2016 (11) TMI 538

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.... is imposable under Section 271 (1)(c) of the Act without considering the fact that the assessee had not offered its income during the regular Assessment proceedings?" 3. The Respondent is a company incorporated and based in Netherlands. The Respondent qualifies as a tax resident of Netherlands as per Double Taxation Avoidance Agreement (DTAA) between India and Netherlands. The Respondent Assessee had affiliated companies operating in India and received income from them. This income was in respect of Corporate Services and CICT Charges (cost incurred on share of email, network and internet charges). However the Respondent Assessee being of the view that the above income is not chargeable to tax, in its return of income filed electronical....

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....71(1)(c) of the Act. The Assessing Officer did not accept the aforesaid contention and by an order dated 30 June 2009, imposed a penalty of Rs. 25 lakhs under Section 271(1)(c) of the Act. 5. Being aggrieved, the Respondent Assessee carried the issue in appeal to the Commissioner of Income Tax (Appeals) (CIT(A)). By order dated 29 December 2010, the CIT(A) noted that identical services were being rendered by the Respondent to its Indian affiliated companies from the Assessment Year 200203 onwards and in the earlier returns also the receipt from the affiliated companies were not shown as income. On the contrary the tax, which was deducted at source by the affiliated companies while making payments to the Respondent, was refunded by the Re....

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....also reiterates the fact that in the context of the returns and assessment done in the earlier assessment years its action in not offering the income received from its affiliated Indian companies was bonafide. The impugned order of the Tribunal also records the fact that the balance sheet and books of accounts also duly reflected that the Respondent Assessee had received payments from its Indian affiliates for providing services. Thus mere nonacceptance of the claim made by the Assessee, would not by itself lead to an imposition of penalty, when the claim made is bonafide. Further, the impugned order holds that even the Assessing Officer had on an interpretation of Article 12 of the DTAA came to a conclusion that the amounts received from t....