TaxTMI 
TaxTMI 
2011 (3) TMI 965
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....M/2010 2001-2002 CIT(A)-7 12/1/2010 ITA No. 2815/M/2010 2002-2003 CIT(A)-7 14/1/2010 ITA No. 2816/M/2010 2003-2004 CIT(A)-7 14/1/2010 ITA No. 2817/M/2010 2004-2004 CIT(A)-7 14/1/2010 In all these appeals the revenue has challenged the orders of CIT(A), whereby the CIT(A) cancelled the order of the AO imposing penalty on the assessee under section 271(1)(c) of the Income Tax Act, 1961(the Act). 2. The facts under which the penalty under section 271(1)(c) was imposed on the assessee by the AO are as follows:- The assessee is a company. It is engaged in the business of providing offshore services. The issue that was considered by the AO in all these assessment years is as to w....
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....ished inaccurate particulars of income and imposed penalty. The CIT(A) however cancelled the penalty imposed for the reason that the claim made by the assessee was bonafide and the issue as to whether the assessee would be entitled to deduction under section 33AC of the Act was debatable issue on which there can be two views. 3. Aggrieved by the orders of the CIT(A) canceling penalty the revenue has preferred the present appeals before the Tribunal. 4. At the time of hearing of these appeals it was brought to our notice that as against the disallowance of claim for deduction under section 33AC of the Act, for all the aforesaid assessment years the assessee had filed appeals before the ITAT in ITA Nos. 4699 to 4705/M/07 f....
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.... all lawful duties as directed by the owner. Various activities done by the assessee have been explained in the order of the CIT(A) at pages 2 and 3. The agreement executed by the assessee with ONGC with reference to the operation and maintenance of the ships owned by the ONGC were also filed. It was pointed out that the said agreement goes to show that the assessee had sufficient experience and is fully qualified to provide services such as hire manning, running operations, victualling and maintenance services for offshore supply vessels belonging to ONGC. Various clauses, terms and conditions of the agreement were explained before the AO and the CIT(A). 8.2 It was also explained that for claiming deduction u/s 33AC, the assessee....
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.... deduction u/s 33AC. Reliance was placed by the AO in the case of TCI reported in 84 ITD 183. The AO has also observed that shipping is not the core business of the assessee and therefore, to that extent the assessee is not fulfilling the conditions. The conditions raised that the deduction is limited to the profit derived out of the income from character of vessel does not deserve merit as the basic condition of eligibility is not fulfilled. In view of this, the claim of the assessee u/s 33AC made in the return of income was withdrawn by the AO while passing assessment u/s 143(3) for AY 2000-01. 9.1 Before the CIT(A), it was stated that the AO was wrong in holding that the core business of the assessee is not of shipping. The AO ....
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.... by the assessee except the operations of shipping. The assessee has its own vessels in the name of Ganga Dolphin. The income earned from shipping operation has been shown as charter hire fees. Reserve account has been maintained by the assessee and the surplus amount, as per conditions of sec.33AC has been transferred to the reserve account. The assessee has also entered into agreement with ONGC for operations and maintenance activities. From the activities done by the assessee it is proved that operations of shipping have been done by the assessee. The assessee has maintained separate accounts on account of its own vessels and the vessels related to ONGC. Deduction u/s 33AC has been claimed only on the amount earned on account of its own ....