TMI Blog2019 (12) TMI 1039X X X X Extracts X X X X X X X X Extracts X X X X ..... tax in the host country. The DRP has given benefit of the tax credit to the assessee for the taxes paid overseas. Whether the profits of foreign branch are liable to be taxed in India is debatable - We find that in the case of DCIT vs. Essar Oil Ltd. [ 2011 (8) TMI 428 - ITAT MUMBAI] , the Tribunal has held that income from overseas branch is taxable in the country where branch is established. In the immediately succeeding assessment year, the Co-ordinate Bench of Tribunal in the case of very same assessee i.e. Essar Oil Ltd. vs. Addl. CIT (supra) has held that the profits of overseas branch are taxable in India. These two divergent views by two different benches of the Tribunal has made the issue debatable. The matter has travelled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. Brief facts of the case as emanating from the records are: The assessee company is engaged in manufacturing and marketing of various pharmaceutical, consumer care, health care and diagnostic products. Assessment order under section 143(3) r.w.s.144C of the Income Tax Act, 1961 [ in short the Act ] was passed on 31/10/2012 interalia making additions/disallowances on following counts:- (i) Disallowance of provision for bonus under section 43B of the Act (ii) Addition on account of profits of overseas branch at Sri Lanka. Penalty under section 271(1)(c) of the Act were initiated for furnishing inaccurate particulars of income in respect of the aforesaid additions/dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of provision for bonus. 6. We have heard the submissions made by rival sides and have perused the orders of authorities below. The Revenue in appeal has assailed deleting of penalty in respect of provision for bonus. We find that the first appellate authority has placed reliance on the decision of Tribunal in assessee s own case for assessment year 2001-02 decided on 28/06/2013, wherein the penalty levied under section 271(1)(c) of the Act was deleted on similar set of facts. The ld.Departmental Representative has not placed on record any material to show any change in facts in the assessment year under appeals or to distinguish the findings of the Tribunal in assessee s own case for earlier year. The order of CIT(A) on this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d i.e. Sri Lanka. The assessee has permanent establish in the said country. The ld. Authorized Representative of the assessee submitted that a perusal of documents on record clearly establishes that it is not a case of concealment or furnishing of inaccurate particulars of income. It is a case of difference in opinion. Under such circumstances provisions of section 271(1)(c) of the Act are not attracted. In support of his contentions ld. Authorized Representative of the assessee placed reliance on the following decisions: (i) CIT vs. Reliance Petro Products Pvt. Ltd. 323 ITR 158(SC) (ii) DCIT vs. Indian Overseas Bank in ITA No.1990 1991/Mad/2011 A.Y 2006-07 and 2007-08 decided on 14/2/2013. 10. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 2014 decided on 17/02/2017. 11. On the other hand, the ld.Departmental Representative vehemently defended the impugned order in confirming penalty levied under section 271(1)(c) of the Act in respect of non-disclosure of profits of Sri Lanka branch by the assessee. The ld.Departmental Representative submitted that it is a clear case of furnishing inaccurate particulars of income by the assessee. 12. We have heard the submissions made by rival sides and have perused the orders of authorities below. The only issue in appeal by the assessee is whether addition on account of profits of Sri Lanka branch is consequent to furnishing inaccurate particulars of income and hence, triggers penal provisions under sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Tribunal has made the issue debatable. The matter has travelled to the Hon ble Bombay High Court in Income Tax Appeal No.227 of 2014(supra). The Hon ble Bombay High Court has admitted substantial question of law on the issue of place of taxability of profits earned by the overseas. It is a trait law that where the issue is debatable no penalty under section 271(1)(c) of the Act is leviable. We further observe that the assessee in computation of income has already disclosed profits of Sri Lanka branch though, the same were subsequently reduced from the total taxable income by the assessee. Merely for the reason that the claim made by the assessee under bona-fide belief is not accepted by the Department penalty under section 271(1)(c) ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
