justice: 1 year(s) 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 1
• Next Hearing Date: 20-10-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 11-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K K JAISWAL SENIOR
• Assessee Lawyers: NIREN GUPTA
• Keywords: Non-deduction of tax
• Section: 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC DELHI BENCH SMC DELHI BENCH SMC DELHI BENCH SMC- -- -1 11 1 : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI R.S. SYAL, ACCOUNTANT MEMBER BEFORE SHRI R.S. SYAL, ACCOUNTANT MEMBER BEFORE SHRI R.S. SYAL, ACCOUNTANT MEMBER BEFORE SHRI R.S. SYAL, ACCOUNTANT MEMBER ITA NO.4386/DEL/2014 ITA NO.4386/DEL/2014 ITA NO.4386/DEL/2014 ITA NO.4386/DEL/2014 ASSESSMENT YEAR : 2008 ASSESSMENT YEAR : 2008 ASSESSMENT YEAR : 2008 ASSESSMENT YEAR : 2008 - -- - 09 0909 09 M/S SYNDICATE LABELS, M/S SYNDICATE LABELS, M/S SYNDICATE LABELS, M/S SYNDICATE LABELS, 6 66 6- -- -E, RANI JHANSI ROAD, E, RANI JHANSI ROAD, E, RANI JHANSI ROAD, E, RANI JHANSI ROAD, JHANDEWALAN EXTENSION, JHANDEWALAN EXTENSION, JHANDEWALAN EXTENSION, JHANDEWALAN EXTENSION, NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. PAN : AAXFS1 PAN : AAXFS1 PAN : AAXFS1 PAN : AAXFS1523P. 523P. 523P. 523P. VS. VS. VS. VS. ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, CIRCLE CIRCLE CIRCLE CIRCLE- -- -38(1), 38(1), 38(1), 38(1), NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI NIREN GUPTA, CA. RESPONDENT BY : SHRI K.K. JAISWAL, SENIOR DR. ORDER ORDER ORDER ORDER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 12.06.2014 PASSED BY THE LD. CIT(A) CONFIRMING PENALT Y OF `4,06,009/- IMPOSED BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE IN COME-TAX ACT, 1961 IN RELATION TO ASSESSMENT YEAR 2008-09. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE CLAIMED DEDUCTION IN RESPECT OF CERTAIN PAYMENTS MADE TO M/S M AERSK INDIA PVT.LTD. THE ASSESSING OFFICER OBSERVED THAT SUCH PAYM ENTS TOTALLING `11,94,498/- WERE MADE WITHOUT DEDUCTION OF TAX AT SOURCE. HE, THEREFORE, INVOKED THE PROVISIONS OF SECTION 40(A)(IA ) OF THE ACT BY HOLDING THAT THE ASSESSEE OUGHT TO HAVE DEDUCTED TAX AT SOURCE. RESULTANTLY, ADDITION WAS MADE FOR THE SUM WHICH CONSTI TUTED BEDROCK FOR THE IMPOSITION OF PENALTY U/S 271(1)(C) OF THE AC T. THE LEARNED ITA-4386/DEL/2014 2 CIT(A) UPHELD THIS PENALTY. THE ASSESSEE IS AGGRIEVED AG AINST THE CONFIRMATION OF THIS PENALTY. 3. AFTER CONSIDERING RIVAL SUBMISSIONS AND PERUSING RELEV ANT MATERIAL ON RECORD, IT IS OBSERVED THAT THE INSTANT PE NALTY HAS BEEN IMPOSED ONLY IN RESPECT OF DISALLOWANCE U/S 40(A)(I) OF THE ACT. THE ASSESSEE ENTERTAINED A BONA FIDE BELIEF ABOUT THE NON-DEDUCTION OF TAX AT SOURCE FROM THE AMOUNT PAID TO M/S MAERSK INDIA PVT . LTD. ON THE BASIS OF A CIRCULAR, AS PER WHICH, THE FOREIGN SHIPPING COMPANIES AND THEIR AGENTS WERE GOVERNED BY THE PROVISIONS OF SECTI ON 172 AND NOT BY SECTION 194C OF THE ACT. THOUGH IT IS AN ADMITTE D FACT THAT THE ASSESSEE MADE THE PAYMENT TO A RESIDENT BUT THE FACT REM AINS THAT PRINCIPAL OF M/S MAERSK INDIA PVT. LTD., BEING M/S A.P . MOLLER-MAERSK A/S, DENMARK, WAS GIVEN 100% DIT RELIEF, COPY OF WHI CH LETTER ISSUED BY THE OFFICE OF DEPUTY DIRECTOR OF INCOME TAX (INT ERNATIONAL TAXATION) DATED 23.04.2007, HAS BEEN PLACED ON RECORD. THESE F ACTS INDICATE THAT THE ASSESSEE WAS UNDER A BONA FIDE BELIEF THAT THE AMOUNT PAID TO M/S MAERSK INDIA PVT. LTD. WAS NOT LIABLE FOR DEDUCTIO N OF TAX AT SOURCE. BE THAT AS IT MAY, I AM CONCERNED WITH THE IMPOSITION AND CONFIRMATION OF PENALTY U/S 271(1)(C) OF THE ACT WHICH PRESUPPOSES C ONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INC OME. HERE IS A CASE IN WHICH THE ASSESSEE NEITHER CONCEALED ANY INCOME NOR FURNISHED INACCURATE PARTICULARS. DEDUCTION ON ACCOU NT OF M/S MAERSK INDIA PVT.LTD. WAS CLAIMED AFTER MAKING DUE PAYMENTS. THE DISPUTE IS ONLY ABOUT DEDUCTION OR NON-DEDUCTION OF TAX AT SOUR CE FROM PAYMENTS TO M/S MAERSK INDIA PVT.LTD. FOR WHICH DISALLOWANCE HA S BEEN MADE U/S 40(A)(IA) OF THE ACT. UNDER NO CIRCUMSTANCE CAN SUC H A DISALLOWANCE BE BROUGHT WITHIN THE AMBIT OF SECTION 271(1)(C) OF THE ACT. THE ASSESSEE MADE A PROPER DISCLOSURE ABOUT THE EXPENSE CLAIME D BY IT AS DEDUCTION WHICH WAS NEITHER BOGUS NOR OTHERWISE NON-DE DUCTIBLE BUT ITA-4386/DEL/2014 3 FOR THE APPLICATION OF SECTION 40(A)(IA) OF THE ACT . OVERTURNING THE IMPUGNED ORDER, I ORDER FOR THE DELETION OF THE INST ANT PENALTY. 4. IN THE RESULT, THE APPEAL IS ALLOWED. DECISION PRONOUNCED IN THE OPEN COURT ON 21 ST OCTOBER, 2015. SD/- (R.S. SYAL) (R.S. SYAL) (R.S. SYAL) (R.S. SYAL) ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATED : 21.10.2015 VK. COPY FORWARDED TO: - 1. APPELLANT : M/S SYNDICATE LABELS M/S SYNDICATE LABELS M/S SYNDICATE LABELS M/S SYNDICATE LABELS, ,, , 6 66 6- -- -E, RANI JHANSI ROAD, JHANDEWALAN EXTENSION, E, RANI JHANSI ROAD, JHANDEWALAN EXTENSION, E, RANI JHANSI ROAD, JHANDEWALAN EXTENSION, E, RANI JHANSI ROAD, JHANDEWALAN EXTENSION, NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. 2. RESPONDENT : ASSISTANT COMMISSIONER OF INCOME TAX, ASSISTANT COMMISSIONER OF INCOME TAX, ASSISTANT COMMISSIONER OF INCOME TAX, ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE CIRCLE CIRCLE CIRCLE- -- -38(1), NEW DELHI. 38(1), NEW DELHI. 38(1), NEW DELHI. 38(1), NEW DELHI. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR ITA-4386/DEL/2014 4 DATE OF DICTATION 20.10.2015 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 20.10.2015 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS/PS DATE ON WH ICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.PS/PS DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FI LE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER *