TMI Blog2019 (12) TMI 366X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee was accepted by the CIT(A) and on account of other claim, the nature of income was changed as capital gain in comparison to the business income and accordingly taxed. According to Section 271(1)(C) of the Act, the assessee nowhere concealed any particulars of income nor furnishing the inaccurate particulars of income. Declining the claim of the assessee nowhere attract the penalty. The facts of the present case is quite similar to the facts of the case decided by Hon ble Supreme Court in the case of CIT Vs. Reliance Petroproducts Pvt. Ltd. [ 2010 (3) TMI 80 - SUPREME COURT] - Decided in favour of assessee. - I.T.A. No.696/Mum/2018 - - - Dated:- 28-11-2019 - Shri M. Balaganesh, AM And Shri Amarjit Singh, JM For the Assessee : Shri Jeet Kamdar For the Revenue : Shri Kailash Kanojiya (Sr. DR) ORDER PER AMARJIT SINGH, JM: The revenue has filed the present appeal against the order dated 08.11.2017 passed by the Commissioner of Income Tax (Appeals) -55, Mumbai [hereinafter referred to as the CIT(A) ] relevant to the A.Y.2008-09. 2. The revenue has rai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Switzerland and claimed benefit under DTAA. The assessment of the assesse was completed u/s 143(3) r.w. Section 144C(3) of the I. T. Act, 1961 on 09.02.2012 assessing total income to the tune of ₹ 75,99,33,801/-. The AO disallowed a sum of ₹ 15,80,80,000/- under the head underwriting commission and an amount of ₹ 18,86,80,359/- claimed as Short Term Capital Gain on debt securities treated as business income. The CIT(A) treated the income on sale of debt securities as Short Term Capital Gain and subsequently held as exempt within the meaning of Article 13(6) of the India-Switzerland DTAA Treaty. The claim of the assessee was treated as FTS as against assessee claim as underwriting Commission and the said income was held to be taxable in India. This ground was partly decided by the CIT(A) in favour of the assessee as income under the head of business income was not accepted, however these receipts were accepted as Fee for technical service and the claim of the assessee was also declined that the same was not taxable in India so these facts were treated as conceal of income in the present case. Undoubted, the Hon ble ITAT has con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was selected for scrutiny and the Assessing Officer assessed the total income of ₹ 75,99,33,801/- taking the total receipts of the assessee as income and initiated penalty proceedings u/s.271(1)(c) of the I.T. Act,1961. Aggrieved by the AO's order, the assessee preferred an appeal before the CIT(A) who considered the issues and decided that Underwriting commission is taxable as Fees for Technical Services @ 10% on gross basis under Article 12 of the DTAA and gains on transfer of debt securities is assessable as 'Capital Gains' and not 'Business Income' and the same is exempt under Article 13(6) of the DTAA. As a result of the CIT(A) order, the demand was reduced from ₹ 14,64,36900/- to ₹ 1,58,08,800 (₹ 6,67,57,184 in respect of underwriting fees and ₹ 7,96,79716/- in respect of gains from transfer of debt securities). The Department filed an appeal before the ITAT as regards the issue of gains from transfer of debt securities and the assessee filed cross objections before the ITAT. The Hon'ble ITAT vide order dated 17.04.2015 upheld the order of the CIT(A) and held that the gains on transfer of debt securities are taxable as cap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of penalty: - Explanation 1 - Where in respect of any facts material to the computation of the total income of any person under this Act- (A) Such person fails to offer an explanation or offers an explanation which is found by the [Assessing] Officer or the commissioner (Appeals) [or the principal commissioner] [or the commissioner] to be false, or (B) Such person offers an explanation which he is not able to substantiate [and fails to prove that such explanation is bona fide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him. In the light of language of sec. 271(1)(c) the case is being discussed]. 2. The first requirement for imposing penalty u/s.271(1)(c) if any person has concealed the particulars of such income From the perusal of appellant's submission during the course of appellate proceedings following facts come to light vis-a-vis the first requirement of sec. 271(1)(c) of the I.T. Act. 3. As per the AO's finding the appellant has concealed the particulars of his income. It was sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The appellant submits that initiation of penalty proceedings made by the AO was on treating Underwriting Commission as business income which was changed to 'fees for technical services by the CIT(A) and hence penalty u/s. 271(1)(c) is not attracted under this set of circumstances. In the light of above discussion penalty u/s. 271(1)(c) imposed by the AO is deleted. 6. On appraisal of the above mentioned finding, we noticed that the factual position is not in dispute. The assessee filed the return of income on 30.09.2008 declaring total income to the tune of ₹ 41,31,73,442/-. The assessee claimed a sum of ₹ 15,80,80,000/- under the head underwriting commission as non-taxable. Secondly, the gains on the transfer of debt securities of ₹ 18,86,80,359/- was also considered as non-taxable. The case was selected for scrutiny and the AO assessed the income in sum of ₹ 75,99,33,801/- considering all receipts as taxable and penalty proceeding u/s 271(c) of the Act was initiated. The CIT(A) has decided the matter of controversy to the fact that the underwriting commission was taxable as Fee for Technical Service @ 10% on gross basis unde ..... X X X X Extracts X X X X X X X X Extracts X X X X
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