TMI Blog2018 (6) TMI 147X X X X Extracts X X X X X X X X Extracts X X X X ..... i. The order of the CIT(A) deleting the penalty imposed by the A.O under Sec. 271(1)(c) is upheld. - Decided in favour of assessee Addition made towards Long Term Capital Gain on sale of structured product, viz. 0% debentures - Held that:- Raising of an incorrect claim in law cannot be construed as furnishing of inaccurate particulars of income. As it remains an admitted position that no information given by the assessee in its return of income in respect of either the amount of sale proceeds or the cost of acquisition of the structured product, viz. 0% debentures of Deutsche Investments India Pvt. Ltd. is found to be incorrect or inaccurate, therefore, the wrong computation of the LTCG can by no means be characterised as furnishing of inaccurate particulars of income by the assessee. We find that our aforesaid view that where no information given in the return of income was found to be incorrect or inaccurate, the assessee cannot be held guilty of furnishing inaccurate particulars, for the reason that he had on the basis of said facts made an incorrect claim in law, is fortified by the judgment of the Hon’ble Apex Court in the case of CIT Vs. Reliance Petroproducts Pvt. Ltd [ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in it has been clearly held that everything would depend upon the return f iled by the assessee and when the particulars therein are found to be inaccurate the liability would arise. v. The appellant craves to leave to add, to amend and / or to al ter any of the grounds of appeal, if need be. vi. The appellant, therefore, prays that on the grounds stated above, the order of the Ld. CIT(A) -40, Mumbai, may be set aside and that of the Assessing Of f ice restored. 2. Briefly stated, the facts of the case are that the assessee who is a film actor by profession and is following cash method of accounting had filed his return of income for A.Y 2010-11 on 30.09.2010, declaring total income of ₹ 46,91,80,367/-. The assessee had in his return of income shown income from house property, profession, capital gains and other sources. The case of the assessee was taken up for scrutiny assessment under Sec. 143(2) of the Act. 3. The assessee who owned a property, viz. Signature Villa (hereinafter referred to as Villa ) at Palm Jumeirah, Dubai, estimated the rateable value of the same at ₹ 20,00,000/- and offered the house property income of ₹ 14,00,000/- i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t owning a property in UAE for selfoccupation was not to be subjected to tax in UAE. The assessee in support of his aforesaid claim submitted that neither Article 6(1) nor protocol to the tax treaty expressly recognized the right of the state of residence of the owner to tax income from immovable property situated in the state of source. It was thus the claim of the assessee that the income from an immovable property could be taxed only in the state of source and that too, to the exclusion of the property used for self occupation. The assessee in the backdrop of his aforesaid submissions tried to persuade the A.O to return a finding that the notional income from the villa owned by him at UAE could not be brought to tax in India. 4. The A.O after perusing the contentions advanced by the assessee was however not persuaded to subscribe to the same. It was observed by the A.O that the submissions put forth by the assessee were not found to be in conformity with the provisions of Sec. 5(1) of the Act. The A.O held a conviction that Sec. 5(1) of the Act covered the incomes of a person who was a resident of India and the income of the assessee could not be related to any exception carv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... did not assail the aforesaid addition in appeal, but disputed the action of the A.O in not allowing the deduction of ₹ 4,00,000/- towards cost of acquisition before the CIT(A). The CIT(A) observing that the assessee had already filed an application for rectification with the A.O on the issue under consideration, therefore, directed the A.O to verify the contention of the assessee and dispose off the rectification application expeditiously. Subsequently, the A.O finding favour with the claim of the assessee revised the LTCG on sale of 0% debentures at ₹ 20,60,000/-, vide his order dated 16/08/2013 passed under Sec. 154 of the Act. The A.O interalia after making certain other additions/disallowances assessed the income at ₹ 47,62,00,550/-. 6. Aggrieved, the assessee carried the matter in appeal before the CIT(A). Before the CIT(A), the assessee reiterated the submissions put forth before the A.O to drive home his contention that the notional income of the Signature Villa, Dubai was not to be taxed in India. However, the CIT(A) not being persuaded to be in agreement with the contentions advanced before him by the assessee, observed, that as per the Notification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... head house property at ₹ 61,66,952/-. As the assessee had offered income from the house property at ₹ 14,00,000/-, therefore, the A.O made an addition of ₹ 47,66,952/- under the head income from house property for the year under consideration. (ii) The assessee further submitted in his reply that as per the provisions of the India-UAE tax treaty and specially sub-clause (ii) of the protocol, which clearly stated that notwithstanding the provisions of Article 6 and Article 23, the residential property owned by a national of a contracting state and occupied for self-residence in the other contracting state shall be exempt in the other contracting state from the taxes covered by the tax treaty, therefore, the notional income of the villa owned by him at Dubai could not be taxed in India. It was further stated by the assessee that as per Sec. 90(2) of the Income tax Act, the provisions of the DTAA would prevail over the provisions of the Act and further, provisions of the protocol shall prevail over the provisions of Article 6 of the DTAA, as per the language used therein. It was the claim of the assessee that the notifications issued by the CBDT which were relie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... compared with the words of enactments legislated by the Parliament, nor could override the Act, the DTAA or a protocol therein. It was thus the claim of the assessee that as the initial offering of the estimated notional income of the villa at ₹ 14,00,000/- and subsequent withdrawal of the same from the scope of the income taxable in India was based on an interpretation of the provisions of the Act and the DTAA between India-UAE, which was further backed by the judicial interpretation of the aforementioned notifications, therefore, the same could neither be construed as concealment of particulars of income or furnishing of inaccurate particulars of income. (B) Long Term Capital Gain on sale of non-convertible debentures: It was stated by the assessee that the Long term capital gain (for short LTCG ) on the sale of structured products, viz. 0% debentures issued by Deutsche Investments India Pvt. Ltd. was worked out by him after claiming indexation and was offered to tax at the rate of 20%. The A.O held that the LTCG on sale of the aforesaid non-convertible debentures, being a structured product was to be taxed as per the proviso to Sec 112 of the Act and benefit of inde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ealment of income by the assessee, concluded that as the assessee in the case before him had purposively furnished inaccurate particulars and concealed his income, therefore, he was liable for imposition of penalty for furnishing inaccurate particulars of his income within the meaning of Sec. 271(1)(c) of the Act. The A.O on the basis of his aforesaid deliberations imposed a penalty of ₹ 16,36,085/- on the assessee for furnishing of inaccurate particulars of income of ₹ 68,26,952/-. 10. Aggrieved, the assessee carried the matter in appeal before the CIT(A). The CIT(A) after perusing the contentions advanced by the assessee in the backdrop of the orders of the A.O observed, that the villa owned by the assessee at Dubai had not been rented out by the assessee, but was apparently being used by him for his personal purpose. It was further observed by the CIT(A) that the assessee had initially on his own estimated the lettable value of the property at ₹ 20,00,000/- and after claiming 30% deduction under Sec. 24 had returned income of ₹ 14,00,000/- in respect of the same under the head house property . The CIT(A) held a conviction that the assessee who though ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and subsequent to the filing of the return of income by the assessee, and that too in respect of wealth tax purposes. The CIT(A) in the backdrop of his aforesaid observations was of the considered view that because of the provisions of the DTAA, as two possible opinions about the taxability of the income from the property under consideration did emerge, therefore, the assessee could not be held liable for penalty under Sec. 271(1)(c) in respect of deemed income from the property under consideration, for the reason that the same had been brought to tax under Sec. 23(a) of the Act. 11. That as regards the addition made by the A.O on account of the long term capital gain on sale of structured product, viz. 0% debentures of Deutsche Investments Pvt. Ltd, it was observed by the CIT(A) that there was no dispute either as regards the quantum of the sale consideration or the cost of acquisition, but rather, the only issue was whether the assessee was eligible for benefit of indexation, or not. The CIT(A) noted that as the A.O was of the view that the assessee was not eligible for benefit of indexation, therefore, for the said reason the computation of capital gain had increased by an am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Sec.24(a) was computed at ₹ 61,66,952/- as his income from house property. The ld. D.R submitted that as the addition made in respect of the variation of the annual lettable value of the property was on the basis of the figure provided by the assessee on the basis of a valuation report procured by him, therefore, it could safely be concluded that neither the issue nor the quantification of the ALV was a debatable one. The ld. D.R further adverting to the addition made on account of long term capital gain, submitted that as the assessee had wrongly computed the capital gain on the sale of 0% debentures after claiming indexation on the same, therefore, the A.O had rightly imposed penalty under Sec. 271(1)(c) for furnishing of inaccurate particulars of income in respect of the addition of ₹ 20,60,000/- made on account of long term capital gain on sale of the aforementioned structured product. It was averred by the ld. D.R that the CIT(A) without appreciating the facts of the case in the right perspective had wrongly deleted the penalty under Sec. 271(1)(c) which was imposed by the A.O on the basis of a well reasoned order. The ld. D.R in order to fortify his aforesaid c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an issue, without putting the other party to notice. The ld. A.R rebutting the aforesaid objection raised by the revenue submitted that there was no statutory obligation cast upon the assessee to raise an objection in writing, and he was well within his right to raise the same during the course of hearing of the appeal. The ld. A.R in support of his aforesaid contention relied on the following judicial pronouncements:- (i) Hukumchand Mills Ltd. Vs. Commissioner of Income Tax, Central, Bombay (1967) 63 ITR 232 (S.C.) (ii) Commissioner of Income Tax, Mumbai Vs. Mahalaxmi Textiles Mills Ltd. (1967) 66 ITR 710 (SC). (iii) Commissioner of Income Tax, Bombay City-1, Vs Gilbert Barkar Manufacturing Company, USA (1978) 111 ITR 529 (Bom). (iv) D.M. Neterwalla vs. Commissioner of Income-tax (1980) 122 ITR 880 (Bom). The ld. A.R further to support his contention that because of the failure on the part of the A.O to strike off the irrelevant default in the body of the SCN , the assessee had remained divested of any opportunity of putting forth its case before the A.O that no penalty under the aforesaid statutory provision was liable to be imposed in his hands, relied upon the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Jamunadas Virji Shares and Stock Brokers Pvt. Ltd.(2013) 258 CTR 458 (Bom) (iii) DCIT Vs. Sandip M. Patel (2012) 137 ITD 104 (Ahmedabad) (iv) CIT Vs. Jindal Ployster Ltd. (2017) 397 ITR 282 (All) (v) Addl. CIT Vs. Gurjargravures (P) Ltd. (1978) 111 ITR 1 (SC) (vi) CIT Vs. Edwert Keventer (Successors) P. Ltd. (1980) 123 ITR 200 (Del) (vii) Ultratech Cement Ltd. Vs. Addl. CIT, Range-2(2) (2017) 298 CTR 437 (Bom) (viii) Self Knitting Works Vs. CIT (2014) 227 taxman 253 (P H) The ld. D.R relying on the aforesaid judicial pronouncements, submitted that as per the settled position of law, the objection raised by the ld. A.R during the course of hearing of the appeal as regards the validity of the jurisdiction assumed by the A.O for imposing penalty 271(1)(c) was not admissible and thus no cognizance of the same may be drawn. Alternatively, and without prejudice to the objection raised to the admission of the challenge thrown by the ld. A.R to the validity of the assumption of jurisdiction by the A.O for imposing penalty under Sec. 271(1)(c), it was averred by the ld. D.R that even otherwise the failure on the part of the A.O to strike off the irrelevant default ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t as the assessee had relied on one set of possible view as regards the taxability of the notional income of the villa owned by him at Dubai, therefore, no penalty under Sec. 271(1)(c) was liable to be imposed in his hands. The ld. A.R submitted that the Notifications No. 90 and 91, dated 28.08.2008 issued by the CBDT and relied upon by the A.O for taxing the notional income of the villa clearly militated against Article 6(1) of the India-UAE tax treaty and the protocol. The ld. A.R further submitted that as the India-UAE tax treaty had been drafted in order to regulate interest of two countries, therefore, a unilateral attempt on the part of one country to distort the contents of the treaty would not be permissible. It was thus the claim of the ld. A.R that Article 6(1) of the India-UAE tax treaty and the protocol could not be superseded by any such unilateral amendment made to the treaty. It was further averred by the ld. A.R that the issue as to whether the Notifications nos. 90 and 91/2008, dated 28.08.2008 would have a superseding effect over the DTAA entered into by the Government of India with the Government of any other country, was so much debatable that the same had trave ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and debate. The ld. A.R taking support of the aforesaid facts, submitted that in case of a debatable issue no penalty under Sec. 271(1)(c) can be imposed in the hands of an assessee. The ld. A.R in order to drive home his aforesaid contention placed reliance on the following case laws:- (i) CIT Vs. Reliance Petroproducts P. Ltd. (2010) 322 ITR 158 (SC) (ii) CIT Vs. Nayan Builders Developers (2015) 231 Taxman 665 (Bom) (iii) CIT Vs. S.M. Construction (2015) 233 Taxman 263 (Bom) (iv) CIT Vs. Petals Engineers P. Ltd. (2014) 264 CTR 577 (Bom) (v) CIT Vs. Nalin P. Shah (HUF) (2013) 85 CCH 132 (Bom) (vi) CIT Vs. Laresen Toubro Ltd. (2014) 366 ITR 502 (Bom) (vii) DIT vs. Administrator of the Estate of Late Mr. E.F. Dinshaw (2013) 218 Taxman 125 (Bom) (Mag) (viii) Sesa Resources Ltd. Vs. ACIT (2013) 219 Taxman 92 (Bom) (Mag) (ix) CIT Vs. Mansukh Dying Printing Mills (2013) 219 Taxman 91 (Bom)(Mag). 15. The ld. A.R further adverting to the penalty imposed by the A.O in respect of the addition made in the hands of the assessee on account of reworking of long term capital gain on sale of structured product, viz. 0% debentures of Deutsche Investments India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al available on record. We shall first advert to the maintainability of the objection as regards the validity of assumption of jurisdiction by the A.O for imposing penalty under Sec. 271(1)(c) in the hands of the assessee, as was orally raised by the ld. A.R during the course of the hearing of the appeal before us. We may herein observe that it remains as a matter of a conceded fact that the objection as regards the validity of the assumption of jurisdiction by the A.O was raised by the ld. A.R not in writing, but for the very first time, and that too orally in the course of hearing of the appeal. The ld. D.R as observed by us hereinabove, had vehemently objected to such raising of objection, for the reason that the revenue not having been put to notice in advance as regards raising of such objection and having been taken by surprise had no occasion to meet out the same, both on the aspect of its maintainability and merits. We find that the ld. A.R on being confronted with the objection raised by the revenue that in the absence of any challenge thrown by the assessee in writing as regards the validity of assumption of jurisdiction by the A.O for imposing penalty under Sec. 271(1)(c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;ble Supreme Court while deliberating on the word thereon observed that the same restricted the jurisdiction of the Tribunal to the subject matter of the appeal. ( ii). CIT, Madras Vs. Mahalaxmi Textiles Mills Ltd.(1967) 66 ITR 710 (SC) : The Hon ble Apex Court had observed that as per Sec. 33(4) of the Income-tax Act, 1922 the appellate Tribunal is competent to pass such order on appeal as it thinks fit . It was further observed that there is nothing in the Income tax Act which restricts the Tribunal to the determination of questions raised before the departmental authorities. It was observed by Hon ble Apex Court that a question, whether on law or on facts, which relate to the assessment of the assessee may be raised before the Tribunal. The Hon'ble Apex Court further held that if for reasons recorded by the departmental authorities in respect of a contention raised by the assessee, grant of relief to him on another ground is justified, it would be open to the departmental authorities and the Tribunal, and indeed they would be under a duty to grant that relief. The right of the assessee to relief is not restricted to the plea raised by him. ( iii). CIT, Bomb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against the order of the Commissioner of Income Tax (Appeals), was withdrawn, perhaps because it was barred by limitation. It was in the backdrop of the aforesaid facts that the Hon ble High Court observed that once the appeal was withdrawn by the assessee, it was only open to the assessee to support the order of the Commissioner of Income Tax (Appeals) on any of the grounds decided against him. Hence, while the assessee would support the order, that would mean that the assessee would be entitled to urge that the deletion of the disallowance to the extent of ₹ 13.73 lacs by the CIT(A) was correct and proper. The assessee, however, would not be entitled to avail of the benefit of the provisions of Rule 27 in regard to that part of the order of the CIT(A) which upon consideration of the evidence, confirmed the disallowance of ₹ 14.96 lacs made by the Assessing Officer. It was thus, in the backdrop of the aforesaid facts, that the Hon ble High Court of Bombay after referring to its earlier orders in the case of B.R. Bamasi v/s Commissioner of Income Tax, (1972) 83 ITR 223 (Bombay) and Commissioner of Income Tax v/s Hazarimal Nagji Co. (1962) 46 ITR 1168 (Bombay), had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case before them had taken a ground before Commissioner (Appeals), and though had not further challenged the findings of the CIT(A) on the said ground, then as per Rule 27 of the Income Tax Rules, he could advance his arguments, even though he had not filed cross-objection against the findings recorded against him by the CIT(A). It was thus in the backdrop of the aforesaid facts, that the High Court observed that the Tribunal did not commit any mistake in permitting the assessee to support the order of CIT(A) on the ground that have been decided against him. ( v) Addl. CIT Vs. Gurjar Gravures Pvt. Ltd. (1978) 111 ITR 1 (SC) The Hon'ble Apex Court in the aforesaid case observed that where neither any claim was made before the ITO, nor was there any material on record supporting such a claim, then it would not be competent for the Tribunal to hold that the AAC should have entertained the question of relief and directed the ITO to allow the same. ( vi) CIT Vs. Edvert Keventer (successors) Pvt. Ld. (1980) 123 ITR 200 (Del):- The Hon'ble High Court in the aforementioned case, had observed that the scope and powers of the Tribunal is spelt out in Sec. 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aled against on any of the grounds decided against him. Rule 27 of the Appellate Tribunal Rules, 1963, lays down that where no appeal has been filed by a respondent, he may support the order appealed against i.e. the order of the CIT(A) on any of the ground decided against him, but cannot invoke the said rule to claim any fresh relief which was denied by the CIT(A) and is not part of the ground so raised by the appellant. The High Court after affirming the aforesaid observations of the Tribunal, held that where the respondent is aggrieved against any disallowance or addition sustained by the CIT(A) which is not under challenge at the behest of the appellant, the only remedy available with the respondent is to either file separate appeal or agitate the issue by way of cross objections in the appeal filed by the appellant impugning the disallowance or the addition sustained. Thus, the High Court on the basis of its aforesaid observations concluded that no error could be related to the view taken by the Tribunal, which had not allowed the assessee respondent to urge the validity of certain additions/disallowances in the garb of Rule 27 of the Appellate Tribunal Rules, 1963. 19. We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authorities could be allowed to be raised orally during the course of the hearing of the appeal, because if that be so, it would seriously jeopardise and rather adversely affect the rights of the other party to defend such an objection so raised. We may herein observe that in the case before us, we are confronted with a situation where the assessee respondent had assailed the validity of assumption of jurisdiction by the A.O for imposing of penalty under Sec. 271(1)(c) neither on the basis of a cross-appeal or a crossobjection filed before us, nor on the basis of any objection in writing which could have safely been comprehended by us as an objection raised under Rule 27 of the Appellate Tribunal Rules, 1963. Despite sufficient opportunity, the ld. authorized representative had failed to bring to our notice any judgment of the Hon ble Apex Court or that of Hon ble High Courts, or any order of a coordinate bench of the Tribunal, approving the admission of an objection that had orally been raised for the first time by a respondent party before the Tribunal, during the course of hearing of the appeal. We have deliberated at length on the judicial pronouncements which had been relied u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being merely procedural in character, do not in any way circumscribe or control the power of the Tribunal under Sec. 33(4) of the Act. Now, this takes us to the powers which are vested with the Tribunal under Sec. 33(4) of the Income tax Act, 1922 [now Sec. 254(1) of the Income-tax act, 1961]. We find that Sec. 254(1) provides that the Appellate Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit. We are of the considered view that by now it stands settled by the aforesaid judgments of the Hon ble Apex Court that rules contemplated under the Appellate Tribunal Rules, 1963 are not exhaustive of the powers of the Tribunal, and rather being merely procedural in character, does not in any way circumscribe or control the power as stood vested with the Tribunal under Sec. 254(1) of the Act. This takes us to the scope of the powers of the Tribunal under Sec. 254(1) of the Act. As observed by us hereinabove, the Tribunal as per the aforesaid substantive provision, viz. Sec. 254(1) is vested with the exhaustive powers to pass such orders thereon as it thinks fit, but however, it is obligatory on the part of the T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal, without affording an opportunity of being heard to the appellant revenue in context of the issue under consideration. 20. We are further of the considered view that though the parties to the appeal before the Tribunal are vested with the right to raise a new point or a new contention, but the same has to be subject to the powers contemplated in the substantive provisions, viz. Sec. 253 r.w the procedural rules contemplated in Appellate Tribunal Rules, 1963. The appellant on the one hand is vested with the right to assail the order of the lower authority before the Tribunal by filing an appeal under Sec. 253(1) of the Act, as well as stands vested with the right to raise additional grounds of appeal under Rule 11 of the Appellate Tribunal Rules, 1963, while for the respondent on the other hand can file a cross-objection under Sec. 253(4) r.w. Rule 22 of Appellate Tribunal Rules, 1963, or support the order appealed against, on any ground decided against him under Rule 27 of the Appellate Tribunal Rules, 1963. 21. We are of the considered view that now when the maintainability of the objection raised by the assessee respondent does not satisfy the statutory obligation cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any cross-appeal or cross-objection can support the impugned order on any ground decided against him. The High Court observed that the respondent may support the order appealed against, on any of the grounds decided against him. The High Court observed that it was discernible from a cursory reading of Rule 27, that the respondent can support the impugned order on any of the ground, which was decided against him. We are of the considered view that as no application under Rule 27 had been filed by the assessee respondent before us, therefore, the same would suffice for us to not proceed any further with admissibility of the objection raised by the assessee respondent in exercise of the said powers. Alternatively, we may herein observe that as the assessee had never assailed the penalty imposed under Sec. 271(1)(c) before the CIT(A), on the ground that the A.O had wrongly assumed jurisdiction to impose penalty under the aforesaid statutory provision, without striking off the irrelevant default, therefore, there being no occasion for the CIT(A) to have decided the said the issue against the assessee, hence the assessee could not support the impugned order of the CIT(A) appealed against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as Villa ) at Palm Jumeirah, Dubai by Nakheel P.J.S.C. The possession of the villa is stated to have been given to the assessee on 8th June, 2008. The assessee initially in his return of income for the year under consideration, viz. A.Y 2010-11, had on his own estimated the rateable value of villa at ₹ 20,00,000/- and offered an amount of ₹ 14,00,000/- towards notional income of the villa under the head house property. However, in the course of the assessment proceedings, the assessee taking support of the provisions of Article 6 of the India-UAE tax treaty and the protocol thereto, requested the assessing officer not to tax the notional income of the villa owned by him at Dubai. We find that the assessee was of the view that as per the provisions of the India-UAE tax treaty and specially sub-clause (ii) of the protocol, notwithstanding the provisions of Article 6 and Article 23 of the India-UAE tax treaty, the residential property owned by a national of a contracting state and occupied for self-residence in the other contracting state was exempt in the other contracting state from the taxes covered by the tax treaty. It was thus in the backdrop of his aforesaid convi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed in his hands under Sec. 5(1) of the Act. 25. We have given a thoughtful consideration to the issue before us and are persuaded to be in agreement with the Ld. A.R. that no penalty under Sec. 271(1)(c) was liable to be imposed as regards the addition made by the A.O towards deemed notional income of the villa owned by the assessee at Dubai. We find substantial force in the contention of the ld. A.R that a perusal of Article 6 of the tax treaty between India-UAE dealing with the taxability of the income of a person from immovable property situated in the other contracting state, read alongwith the protocol on the one hand, and the Notifications No. 90 and 91, dated 28.08.2008 issued by the CBDT on the other hand, revealed that the issue as regards the taxability in India of the notional income of the villa owned by the assessee at Dubai was not free from doubts and debates. The aforesaid claim of the assessee further stands fortified from the fact that the issue as to whether the Notifications nos. 90 and 91/2008, dated 28.08.2008 would have a superseding effect over the DTAA entered into by the government of India with the government of any other country, was so much debatab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... troproducts P. Ltd. (2010) 322 ITR 158 (SC) (ii) CIT Vs. Nayan Builders Developers (2015) 231 Taxman 665 (Bom) (iii) CIT Vs. S.M. Construction (2015) 233 Taxman 263 (Bom) (iv) CIT Vs. Petals Engineers P. Ltd. (2014) 264 CTR 577 (Bom) (v) CIT Vs. Nalin P. Shah (HUF) (2013) 85 CCH 132 (Bom) (vi) CIT Vs. Laresen Toubro Ltd. (2014) 366 ITR 502 (Bom) (vii) DIT vs. Administrator of the Estate of Late Mr. E.F. Dinshaw (2013) 218 Taxman 125 (Bom) (Mag). 26. We are further of the considered view that the conduct of the assessee in offering an amount of ₹ 14,00,000/- as the notional income of the villa for tax in his return of income for the year under consideration, followed by raising of claim during the course of the assessment proceedings that as neither Article 6(1) nor protocol to the India-UAE tax treaty expressly recognized the right of the state of residence of the owner to tax the income from immovable property situated in the state of source, therefore, the notional income of the villa owned by him at Dubai could not be subjected to tax in India, clearly reveals a bonafide claim raised by him in context of the issue under consideration. We thus are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed the LTCG to an amount ₹ 20,60,000/-. 28. We find that the assessee though had in his return of income for the year under consideration furnished the complete particulars in respect of the transaction under consideration, but however, had inadvertently computed the LTCG after the indexing the cost of acquisition of the same. At this stage, we may herein observe that admittedly, no part of the details furnished by the assessee as regards either the cost of acquisition or the sale proceeds of the structured product, viz. 0% debentures issued by Deutsche Investments India Pvt. Ltd. were found to be false or incorrect. Rather, the A.O had only dislodged the computation of LTCG by the assessee, on the basis of facts and figures disclosed by the assessee, only for the reason that as the same was liable to be computed as per the proviso to Sec. 112 of the Act, therefore, the assessee would not be entitled towards indexation of the cost of acquisition of the same. We may herein observe that the bonafides of the assessee can safely be gathered from the fact that the moment he learnt about his mistake in computing the LTCG, he by his letter dated 26/02/2013 submitted before the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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