Bombay High Court
Commissioner Of Income Tax (It)-3 vs M/S. Linklaters on 17 December, 2018
Bench: Akil Kureshi, M.S. Sanklecha
10. os itxa 1537-16 + 4.doc
R.M. AMBERKAR
(Private Secretary)
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
O.O.C.J.
INCOME TAX APPEAL NO. 1537 OF 2016
WITH
INCOME TAX APPEAL NO. 1541 OF 2016
WITH
INCOME TAX APPEAL NO. 1560 OF 2016
WITH
INCOME TAX APPEAL NO. 1566 OF 2016
WITH
INCOME TAX APPEAL NO. 1661 OF 2016
Commissioner of Income Tax (IT)-3 .. Appellant
Vs
M/s. Linklaters .. Respondent
...................
Mr. Tejveer Singh for the Appellant
Mr. Anay Banhatti a/w Ms. Virangana Wadhawah i/by Economic
Laws Practice for the Respondent
...................
CORAM : AKIL KURESHI &
M.S. SANKLECHA, JJ.
DATE : DECEMBER 17, 2018.
P.C.:
1. These appeals involve the same assessee and arise in similar background. We may refer the facts from Income Tax Appeal No. 1537 of 2016.
2. This appeal is filed by the Revenue challenging the judgment of the Income Tax Appellate Tribunal ("the Tribunal" for short) dated 4.2.2016. The following questions 1 of 5 ::: Uploaded on - 20/12/2018 ::: Downloaded on - 27/12/2018 08:55:16 :::
10. os itxa 1537-16 + 4.doc are presented for our consideration :-
"(a) Whether on the facts and circumstances of the case and in law, the Tribunal is correct in holding that the assessee firm had not concealed the particulars of its income and deleted the penalty levied u/S. 271(1)(c) whereas the A.O. has levied the penalty for furnishing of inaccurate particulars by the assessee?
(b) Whether on the facts and circumstances of the case and in law, the Tribunal is correct in cancelling the penalty levied u/S. 271 (1)(c) by the A.O. disregarding the decision relied on by the A.O. in the case of CIT V/s. Vidyagauri Natwarlal (238 ITR 91) (Gujrat), as penalty was levied on income arising from services rendered in India by India PE, whereas, appeal has been admitted before the High Court on issue of total receipts pertaining to India in hands of Indian PE?"
3. The issue concerns the penalty imposed by the assessing officer against the respondent - assessee under Section 271(1)(c) of the Income Tax Act, 1961 ("the Act" for short) in connection with A.Y. 1996-97. Such penalty was deleted by CIT(A) principally on the ground that there was no failure on the part of the assessee to make full disclosures. The Revenue carried the matter in the appeal before the Tribunal. The Tribunal confirmed the view of the CIT(A) on the issue of full disclosures by the assessee. The Tribunal also noted that on the quantum additions, the assessee's 2 of 5 ::: Uploaded on - 20/12/2018 ::: Downloaded on - 27/12/2018 08:55:16 :::
10. os itxa 1537-16 + 4.doc appeal is admitted. The Tribunal, therefore, held that the issue itself was debatable.
4. Having heard the learned counsel for the parties and having perused the documents on record, we notice that the CIT(A) and the Tribunal concurrently came to the conclusion that the assessee had made fully disclosures in the return filed. Before the Authorities, the assessee had pointed out that the return was filed expressing bonafide belief that the appellant was not liable to tax since the appellant did not have a permanent establishment in India. Despite which, the return was filed and full particulars of the income were provided. All the relevant details of invoices forming basis of income of services rendered in India and outside India were furnished. All other relevant details were also provided. In this background, thus, CIT(A) has observed as under:-
"4. I have carefully considered the submissions made by the learned ARs, the contentions of the Assessing Officer & case laws cited by both the sides. It is observed that the assessment order has been made based on the information and details furnished by the appellant and the AO has no where in the assessment order or penalty order observed that the information or explanation provided by the appellant is found to be incorrect. Therefore, it cannot be held that inaccurate particulars of income were filed by the appellant. It is 3 of 5 ::: Uploaded on - 20/12/2018 ::: Downloaded on - 27/12/2018 08:55:16 :::
10. os itxa 1537-16 + 4.doc also found that the appellant suo-moto filed its return and made adequate disclosure in the 0eturn and during the assessment proceedings. It is not a case where the department has issued notice u/S. 142(1) or 148 after which the appellant filed the return. The entire assessment is based on the information and explanation furnished by the appellant. The addition to income is only due to different interpretation of provisions of India & UK Tax Treaty by the AO. It is also observed that the legal interpretation of the provisions of the Tax Treaty advanced by the appellant is based upon OECD commentary and observation of the International tax expert Mr. Klaus Vogel. I find merits in the appellant's submission that it is a debatable issue and there is only a difference of opinion about the interpretation of the tax treaty, which cannot be a ground for levy of penalty. The appellant's claim that it does not have permanent establishment in India is also supported by the certificate issued by the UK Tax Authorities. It is a different matter that these interpretations have not been accepted by the department."
5. The Tribunal in the Revenue's appeal while confirming the decision of the CIT(A) further observed as under:-
"5. We have heard the rival submissions and perused the material before us. We find that the assessee had filed the return of income on its own, that it had claimed that income relatable to Indian clients was not taxable in India as per the provisions of DTAA, that alternatively it had submitted that a part of the income could be taxed in India, that the AO had taxed the whole income earned by the assessee, that the FAA had given a substantial relief to the assessee, that the Tribunal had confirmed the order of the FAA. It is a fact that in the statement accompanying the return of income at page-81 to 83 of the Paper Book the assessee had made full disclosure about the income earned by it as well as non taxability of side income, that at para no. 10 of the statement an alternative 4 of 5 ::: Uploaded on - 20/12/2018 ::: Downloaded on - 27/12/2018 08:55:16 :::
10. os itxa 1537-16 + 4.doc argument had also been made. Thus, it is clear that the assessee- firm had not concealed the particulars of its income. There was difference of opinion between the AO and the assessee about the taxability of income and PE. In our opinion, confirmation of the additions made by the AO, in the appellate proceedings and levy of penalty u/S. 271(1)(c) of the Act are totally two different things."
6. In view of the findings of the CIT(A) and the Tribunal as noted above, we do not find that the Tribunal committed any error in confirming the view of the CIT(A) deleting the penalty. No question of law arises. The Income Tax Appeals are dismissed.
[ M.S. SANKLECHA, J. ] [ AKIL KURESHI, J ]
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