2019 (3) TMI 989 - AT - Income Tax

Tribunal Deletes Penalties for Income Additions, Rules on Taxation of Dubai Villa Rental Income

The Tribunal upheld the deletion of penalties imposed under section 271(1)(c) for various additions made to the assessee's income for A.Y. 2009-10. The ... Penalty u/s.271(1)(c) - disallowance of expenditure of professional fees and income for the presence of the assessee as brand ambassador are concerned - HELD THAT:- Penalty u/s.271(1)(c) was levied in respect of addition towards disallowance of expenditure of professional fees and ₹ 7 Crores towards income for the presence of the assessee as brand ambassador are concerned, we find that this Tribunal in assessee's own case for the A.Y.2009-10 [2017 (3) TMI 957 - ITAT MUMBAI] had deleted the quantum addition made thereon. As agreed that the quantum addition has been indeed deleted by this Tribunal on the addition made on aforesaid two sums of ₹ 10 Crores and ₹ 7 Crores. We hold that once the quantum is deleted, the concealment penalty u/s. 271(1)(c) does not survive. Accordingly, grounds No.1 & 2 raised by the revenue are dismissed. Addition towards deemed rental income - assessee was gifted a Villa in Dubai by Nakheel PJSE and possession was received by the assessee in 2008 - AO estimated annual letting value of Villa and thereafter, allowed deduction u/s. 24(a) and assessed the remaining sum as deemed rental income under the head 'income from house property' - HELD THAT:- In assessee's own case for the A.Y.2010-11 [2018 (6) TMI 147 - ITAT MUMBAI] had deleted the penalty on the very same issue on the ground that the revenue had placed reliance on Notification Nos. 90 & 91 of 2008 dated 28/08/2008 and whether such notification would supersede over the DTAA, was a debatable issue and that the very same issue have travelled up to the level of Tribunal in assessee's own case wherein the scope and gamut of the term “may be taxed in such other state” was subjected to heavy deliberations and debate. Since, the issue per se was debatable, this Tribunal in assessee's own case for the A.Y.2010-11 in the case referred held that no concealment penalty u/s.271(1)(c) of the Act could be levied on a debatable issue. - Appeal of the revenue is dismissed. Issues:1. Imposition of penalty u/s.271(1)(c) of the Income Tax Act, 1961 for A.Y.2009-10.2. Justification of deleting penalty by Ld. CIT(A) on various additions.3. Taxability of rental income from Dubai Villa under DTAA between India and UAE.Analysis:1. The appeal filed by the revenue challenges the order of the Commissioner of Income Tax-52 regarding the imposition of penalty u/s.271(1)(c) for A.Y.2009-10.2. The central issue is whether the Ld. CIT(A) was correct in deleting the penalty imposed under section 271(1)(c) concerning specific additions made to the assessee's income.3. The Tribunal noted that in the assessee's own case for the same assessment year, quantum additions related to professional fees and income as a brand ambassador were deleted, rendering the concealment penalty unsustainable.4. The Tribunal dismissed grounds raised by the revenue concerning the deletion of penalty on these additions, as the quantum additions had been previously removed.5. Another ground of appeal was the deletion of penalty on the addition of deemed rental income from a Villa in Dubai. The Ld. CIT(A) upheld the addition made by the Ld. AO.6. During the quantum appeal proceedings, the assessee argued that rental income from the Dubai Villa should not be taxed in India based on the DTAA between India and UAE. However, the Tribunal held that the income was taxable in India, but any taxes paid in the UAE should be credited to the assessee.7. The penalty imposed on this addition was deleted by the Ld. CIT(A), leading to the revenue's appeal.8. The Tribunal, considering a previous decision in the assessee's case for A.Y.2010-11, held that no concealment penalty could be levied on a debatable issue. As the taxability of the rental income was a contentious matter, the penalty u/s.271(1)(c) was deleted.9. Consequently, the Tribunal dismissed the appeal of the revenue, upholding the deletion of penalties on all contested additions.This detailed analysis of the judgment covers the imposition of penalties under section 271(1)(c) for various additions and the taxability of rental income from a Dubai Villa under the DTAA between India and UAE.