TaxTMI 
TaxTMI 
2010 (2) TMI 769
X X X X Extracts X X X X
X X X X Extracts X X X X
....ented for the revenue. 2. It was the submission by the Ld. A.R. that the assessee is in the business of running healthcare and beauty parlor center. The assessee had centers which were run by the assessee and there were also centers which were run in partnership and other centers, which were run on franchisee basis. It was the submission that the assessee had paid royalty @ 1% of the total revenue collected from the business activities carried out by using the brand name of Smt. Vandana Luthra. The royalty was paid to Mrs. Vandana Luthra in line with an agreement entered into between the assessee and Mrs. Vandana Luthra dated 04th October 2000. It was the submission that in the course of assessment proceedings the A.O. had disallo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ent with Mrs. Vandana Luthra. It was the submission that though the income from the partnership entered into by the assessee was exempt in the hands of the assessee, the income from the franchisee was taxable in the hands of the assessee. It was the submission that it was only on account of non-production of franchisee agreement before the tribunal, the tribunal had held that it could not give a finding in respect of the allowability of royalty paid to Mrs. Vandana Luthra. It was the further submission that even assuming that the royalty was not allowable in the hands of the assessee on account of the exempt income the royalty payable would have been the responsibility of the partnership and franchisee centers and consequently the income fr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y order having been passed only on 29.11.2007, the penalty was barred by limitation. 3. In reply the Ld. D.R. submitted that the issue of limitation was covered by the decision of Coordinate Bench of this Tribunal in the case of Pandit Vijay Kant Sharma in I.T.A. No. 3709/Del/2008 dated 29.05.2009 wherein one of us was the author. It was the submission that in view of the decision of Coordinate Bench of this Tribunal in the case of Pandit Vijay Kant Sharma referred to supra it cannot be said that the penalty was bared by limitation. 4. On merits, it was the submission that in the return of income the assessee has only disclosed the assessee's own turnover and the turnover of the franchisees and the partnership were not d....
X X X X Extracts X X X X
X X X X Extracts X X X X
....able to tax and any expenditure on the basis of the receipt by the centers could only be claimed against the sales shown in their respective returns. Thus, it is noticed that the disallowance of the royalty paid to Mrs. Vandana Luthra is not on account of disbelief of the A.O. of sthe payment of royalty but on account of the view that the expenses in the form of royalty were the expenses of the franchisees centers and the partnership concerns which were separately assessable to tax. It is further noticed that the assessee could not have entered into the franchisees agreement and the partnership but for the fact that the assessee had the valuable brand value of Mrs. Vandana Luthra. The assessee has entered into agreement with Mrs. Vandana Lu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....stances, the penalty as levied by the A.O. and as confirmed by the Ld. CIT(A) stands deleted. 6. In respect of the alternate submission made by the Ld. A.R. that the penalty levied u/s 271(1)(c) of the Act is barred by limitation on account of the proviso to clause (a) of sub-section (1) of Section 275 of the Act, it is noticed that this issue has been decided by the Coordinate Bench of this Tribunal in the case of Pandit Vijay Kant Sharma referred to supra wherein it has been held as follows:- "We have considered the facts of the case and rival submissions. The learned counsel has sought to defend the order of CIT(A) as a respondent by taking the plea that the order of penalty was barred by limitation. Such a plea was n....
X X X X Extracts X X X X
X X X X Extracts X X X X
....that the order was in time in terms of the main provision contained in the aforesaid clause (a). It is an admitted fact that the order was passed in time in so far as clause (a) is concerned, which permits the Assessing Officer to pass the order, on the facts of the case, within six months from the end of the month in which the order of CIT(A) or the Tribunal was received. This clause contains the general rule, to which only exceptions can be provided by way of proviso to the clause. This proviso places an outer limit of one year from the end of the financial year in which the order of the CIT(A) was received by the Commissioner. If we accept the plea of the learned counsel, the consequence will be that this provision overrides a part of th....