ACIT, New Delhi V. M/s. Remfry & Sagar, Gurgaon

ITA 6274/DEL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 4012 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 10 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2007-2008
• Appeal Filed On: 26-11-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Gift; Difference of opinion
• Section: 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: D NEW DELHI BEFORE SHRI G.D. AGRAWAL, HONBLE PRESIDEN T & SHRI K.N. CHARY, JUDICIAL MEMBER ITA NO.-6274/DEL/2015 ( ASSESSMENT YEAR: 2007-08) ACIT CIRCLE 61(1) ROOM NO. 2005, 20 TH FLOOR, BLOCK E-2, DR. SHYAMA PRASAD MUKHERJEE CIVIC CENTRE, J.L.N. MARG, NEW DELHI. VS REMFRY & SAGAR REMFRY HOUSE, MILLENIUM PLAZA, SECTOR-27, GURGAON. AAEFR6753P ASSESSEE BY SH. K.V.S.R. KRISHNAN, CA REVENUE BY SH. ARUN KUMAR YADAV, SR. DR ORDER PER SHRI K.N. CHARY, JUDICIAL MEMBER THIS APPEAL OF THE REVENUE IS CHALLENGING THE ORDER DATED 04.09.2015 IN APPEAL NO. 12/2012-13 PASSED BY THE L D. COMMISSIONER OF INCOME TAX (APPEALS)-20, NEW DELHI (HEREINAFTER FOR SHORT CALLED AS THE LD. CIT (A)) ON THE FOLLO WING GROUNDS: 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD . CIT (A) HAS ERRED IN DELETING THE PENALTY IMPOSED U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 OF RS. 7,57,79,930/- BY WAY OF FURNIS HING INACCURATE PARTICULARS OF INCOME, WITHOUT APPRECIATING THE FAC T THAT THE WHOLE DATE OF HEARING 19.09.2017 DATE OF PRONOUNCEMENT 09.10.2017 2 ITA NO. 6274/DEL/2015 TRANSACTION OF FIRST GIFTING THE GOODWILL ASSOCIATE S WITH REMFRY & SAGAR TO R&S CONSULTANTS PVT. LTD. AND THEN LEASING BACK TO PARTNERSHIP FIRM REMFRY & SAGAR FOR USE OF GOODWILL AND CONSEQUENT PAYMENT OF LICENSE FEE THEREOF WAS A COL OURABLE TRANSACTION DONE WITH AN INTENTIN OF SIPHONING OF P ROFIT OF THE FIRM. 2. THAT THE APPELLANT, CRAVES, LEAVE TO ADD, AMEND OR MODIFY THE GROUNDS OF APPEAL AT ANY TIME. IT IS PRAYED THAT THE ORDER OF CIT (A) IS CONTRARY TO THE FACTS ON RECORD AND THE SETTLED POSITION OF LAW; AND THE ORDER OF T HE AO DESERVES TO BE RESTORED. 2. BRIEFLY STATED FACTS ARE THAT DURING THE SCRUTIN Y ASSESSMENT FOR THE AY 2007-08 RELATING TO THE ASSESSEE AO FOUN D THAT THE ASSESSEE PAID A SUM OF RS. 22,51,33,484/- UNDER THE LICENSE FEE TO M/S REMFRY & SAGAR CONSULTANTS PVT. LTD. FOR THE US E OF GOODWILL OF REMFRY & SAGAR AND TO PRACTICE IN THIS NAME. THE AO TREATED THIS TRANSACTION AS A COLOURABLE TRANSACTION FOR SI PHONING OF PROFIT OF THE FIRM ONLY TO REDUCE TAX LIABILITY OF THE FIR M AND BENEFIT RELATIVES AND MADE AN ADDITION OF RS. 22,51,33,484/ -. SIMULTANEOUSLY THE AO INITIATED PROCEEDINGS U/S 271 (1)(C) OF THE INCOME TAX ACT, 1961 (FOR SHORT CALLED AS THE ACT ) AND CONCLUDED THEM BY WAY OF ORDER DATED 29.03.2012 LEVYING A PEN ALTY OF RS. 7,57,79,930/-. IN THE APPEAL LD. CIT (A) OBSERVED THAT THE ASSESSEE HAD DECLARED ALL FACTS IN THE RETURN OF IN COME DURING THE ASSESSMENT AS WELL AS PENALTY PROCEEDINGS, THE DEPA RTMENT DID 3 ITA NO. 6274/DEL/2015 NOT UNEARTHED ANYTHING DURING THE INVESTIGATION WHI CH THE ASSESSEE HAD NOT DECLARED, MERE REJECTING THE CLAIM OF THE ASSESSEE IN THE ASSESSMENT PROCEEDINGS CANNOT MAKE THE PARTI CULARS INACCURATE OR CONCEALMENT OF FACTS AND LASTLY THAT THERE IS A DIFFERENCE OF OPINION IN THE DEPARTMENT ABOUT THE T REATMENT OF THE ASSESSEES CLAIM. ON THESE OBSERVATIONS, LD. CIT ( A) THOUGHT IT FIT TO DELETE THE PENALTY AND THEREBY ALLOWED THE APPEA L. THE REVENUE IS, THEREFORE, BEFORE US IN THIS APPEAL. 3. AT THE OUTSET, LD. AR BROUGHT IT TO OUR NOTICE T HAT APART FROM THE DELETION OF ADDITION BY THE LD. CIT (A) IN THE IMPUGNED ORDER, IN THE APPEALS PREFERRED BY THE ASSESSEE AGAINST TH E QUANTUM ADDITION FOR THE EARLIER YEARS, A COORDINATE BENCH OF THIS TRIBUNAL CONSIDERED THAT DEDUCTION CLAIMED BY THE ASSESEE OF LICENSE FEE PAID TO M/S RSCPL HAD TO BE ALLOWED AS DEDUCTION U/ S 37 OF THE ACT, AND HE SUBMITTED THAT IN VIEW OF THE DELETING THE ADDITION FOR THE RELEVANT ASSESSMENT YEAR THE PENALTY CANNOT BE SUSTAINED. 4. WE HAVE GONE THROUGH THE RECORD AND VIDE PARAGRA PH NO.8.20 A COORDINATE BENCH OF THIS TRIBUNAL RECORDED THE FI NDING THAT THE LICENSE FEE PAID BY THE ASSESSEE TO M/S RSCPL HAD T O BE ALLOWED 4 ITA NO. 6274/DEL/2015 AS DEDUCTION U/S 37 OF THE ACT AND DELETED THE QUAN TUM ADDITION. SINCE THE QUANTUM ADDITION IS DELETED THE PENALTY D OES NOT SURVIVE. HENCE, WE ALLOW THE GROUNDS OF APPEAL AND DELETE THE PENALTY. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 09.10.2017 SD/- SD/- (G.D. AGRAWAL) (K.N. CHARY) PRESIDENT JUDICIAL MEMBER DATED: 09.10.2017 *KAVITA ARORA COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT TRUE COPY ASSISTANT REGISTRAR ITAT NEW DELHI 5 ITA NO. 6274/DEL/2015