2017 (11) TMI 1652

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.... Sports International Ltd. relating to assessment years 2011-12 to 2013-14 and the remaining three appeals by the Revenue in respect of Jaypee Infratech Ltd. for assessment years 2011-12 to 2013-14. All these appeals involve a solitary issue of confirmation/reduction of penalty u/s 271C of the Income-tax Act, 1961 (hereinafter also called 'the Act'). Jaypee Sports International Ltd. 2. Facts of this assessee relating to the assessment year 2011-12 are that a Survey u/s 133A of the Act was conducted on the assessee on 24.02.2014 to verify the applicability of TDS provisions. During the course of such Survey, it transpired that the assessee made payments of Lease rent and Interest to Yamuna Expressway Industrial Development Authority (Y....

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....ainability or otherwise of penalty u/s 271C in respect of Lease rent, it is necessary to record the relevant factual matrix. The assessee was given some land on lease for a period of 90 years. The assessee was free to make any construction on such land. Annual lease rent was paid for such land, which the assessee treated as not attracting the provisions of section 194-I. It is in respect of such payment of lease rent that the issue has been decided by the Tribunal against the assessee by following the judgment of the Hon'ble Delhi High Court, which was delivered on 16.02.2017. Assessment years under consideration are 2011-12 to 2013-14. Our attention has not been drawn towards any judgment prevalent at the material time casting obligati....

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....antly clear that the assessee entertained a bona fide belief that no tax withholding was required on lease rent payments. This belief, being a reasonable cause, for non deduction of tax at source in respect of lease rent payment, magnetizes the provisions of section 273B. Considering the provisions of section 271C read with section 273B, we hold that the penalty imposed u/s 271C is not sustainable. 8. Facts of the cross appeals for subsequent two assessment years, namely, 2012-13 and 2013-14 are, admittedly, similar. Following the view taken hereinabove, while upholding the action of the ld. CIT(A) in deleting the penalty u/s 271C in respect of Interest payment, we order to delete penalty in respect of Lease rent as well. Jaypee Infra....