TMI Blog2016 (6) TMI 31X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Shri Ashwani Taneja, Accountant Member For The Assessee : Shri Ronak G. Doshi For The Revenue : Shri M.V.Rajguru ORDER Per Joginder Singh (Judicial Member) The assessee is aggrieved by the impugned order dated 29/09/2010 of the First Appellate Authority, Mumbai, The only ground agitated by the assessee is with respect to levy of penalty of ₹ 20,44,735/- u/s 271(1)(c) of the Income tax Act, 1961 (hereinafter the Act). 2. During hearing, the ld. counsel for the assessee, Shri Ronak G. Doshi, at the outset, claimed that on identical facts, for Assessment year 1999-2000 and 2001-02 vide order dated 07/01/2011, the penalty levied u/s 271(1)(c) was deleted by the Tribunal in ITA No. 4128/Mum/2008 and ITA No.3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ked Explanation 1 to section 271[1][c] and levied penalty @ 100%. 4. The action of the AO has been confirmed by the ld. CIT(A). 5. Before us Ld. counsel of the assessee referred to page-54 of the paper book, which is a copy of the Shareholders Agreement between the assessee company and Boots Company, PLC who was a foreign partner in the joint venture. He invited our attention to clause 9.13 through which it was agreed that Boots Company, PLC i.e. joint venture partnership was responsible for payment of salaries and other expenses in relation to the Managing Director. He submitted that, in fact, the Managing Director was to be appointed by Boots Company, PLC because the joint venture partner s wanted its own representative as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alities and could have taken many months because certain approvals were also required. 6. On the other hand, Ld.DR strongly supported the order of the CIT(A) and pointed out that it was clearly found by the AO that as per Shareholders Agreement the other partner of the joint venture i.e. M/s. Boots Company, PLC was required to pay the remuneration and, therefore, there was no justification for claiming this expenditure when assessee was not at all responsible for making such payments. He strongly relied on the decision of the Hon ble Supreme Court in the case of Dharmendra Textile Processors 212 CTR (SC) 432 and the decision of the Hon ble Madras High Court in the case of Thirupathy Kumar Khemka Another vs. CIT [291 ITR 122]. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mend the Shareholders Agreement which involves lots of time and expenditure which may not have been feasible because of the smallness of the item of the expenditure. We further find that in the case of Dharmendra Textiles Processors [supra], the main issue was whether mens rea is required for levy of penalty or not and the Hon ble court held that while dealing with the civil penalty statutory provisions are enough and no mens rea is required. But it does not mean that in all cases where addition has been made penalty has to be levied. Similarly, in the case of Thirupathy Kumar Khemka Another vs. CIT [supra], the assessee had not disclosed the amount of interest u/s.244A received on the refund of income tax in his income. Further some cred ..... X X X X Extracts X X X X X X X X Extracts X X X X
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