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TMI Blog2016 (3) TMI 504X X X X Extracts X X X X X X X X Extracts X X X X ..... f income offering 10% of total amount of supply of material and equipment of Rs. 2,37,55,936/- i.e. Rs. 23,75,590/- u/s 44BBB of the Act . Since According to AO the contract of the assessee did not satisfied conditions of contract mentioned u/s 44BBB of the ACT but only service contract, the benefit of section 44BBB was denied to the assessee. The AO further held that consideration received by the appellant on account of supervision and training charges is taxable @20 as per the provision of section 115A of the Act and Article 7 of DTAA between India and Germany. On appeal the learned Commissioner of Income-tax (Appeals) confirmed with respect to 20% income deduction u/s 115A of the Act received on account of supervision charges but the consideration received for training was held to be taxable at 10% as per Article 12(2) of Indo Germany DTAA. On Appeal ITAT also dismissed the appeal of the assessee preferred against the order of CIT (A). Therefore the view of the ld AO was concurrently accepted with respect to section 44BBB of the Act and partly on applicability of rate of tax on service contracts. In these background the penalty u/s 271(1)(c) was levied by order dated 25.03.2010. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim of the assessee u/s 44BBB is false or malafide. Merely the claim of the assessee was rejected holding that this contract entered in to by the assessee does not satisfy the conditions u/s 44BBB of the Act, assessee cannot be said to have furnished inaccurate particulars of income. It is simply a matter of interpretation of that contract. It is established principle that merely because of the claim of the assessee did not find favour of the assessing authority , it cannot attract a provision of penalty u/s 271(1)(c) of the Act. Furthermore at the time of filing of return the assessee has put a note along with computation of income which fully disclosed the content of the agreement as well the contention of the assessee. In the note it is contended that the assessee satisfied the conditions laid down u/s 44BBB of the Act. Therefore there is adequate disclosure made by the assessee putting forth its contention. Therefore at the most claim of the assessee can be said to be incorrect but not false. Honourable supreme court in case of CIT V Reliance Petro products Private Limited 322 ITR 158 deleting the penalty u/s 271(1) (c) on incorrect claim has held that 8. A glance at this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 271(1)(c) must exist before the penalty is imposed. There can be no dispute that everything would depend upon the return filed because that is the only document, where the assessee can furnish the particulars of his income. When such particulars are found to be inaccurate, the liability would arise. In Dilip N. Shroff v. Joint CIT [2007] 6 SCC 329****, this court explained the terms "concealment of income" and "furnishing inaccurate particulars". The court went on to hold therein that in order to attract the penalty under section 271(1)(c), mens rea was necessary, as according to the court, the word "inaccurate" signified a deliberate act or omission on behalf of the assessee. It went on to hold that clause (iii) of section 271(1)(c) provided for a discretionary jurisdiction upon the assessing authority, inasmuch as the amount of penalty could not be less than the amount of tax sought to be evaded by reason of such concealment of particulars of income, but it may not exceed three times thereof. It was pointed out that the term "inaccurate particulars" was not defined anywhere in the Act and, therefore, it was held that furnishing of an assessment of the value of the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urate particulars. In Webster's Dictionary, the word "inaccurate" has been defined as : "not accurate, not exact or correct ; not according to truth ; erroneous ; as an inaccurate statement, copy or transcript." 11. We have already seen the meaning of the word "particulars" in the earlier part of this judgment. Reading the words in conjunction, they must mean the details supplied in the return, which are not accurate, not exact or correct, not according to truth or erroneous. We must hasten to add here that in this case, there is no finding that any details supplied by the assessee in its return were found to be incorrect or erroneous or false. Such not being the case, there would be no question of inviting the penalty under section 271(1)(c) of the Act. A mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such claim made in the return cannot amount to the inaccurate particulars. 12. It was tried to be suggested that section 14A of the Act specifically excluded the deductions in respect of the expenditure incurred by the assessee in relation to income which doe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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