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2015 (8) TMI 1212 - DELHI HIGH COURT

2015 (8) TMI 1212 - DELHI HIGH COURT - [2015] 377 ITR 215 (Del) - Penalty under Section 271(1)(c) - compensation "in lieu of giving up their right" received - CIT(A) deleted penalty confirmed by ITAT - Held that:- The Court finds that in the present case the order of the CIT (A) explaining why Section 271(1)(c) is not attracted in the facts and circumstances of the case merits no interference. The issue that arose for determination in the quantum appeal does appear to have been debatable as is e .....

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time of being known in the market as a joint venture partner of TE". Secondly, the Assessee armed itself with a legal opinion. These facts are sufficient to distinguish the present case from the facts in Zoom Communication (2010 (5) TMI 34 - DELHI HIGH COURT ) where the Court observed that apart from a making wrong claim, the Assessee did so not on the basis of any advice given to it by an auditor or tax expert. Even in MAK Data (2013 (11) TMI 14 - SUPREME COURT) the Supreme Court held on facts .....

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. Muralidhar And Vibhu Bakhru, JJ. For the Petitioner : Mr N P Sahni, Senior Standing Counsel with Mr Nitin Gulati, Adv. For the Respondent : Mr Piyush Kaushik, Adv. ORDER 1. This penalty appeal by the Revenue under Section 260A (1) of the Income Tax Act, 1961 ('Act') is directed against the order dated 26th September 2014 passed by the Income Tax Appellate Tribunal ('ITAT') in ITA No. 2734/Del/2013 for the Assessment Year ('AY') 2004-05. 2. The Respondent Assessee is eng .....

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39;AO') noted that the Respondent had in its computation of income (furnished along with return of income) shown a sum of ₹ 12,12,18,990 as capital gain, treating the cost of acquisition as nil. It was also noted that the Respondent had invested the said sum in capital gain bonds and claimed deduction under Section 54EC of the Act resulting in the chargeable capital gains being 'nil'. The following Note No.22 of the Notes to Account (Schedule 17) was appended by the Respondent: .....

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, pursuant to settlement agreement, received capital compensation in lieu of giving up their right under Press Note 18, which debarred the collaborator from carrying out business in India, without the permission of JV partner, and in lieu of agreeing not to use the name after an interim period i. e. to give up the benefit over a period of time, of being known in the market as a joint venture partner of TE. Such compensation is not taxable. The company has treated it as capital receipt/capital ga .....

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bruary 2009. The matter was carried by the Assessee in appeal to the ITAT which also confirmed the order of the CIT (A). It is stated that against the said order of the ITAT, the Assessee has filed an appeal being ITA No. 25 of 2013 in which this Court has by order dated 8th October 2013 framed a question of law. 6. In the meanwhile, the AO imposed a penalty on the Assessee under Section 271(1) (c) of the Act by order dated 21st March 2011 on the ground that the Assessee had furnished inaccurate .....

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had failed to discharge its burden to show that there was no concealment. 7. The Assessee then went to appeal against the said order to the CIT (A). By the order dated 28th February 2013 CIT (A) allowed the appeal. The CIT (A) inter alia noted that the material facts have been disclosed by the Assessee in its return of income. The Assessee had obtained with an opinion of a lawyer to the effect that the entire receipt from its foreign collaborator (Schneider Electric Industry) would be capital re .....

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ry the same line of business. Consequently, the CIT (A) came to the conclusion that "very basis of taking the impugned amount of compensation as 'business income' of the appellant company was debatable". The order of the CIT (A) was affirmed by the ITAT by the impugned order, dismissing the Revenue's appeal. 8. Mr. N.P. Sahni, learned Senior Standing counsel for the Revenue, maintained that this was a case of the Assessee furnishing inaccurate particulars and in view of the .....

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