TMI Blog2004 (5) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... cerned these are extraneous considerations as what the revenue authorities are required to consider while levying such penalty is existence of reasonable cause for non-deduction of tax at source - reasonable cause as shown by the assessee-company has not been properly appreciated and deliberated by the lower authorities – Tribunal was right in cancelling the penalty imposed under section 271C - - - - - Dated:- 6-5-2004 - Judge(s) : B. C. PATEL., BADAR DURREZ AHMED. JUDGMENT The judgment of the court was delivered by B.C. Patel C.J. - The Revenue has filed this appeal, inter alia, agitating that the order made by the Tribunal is perverse. The Division Bench while admitting the matter on May 16, 2001, framed the question as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x Act, 1961 (hereinafter referred to as "the Act"). It may be noted that these technicians or personnel were paid salary and other perquisites in accordance with the terms of their contract. The relevant term reads as under: "Income chargeable under the head 'Salaries' rendered in India; and retention/continuation paid in Japan." The Revenue came out with the version that the salary was paid to the Japanese experts in Japan for the work carried out in India. It was stated that part of the salary was paid in India and in Indian currency as well. It also transpires that later on, the assessee paid the amount claimed by the Revenue with interest which was required to be deducted by way of TDS. It is, thereafter, the question of penalty aro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest no further action is justified under section 271C of the Income-tax Act, looking to the ratio of the aforecited decisions of the hon'ble jurisdictional Delhi High Court." The Tribunal independently examined the matter on the facts as well as on law and arrived at a conclusion, which reads as under: "Considering all the facts and circumstances discussed above we are of the considered view that there existed a reasonable cause for not deducting the tax at source from the payments made to expatriates in Japan within the meaning of section 273B and accordingly no penalty under section 271C is exigible." It is this later part of the judgment which has compelled the Revenue to agitate the cause before this court. The Tribunal has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e details of payments made in Japan to expatriate employees and their taxability in India and in the absence of any such material there was a good and sufficient reason available for not deducting the tax at source from the salary and perquisite paid in India over and above that already deducted and paid in Government account." In para. 8.32, the Tribunal held as under: "Admittedly, the assessee-company paid retention/continuation pay to expatriate employees in Japan in addition to the salary and perquisite paid in India. It has been claimed on behalf of the company before the lower authorities that retention/continuation pay paid to expatriate employees in Japan is not taxable in India and the provisions of Chapter XVII-B relating to T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tails of salary or denial of payment of salary in Japan and the ultimate payment of tax and interest was not suo motu but was as a result of investigations and efforts made by the Assistant Commissioner of Income-tax. In our considered view, these facts no doubt adversely effected the waiver of interest/penalty under section 273A but so far as the levy of penalty under section 271C is concerned these are extraneous considerations as what the revenue authorities are required to consider while levying such penalty is existence of reasonable cause for non-deduction of tax at source and the reasonable cause as shown by the assessee-company has not been properly appreciated and deliberated by the lower authorities." The arguments with regard t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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