CIT v. AT & T Communication Services India (P) Ltd.

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The Tax Publishers2012 TaxPub(DT) 1630 (Del-HC) : (2012) 045 (I) ITCL 0489 : (2012) 342 ITR 0257 : (2012) 250 CTR 0057 : (2012) 205 TAXMAN 0093 : (2012) 070 DTR 0379 KINCOME TAX ACT, 1961 --Penalty under section 271(1)(c)--ConcealmentDisallowance under section 40(a)(i)--Assessee claimed expenses in respect of payment made to AT & T, Singapore. Assessee had deducted TDS on 31-3-2001 but the same was paid on 23-11-2001. Tribunal held that tax had been deposited only in November, 2001, and therefore, in view of section 40(a)(i), the deduction as an expense would be available in the next assessment year and not in assessment year in question, AO imposed penalty on account of disallowance of expenses claimed in respect of payment made to AT & T, Singapore. Assessee contended that section 40(a)(i) was not applicable as the words used were 'tax has been paid or deducted. AO argued that the amendment which came in 2004 was clarificatory in nature and' thus assessee could not have raised the said plea or argued that the disallowance under the pre-amended section 40(a)(i) was not justified or mandatory. Tribunal deleted the penalty after going into the question of whether or not assessee had been able to justify and discharge the onus under Explanation 1 to section 271(1)(c). Held: The plea and interpretation propounded by assessee was rejected in the quantum proceedings but assessee could in the penalty proceeding showed and explained that the interpretation was plausible and had merit, though was not accepted. Therefore, Tribunal order was justified in deleting the penalty. Income Tax Act, 1961, Section 271(1)(c), Explanation 1 IN THE DELHI HIGH COURT SANJIV KHANNA & R.V. EASWAR CIT v. At & T Communication Services India Pvt Ltd. ITA No. 526/2011 19 January, 2012 Appellant by : Abhishek Maratha with Anshul Sharma, Respondent by : Jayant K. Mehta and Sukant Vikram, ORDER *Sanjiv Khanna, J* The Revenue is aggrieved by the order of the Income Tax Appellate Tribunal (for short 'the Tribunal‟) dt. 19-2-2010 in ITA No. 2788/Del/2006 deleting the penalty under section 271(1)(c) of the Income Tax Act, 1961 (for short 'the Act‟). It pertains to the assessment year 2000-01. 2. The assessing officer had imposed penalty under the said section on three accounts: (i) Rs. 1,31,58,290 on account of disallowance of expenses claimed respect of payment made to AT&T, Singapore; (ii) Rs. 33,333 being disallowance of expenses paid to the Registrar of Companies (ROC); and (iii) Rs. 3,98,36,108 being amount received from Birla AT&T. 3. At the outset, we may note that the third addition has been set aside for fresh adjudication by the Tribunal in the quantum appeal. The Revenue, therefore, has not raised this issue in the present appeal. The question therefore is whether the Tribunal was justified in deleting the penalty under section 271(1)(c) of the Act in respect of additions/disallowance (i) and (ii). SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2012 TaxPub(DT) 1630 (Del-HC) : (2012) 045 (I) ITCL 0489 : (2012) 342 ITR 0257 : (2012) 250 CTR 0057 : (2012) 205 TAXMAN 0093 : (2012) 070 DTR 0379

KINCOME TAX ACT, 1961

--Penalty under section 271(1)(c)--ConcealmentDisallowance under section 40(a)(i)--Assessee claimed expenses in respect of payment made to AT & T, Singapore. Assessee had deducted TDS on 31-3-2001 but the same was paid on 23-11-2001. Tribunal held that tax had been deposited only in November, 2001, and therefore, in view of section 40(a)(i), the deduction as an expense would be available in the next assessment year and not in assessment year in question, AO imposed penalty on account of disallowance of expenses claimed in respect of payment made to AT & T, Singapore. Assessee contended that section 40(a)(i) was not applicable as the words used were 'tax has been paid or deducted. AO argued that the amendment which came in 2004 was clarificatory in nature and' thus assessee could not have raised the said plea or argued that the disallowance under the pre-amended section 40(a)(i) was not justified or mandatory. Tribunal deleted the penalty after going into the question of whether or not assessee had been able to justify and discharge the onus under Explanation 1 to section 271(1)(c). Held: The plea and interpretation propounded by assessee was rejected in the quantum proceedings but assessee could in the penalty proceeding showed and explained that the interpretation was plausible and had merit, though was not accepted. Therefore, Tribunal order was justified in deleting the penalty.

Income Tax Act, 1961, Section 271(1)(c), Explanation 1

IN THE DELHI HIGH COURT

SANJIV KHANNA & R.V. EASWAR

CIT v. At & T Communication Services India Pvt Ltd.

ITA No. 526/2011

19 January, 2012

Appellant by : Abhishek Maratha with Anshul Sharma,

Respondent by : Jayant K. Mehta and Sukant Vikram,

ORDER

Sanjiv Khanna, J

The Revenue is aggrieved by the order of the Income Tax Appellate Tribunal (for short 'the Tribunal‟) dt. 19-2-2010 in ITA No. 2788/Del/2006 deleting the penalty under section 271(1)(c) of the Income Tax Act, 1961 (for short 'the Act‟). It pertains to the assessment year 2000-01.

2. The assessing officer had imposed penalty under the said section on three accounts:

(i) Rs. 1,31,58,290 on account of disallowance of expenses claimed respect of payment made to AT&T, Singapore;

(ii) Rs. 33,333 being disallowance of expenses paid to the Registrar of Companies (ROC); and

(iii) Rs. 3,98,36,108 being amount received from Birla AT&T.

3. At the outset, we may note that the third addition has been set aside for fresh adjudication by the Tribunal in the quantum appeal. The Revenue, therefore, has not raised this issue in the present appeal. The question therefore is whether the Tribunal was justified in deleting the penalty under section 271(1)(c) of the Act in respect of additions/disallowance (i) and (ii).