Income Tax Appellate Tribunal - Delhi
Dcit Coy. Circle-10 (1), vs Assessee
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/2006
Assessment Years : 1998-99, 1999-2000 & 2001-02
Dy.Commissioner of Vs. Shri Daler Singh Mehndi,
Income Tax, F-55-A, Lado Sarai,
Coy.Circle-10(1), New Delhi.
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 deletion of penalty imposed u/s 271(1)(c) of the IT Act.
2. The issue in all the years pertains to the assessee's claim for deduction u/s 80RR which was reduced, and on the amount of reduction, penalty was imposed u/s 271(1)(c) which was deleted by the CIT(A) and Revenue is in further appeal before us.
3. We have considered the rival contentions and found from the record that assessee is a popular artist engaged in the profession 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 2 ITA-3448 & 3506/D/2007 & 3261/D/2006 well as by way of royalty on sound recordings and visual works (albums), endorsement fees etc. Assessee's 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 professional receipts but also by way of royalty from albums, endorsement fees, salary and other 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 the 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 those expenses which were alleged to be directly incurred to earn various source 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 this 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 opinion 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 been made the basis of levy of penalty for concealment is only due to difference of opinion at various levels about the extent of expenditure to be allocated for foreign shows vis-à-vis the Indian shows etc. for working out the deduction. This 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 receipts or on the net income in view of Hon'ble Delhi High Court referring the matter 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 the Act. The penalty so levied for reduction in claim of deduction u/s 80RR during the AY 1998-99 was deleted 3 ITA-3448 & 3506/D/2007 & 3261/D/2006 by the CIT(A) by observing that the assessee had claimed deduction u/s 80RR of Rs.1,00,62,960/- @ 75% of Rs.1,34,17,280/- which were gross receipts of foreign shows whereas in the return filed in response to notice 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 expenditure 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 80RR had been restricted to Rs.95,04,092/- and while doing so, the CIT(A) had followed the earlier appellate order dated 6.7.2006 in appeal No.41/06-07 as per which 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 addition has been made by the AO on estimate basis only and which has been sustained partly by CIT(A), again on estimate basis which cannot be made the basis for levy of concealment penalty and secondly that the facts and circumstances of the case 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 facts and circumstances of the instant case remain the same as for AY 2001-02 where penalty was deleted by CIT(A), the CIT(A) directed the AO to cancel the penalty for concealment levied on the assessee. We also found that substantial question has been accepted by the Hon'ble High Court in the matter of disallowance made 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 the High Court to have given rise to a substantial question of law, cannot be treated to be frivolous or mala-fide as to attract levy of penalty u/s 271(1)(c). It was held by the Bench that in these circumstances no penalty is leviable u/s 271(1)(c).
4 ITA-3448 & 3506/D/2007 & 3261/D/2006
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) of IT Act.
5. In the result, the appeals of the Revenue for all the three years are dismissed.
Decision pronounced in the open Court on 17th 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
5 ITA-3448 & 3506/D/2007 &
3261/D/2006