TMI Blog2015 (1) TMI 613X X X X Extracts X X X X X X X X Extracts X X X X ..... in allowing the claim of the assessee for 10% of the expenditure relating to indirect cost for computing deduction under Section 80HHC. - Decided in favour of assessee. Penalty u/s 271(1)(c) - addition made in the quantum proceedings - Held that:- As the said addition was subsequently deleted by the Tribunal in ITA No.45/Ahd/2005. Since the penalty was a consequential action of the addition made, the same would not survive when the addition itself has been deleted by the Tribunal.Tribunal was right in cancelling the order of penalty imposed on the assessee. - Decided in favour of assessee. - TAX APPEAL NO. 58 of 2007 With TAX APPEAL NO. 1670 of 2007 - - - Dated:- 24-12-2014 - MR. KS JHAVERI AND MR. K.J.THAKER, JJ. FOR THE APPELL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The Assessing Officer, after scrutiny, imposed penalty of ₹ 5,50,465/- under Section 271(1)(c) of the Income Tax Act, vide order dated 24.03.2006. Against the said order, the assessee filed an appeal before the Commissioner of Income Tax (appeals). The CIT(A) allowed the said appeal and cancelled the order passed by the Assessing Officer. Being aggrieved and dissatisfied with the order of the CIT(A), the revenue filed an appeal before the Tribunal. The Tribunal vide impugned order dated 13.03.2007 dismissed the said appeal. Hence, this appeal is filed at the instance of the revenue. 5. While admitting Tax Appeal No.58 of 2007 on 19.10.2007, the Court had formulated the following substantial question of law:- Whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... table to the exports of trading goods. Therefore, the principle of attribution is retained. Thirdly, keeping in mind the provisions of section 80HHC(3)(b) read with clauses (d) and (e) of the Explanation it is clear that Legislature intended allocation of costs between export turnover and total turnover. It is urged that the apportionment would not apply to cases under section 80HHC(3) (b). It is true that, in most cases, it may not. But in certain cases falling under section 80HHC(3)(b), ratio still applies. For example, in the case where the assessee exports all bought-out items but brings back only a part of the export proceedings into India, in such cases, the ratio will apply and, therefore, if one is to read clause (e), it retains the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses is how to allocate the costs? As stated above, assessee has two incomes with one Common Pool of expenses and since principle of attribution has been retained in the scheme of section 80HHC, both in terms of section 80HHC(3), clause (e) to the Explanation to section 80HHC(3)(a), (b) and (c) and in clause (baa) to the Explanation to section 80HHC, instead of going into lengthy exercise of dividing such Common Expenses, the assessee has estimated the reduction of export turnover by 10% of the other income of ₹ 1,60,000 (in the above example). Ultimately, clause (baa) to the Explanation is itself based on the assumption that 10% of the income would be an expense. We make it clear that we are not reading Explanation (baa) into sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question of law raised in Tax Appeal No. 1670 of 2007 is concerned, it is a matter of fact that the penalty was levied under section 271(1)(c) of the Income Tax Act on account of the addition made in the quantum proceedings. However, the said addition was subsequently deleted by the Tribunal in ITA No.45/Ahd/2005. Since the penalty was a consequential action of the addition made, the same would not survive when the addition itself has been deleted by the Tribunal. 11. In view of the same, the present appeal deserves to be dismissed and the same is accordingly dismissed. The question of law raised in this appeal is answered in favour of the assessee and against the revenue. Therefore, we hold that the Tribunal was right in cancelling the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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