TaxTMI 
TaxTMI 
2017 (10) TMI 938
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....correctly disclosed. 3. Whether the Ld. CIT(A) is right in not appreciating that the penalty u/s. 271(1)(c) of the I.T. Act, 1961 is a civil liability meant to provide for ready for loss of revenue. 4. The appellant craves leave, to add, alter or amend any ground of appeal raised above at the time of the hearing. 3. The brief facts of the case are that the assessee filed its return of income of Rs. 68,35,97,164/- on 30.10.2007. The assessment order u/s. 143(3) of the Income Tax Act, 1961 (hereinafter referred as the Act) was passed by completing the assessment at total income of Rs. 71,39,06,819/- on 21.11.2008 by making disallowance / addition on account of disallowance of license fee of Rs. 2,19,60,467/-, which was held as capital in nature and on account of disallowance of depreciation on computers which was allowed @15% instead of 60%, for which an addition in respet of Rs. 83,49,188/- was made. Being aggrieved with the order of the AO, the assessee had filed the appeal before the Ld. CIT(A), New Delhi. The Ld. CIT(A) has confirmed the addition made on account of disallowance of license fee and has deleted the addition on account of excess depreciation on c....
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.... Serves Pvt. Ltd. vs. ACIT, wherein the quantum addition of Rs. 2,19,60,467/- on account of license fee has been deleted by the Tribunal. We find that Section 271(1)(c) of the Act provides for imposition of penalty in case the Assessing Officer, in the course of any proceeding under Act, is satisfied that: (i) any person had concealed particulars of his income or (ii) had furnished inaccurate particulars of such income. 7.1 We further find that after the insertion of Explanation 1 to Section 271(1)(c) "the onus is on the assessee to show that there was no intention of concealment and not on the Revenue. Mens rea was considered to be a necessary ingredient for levy of penalty as laid down by the Supreme Court in CIT Vs Anwar Ali (1970) 76 ITR 696. But after the introduction of Explanation 1 to Section 271(1)(c), the Supreme Court held that the requirement of proof of Mens rea on the part of the Revenue, would no longer be necessary as held in Add!. CIT Vs Jeevan Lal Shah (1994) 205 ITR 244 (SC) and B.A. Balasubramaniam and Bros. Co. Vs CIT (1999) 236 ITR 977 (SC). 7.2 The role of the Explanation, it was pointed out, was only to place the burden of proof squar....
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....ers vs. ACIT (2004) 265 ITR 562 (SC) that "deliberatness" is implied in the concept of concealment. 7.5 However after the decision laid down in Dilip N. Shroff (Supra). T. Ashok Pai (Supra) in dispute under Central Excise Law the Apex Court in the case of UOI vs. Dharmendra Textile Processors (2008) 306 ITR 277 (SC) held that "default merited penalty without having to consider any intend of the assessee to evade tax. The Mens rea is essential only for matters of prosecutor and not penalty." Thus after the decision in the case of Dharmendra Textile Processor (Supra), "Mesn rea is not necessary to be proved by revenue for civil penalties." 7.6 However with the recent decision of the recent decision of the Supreme Court in the case of CIT vs. Reliance Petro Products Pvt. Ltd. (2010) 322 ITR 158 (SC), it is clear that the Supreme Court by giving the ruling in Dharmendra Textile Processor's Case (Supra) has not overruled their decision in Dilip N. Shroff's case except for its mention of Mensrea therein. 7.7 It is also pertinent to mention here that after the ruling of Dharmendra Textile Processor, the Supreme Court has come out with the ruling in 2 different case of CIT Vs Atul....
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....accounting and processing of credit card transactions. Vision plus is an /Application Software/ which manages aspects of Credit Cards right from the time the application for credit card is made/ evaluated/ account is created/ transactions are authorized/ raising disputes/ sending statements/ customer services and online payment processing. The software is mainly for credit card transaction processing by multinational banks and transaction processing companies. Various banks and financial institutions use this software application to store and process credit card/ debit card/ prepaid closed end loan accounts and process financial transactions which is available off the shelf. I also find that GECC itself has received the right to use the Software internally including its group entities for its business. It does not have any right to commercially exploit the Software. The Appellant makes the payment to GECC only to use the licensed programs. Further/ on careful consideration of the contents of EULA/ I observe that: (i) The appellant has been vested with only the limited right to use the license by the GECC during the period the agreement is in existence and the EULA....
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..... The reliance by the Ld. AO on various judicial pronouncements has been distinguished by the appellant on facts. 7.4 My Ld. Predecessor, while deciding the appeal for AY 2007-08 had taken a different view in the matter by holding that since there is no sun-set clause in the agreement, the agreement is perpetual in nature and hence the transfer of license is on permanent basis. Respectfully disagreeing with the same, I hold that the licensee appellant does not become the owner of the license by virtue of the EULA in view of the fact that the agreement provides for periodic payment for use of software, which itself is subject-matter of revision every year and that the agreement is subject to termination, in case of any breach in material terms and upon termination, the right to use the licensed program shall end and the Appellant will be required to deliver the licensed program with immediate effect to GECC and to remove from its systems the licensed software. 7.5 In view of the same, I hold that the impugned payment of Rs. 24,258,933 on account of License fee, Connectivity charges and Coordination charges for use of Vision plus' software was revenue in nature ....