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2015 (9) TMI 2 - AT - Income TaxReopening of assessment - whether CIT(Appeals) has erred in annulling the assessment order under section 143(3)/147 - Held that:- In the Assessment year under consideration before us, this material aspect of the case has not been rebutted that the issue of allowability of royalty of expenses was duly considered by the Assessing Officer while framing the original assessment under sec. 143(3) of the Act on 29.12.2006 and since then, there was no change of law or material and the decision of the Hon'ble Supreme Court in the case of Southern Switch Gear Ltd. vs. CIT (1997 (12) TMI 105 - SUPREME Court) was very much in existence, when the original assessment order was framed on 29.12.2006. We are thus respectfully following the ratios laid down by the Hon'ble Supreme Court in the case of CIT vs. Kelvinator India Ltd. (2010 (1) TMI 11 - SUPREME COURT OF INDIA ) hold that the Learned CIT(Appeals) has rightly come to the conclusion that the Assessing Officer was not justified in reopening of the assessment under sec. 147 of the Act holding the same as void ab initio and consequently the assessment in question as annulled. We thus hold that there is no infirmity in the first appellate order on the issue. The same is upheld. - Decided in favour of assessee. Penalty imposed under sec. 271(1)(c) - whether CIT(Appeals) while deleting the penalty has ignored the fact that assessee had made a wrong claim of ₹ 23,07,349 in relation to the commission of the ex-gratia paid to its directors even though the same was not allowable as per the provisions of sec. 36(1)(ii)? - Held that:- the very addition made by a disallowance of ₹ 23,07,349 on account of commission and ex-gratia payment made to directors of the assessee company by invoking sec. 36(1)(ii) of the Act, which remained the subject matter of penalty in question, has been deleted by the ITAT. The ITAT has also approved the first appellate order in this regard on an identical issue for the assessment year 2004-05, following which the Learned CIT(Appeals) in the assessment year under consideration has held the levy of penalty as unjustified on the basis that in the assessment year 2004-05, the Learned CIT(Appeals) has allowed the appeal of the assessee on the issue. We thus do not find any reason to interfere with the first appellate order. - Decided in favour of assessee.
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