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HIGH COURT OF JUDICATURE AT ALLAHABAD
Court No. - 10
Case :- INCOME TAX APPEAL No. - 354 of 2013 (A.Y.-2002-03)
Order Date :- 20.4.2015
Appellant :- Commissioner Of Income Tax, Noida
Respondent :- Technip Italy Spa India Project
Counsel for Appellant :- Dhananjay Awasthi,Bharat Ji Agarwal, Csc
Counsel for Respondent :- Nishant Mishra
Hon'ble Arun Tandon,J.
Hon'ble Dr. Satish Chandra,J.
The present appeal is filed by the department against the impugned order dated 28.06.2013 passed by the Income Tax Appellate Tribunal, Delhi in I.T.A. No. 2101/Del./2010 for the assessment year 2002-03, where the Tribunal has cancelled the levy of the penalty under Section-271(1)(c) of the Act.
On 12.12.2013, this Court has admitted the appeal on the following substantial questions of law"-
"(1) Whether on the facts and circumstances of the case , the ITAT erred in law on deleting the penalty on ground that quantum has already been deleted and that thee return was filed on NIL income when there is no such exception carved out by the legislator in the language of Section 271 (1)(c).
(2)Whether on the facts and circumstances of the case the ITAT was justified in law in concluding that since the quantum has already been deleted , hence, there is no question of penalty absolutely ignoring that the order of deletion of quantum has been admitted has been admitted by the jurisdiction High Court vide order dated 13.2.2013.
(3) Whether on the facts and circumstances of the case, that ITAT erred in law in concluding that no penalty is leviable as tax sought to be evaded as NIL totally ignoring that the NIL income was after adjustment and no tax was paid on the returned income and entire amount of TDS was claimed as refundable.
(4) Whether on the facts and circumstances of the case, the ITAt was justified in deleting the penalty on the quantum of addition of Rs.3,55,85,515/- assessed u/s 115-A, without appreciating the fact that the quantum addition was confirmed by the ITAT and there was no two views of taxing the income was assessed U/s 115-A."
The brief facts of the case are that assessee is a company incorporated in Itlay, was awarded a turn key contract by Indian Oil Corporation Ltd. (IOCL) in November 1999 for design, construction and commissioning of a hydro treater and hydrogen facility at IOCL's Gowhati refinery. Under the terms of the contract, Technip was required to supply equipment to IOCL and undertake construction/installation services and related design and engineering services, the consideration for which was dominated partly in Indian and partly in Foreign currency. Revenues arising to "Technip" from on shore construction, on shore design and engineering, on shore supply, off shore construction and off shore design and engineering were offered to tax in India by Technip. The revenues from off shore supply of equipment were not considered to be chargeable to tax in India. But the A.O. has not accepted this plea and made the addition.
At the same time on off shore supply and on estimation of the G.P., after rejecting the books of account under Section-145 of the Act, the A.O. has levied the penalty under Section-271(1)(c) of the Act. But the same was cancelled by both the appellate authorities by observing that for all shores supply of the equipment and fluctuation of foreign currency, the additions were deleted in quantum appeal by the Tribunal. Further, it was observed by the Tribunal that regarding the addition made on account pertaining to the fee for design and engineering under Section-115A is concerned, the matter is squarely covered in favour of assessee as per the ratio laid down in the following cases:
(1) CIT Vs. S. Dhanabal, (2009) 309 ITR 268 (Del.);
(2) Cit Vs. Reliance Products P. Ltd., 332 ITR 158 (SC); and
(3) CIT Vs. Amit Jain, 213 (351) ITR 74 (Del.).
In the abovementioned cases, it was held that the assessee had a bona-fide belief regarding the manner of income on account of design and engineering fees. There is no dispute that the computation of income was duly disclosed by the assessee and accepted by the A.O. In these circumstances, the entire addition was deleted by both the appellate authorities. Later, this Hon'ble Court upholds the same by dismissing the appeal filed by the department.
When the addition was deleted in quantum appeal, then there is no justification for levy of the penalty. Hence, we find no reason to interfere with the impugned orders passed by both the appellate authorities and the same is hereby sustained alongwith the reasons mentioned therein.
The answer to the substantial questions of law are in favour of the assessee and against the department.
In the result, the appeal filed by the department is dismissed.
(Dr. Satish Chandra,J.) (Arun Tandon,J.)
Allahabad HC-No Question/Justification for Levy of Penalty u/s 271(1)(c) when the Addition was Deleted in Quantum Appeal |22-04-2015|
