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TMI Blog2010 (2) TMI 692X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 of 2007 pertain to the assessment year 1996-97, I. T. A. Nos. 559 of 2007 and 557 of 2007 pertain to the assessment year 1997-98 and I. T. A. Nos. 569 of 2007 and 561 of 2007 pertain to the assessment year 1998-99. 2. For the sake of convenience all these appeals are taken up together and common order is passed. 3. The facts leading to the filing of these appeals are as under : 4. The Revenue has come up in these appeals being aggrieved by the order passed by the Income-tax Appellate Tribunal, Bangalore. The respondent- company is incorporated in Japan. It had entered into an agreement with the Indian company-Indo Nissan Foods Ltd. Pursuant to the agreement of collaboration, the respondent-company had deputed its e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gainst the same, the assessee filed an appeal before the Income-tax Appellate Tribunal, Bangalore which allowed the appeal granting relief to the assessee. Simultaneously, proceedings were also initiated under section 272A(2)(c) of the Act on the ground that the return of income was not furnished in due time, accordingly, an order was also passed. Being aggrieved by the said two orders, the appeal was also preferred which ended in dismissal, against which the appeal was preferred by the respondent-assessee before the Income-tax Appellate Tribunal wherein the Tribunal granted relief to the respondent/assessee. Being aggrieved by the same, these appeals were preferred by the Revenue. 7. Though these appeals are admitted, substantial q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... employees was not salary. Therefore, the said amount could not have been considered as a salary as required under section 192(1) of the Act and that, it was not required for the respondent to deduct the tax at source. It is also contended by the respondent that the respondent-company being a foreign company was of the opinion that it was not required to deduct tax at source and having come to the conclusion that the tax was required to be paid the same was paid by the respondent. Therefore, the cause accepted by the Tribunal has to be confirmed by the court. In the circumstances she requests the court to dismiss these appeals. 11. Having heard the counsel for both parties, we have to consider the questions that arise for our consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall be liable to pay, by way of penalty, a sum equal to the amount of tax which such person failed to deduct. In these cases we are concerned with section 271C(1)(a). Thus, section 271C(1)(a) makes it clear that the penalty leviable shall be equal to the amount of tax which such person failed to deduct. We cannot hold this provision to be mandatory or compensatory or automatic because under section 273B Parliament has enacted that penalty shall not be imposed in cases falling thereunder. Section 271C falls in the category of such cases. Section 273B states that notwithstanding anything contained in section 271C, no penalty shall be imposed on the person or the assessee for failure to deduct tax at source if such person or the assessee pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduct tax at source from the home salary paid by the foreign company/head office and, consequently, we are of the view that in none of the 104 cases penalty was leviable under section 271C as the respondent in each case has discharged its burden of showing reasonable cause for failure to deduct tax at source." 13. As we have come to the conclusion that the Assessing Officer has failed to consider the cause shown by the assessee, we are of the opinion that the matter requires to be reconsidered by the Assessing Officer keeping open all the contentions raised by the assessee. In the circumstances without answering the questions of law, the matter is remanded to the Assessing Officer by setting aside the orders to consider the case in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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