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2015 (11) TMI 116 - AT - Income TaxPenalty u/s. 271C - failure to deduct tax and deposit to Govt. account - short deduction of TDS u/s. 194D of the Act treating the payments as contractual receipts u/s. 194C - CIT(A) deleted penalty - Held that:- The assessee has made payments treating the same as contractual payments in lieu of the agreement after obtaining opinion from the advocate. There is no dispute that the assessee has deducted tax u/s. 194C of the Act for contractual payment on the basis of the opinion of advocate and this is also not under dispute that the deductions were required to be made by the assessee u/s. 194D of the Act from the payments being made by the assessee either reimbursement of expenses or payments being contractual or commission income. Once there is advice from an expert, assessee has to rely on it and this constitutes a reasonable cause. See Woodward Governors India (P) Ltd. Versus Commissioner Of Income Tax And Others. [2001 (4) TMI 34 - DELHI High Court]. In case the assessee is in a genuine and bona fide belief that it was not under obligation to deduct tax penalty u/s. 271C of the Act cannot levied. See CIT Versus Eli Lilly & Company (India) Pvt. Ltd. [2009 (3) TMI 33 - SUPREME COURT - Income Tax] The advice of the expert i.e. advocate after going through the clauses of the agreement holding the same as contractual obligation may be ill conceived advice but assessee has no option except to believe the same. Accordingly, in view of facts and circumstances of the case, we are of the view that the CIT(A) has rightly deleted the penalty and we confirm the same. - Decided in favour of assessee.
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