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2016 (8) TMI 822 - HC - Income TaxPenalty levied u/s.271C - non deduction of tds - Held that:- The assessee could not be faulted if it thought that its own determination of what would be the income of the Canadian and UK Companies were not conclusive of its liability to deduct tax from the provisions. Such belief appears to have been held by the assessee bona fidely. The bona fide belief is fortified when the assessee deducted and paid tax in October 2005 when it received invoices and remitted the service charges. In respect of the U.K. Company, no formal agreement was executed even later also, as in the case of the Canadian Company. This strengthens the assessee's claim that it was under the bona fide belief that tax was deducted only when service charge was determined by a specific agreement and were paid. There was no prompting by the Department and assessee had made the payment voluntarily. In this background, it would be relevant to refer to a judgment of the Apex Court in the case of CIT v. Eli Lilly and Co. (India) P. Ltd., [2009 (3) TMI 33 - SUPREME COURT ]. In that case, it has been held that liability to pay penalty u/s.271C can be fastened only on the person who does not have good and sufficient reason for not deducting tax at source and the burden, of course, will be on that person to prove such good and sufficient reason. - Decided in favour of the assessee
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