TaxTMI 
TaxTMI 
2014 (9) TMI 395
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....ly, 2013 upholding levy of penalty for concealment of income under Section 271(1)(c) of the Act. 2. The appeal in question pertains to Assessment Year 2005-06. 3. The respondent-assessee a foreign company based in Canada was, during the relevant period, engaged in providing engineering consultancy service for design, supervision, transportation, planning and project management in the field of roads and highways, urban development, transportation, planning, water resources and railways. 4. The appellant-assessee had received Rs. 2,29,583/- under a contract with Asian Development Bank (ADB), for providing consultancy service. In the return of income, the aforesaid amount was claimed as exempt from tax. We shall be referring to the re....
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....shall be exempt from immigration restrictions, alien registration requirements and national service obligations of the recipient country; (iii) the Consultant and the personnel (if they are not citizens or nationals of the recipient country) may bring into the recipient country reasonable amounts of foreign currency for the purpose of the Technical Assistance and may withdraw from the recipient country similar amounts of foreign currency together with any amounts earned therein by the Consultant and the personnel in connection with the Technical Assistance; and (iv) the personnel and their families (if they are not citizens or nationals of the recipient country) may bring into the recipient country reasonable amounts of foreign curren....
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....supplies which have been brought into the territories of the recipient country (except by Consultants or personnel who are citizens or nationals of the recipient country) for the purpose of carrying out the Technical Assistance and which will be consumed therein or subsequently withdrawn therefrom; and (iv) any personal effects of the personnel and their families (if they are not citizens or nationals of the recipient country) which, having been brought into the territories of the recipient country will be consumed therein or subsequently withdrawn therefrom." 6. The agreement records that the Government of India had agreed and affirmed to provide and make available to the consultant, i.e., the appellant-assessee free of charges sever....
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.... Economic Affairs, Ministry of Finance, Government of India, North Block, New Delhi Re: Approval u/s 10(8A) of the Income Tax Act, 1961 Sir, The applicant, M/s Lea International Limited, Canada had entered into an agreement with M/s Asian Development Bank on 23rd November, 2004 for rendering technical consultancy services in relation to "North Eastern Region Urban Development Project". Appendices 4 of the said agreement enlists the Specific assurances of the Government. section 12.02 of the appendix 4 provides that- "The government shall exempt the Consultant and the personnel from, or bear the cost of, any taxed, duties, fees or other impositions levied under the laws and regulations in effect in the territories of the recip....
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....and conditions, including the condition relating to payment of taxes. The letter dated 20th November, 2006 no doubt was written after filing of the return and post issue of notice under Section 143(2), but it records that the appellant-assessee was under the bona fide belief that the receipt was exempt on the basis of Section 12.02 of the appendix 4 of the agreement between them and ADB, referring to the obligation of the Government of India. Subsequently, on the advice given by the tax consultants, the application under Section 10(8A) was being moved. The letter clearly stated the reason and cause why the application was moved on 20th November, 2006 and not earlier. The appellant-assessee had given an intelligible and cogent explanation in....
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....ssee. This clearly shows that the subsequent application dated 20th November, 2006 was pursuant to the legal advice, but earlier the receipt in question was claimed as exempt in view of the terms and conditions set out in the agreement between the appellant-assessee and the ADB. The said stand was thus specifically mentioned in note 3.2. Looked from this light, it is apparent that the issue involved interpretation of the agreement between the appellant-assessee and ADB. The assessee had taken due care and caution to mention all relevant facts in the return of income without any attempt to conceal or withhold information or details. No reference was made to Section 10(8A) of the Act in the said notes. May be the appellant-assessee was wrong ....