TaxTMI 
TaxTMI 
TaxTMI 
2019 (9) TMI 348
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....., respectfully submits that the order of the Ld.CIT(A)-I, Bangalore is not correct as it is based on incorrect interpretation of fact and law and therefore, is bad in law and hence, needs to be cancelled. The appellant also submits that each of the grounds hereinafter are independent and without prejudice to one another. 1.The Ld.CIT(A( erred in upholding the levy of penalty u/s 271(1) (c) of the Act on the disallowances and additions made by the Ld.Addl.CIT, Range-11, Bangalore in the assessment order without awaiting the outcome of the quantum appeal proposed to be filed by the appellant before the ITAT. 2. The Ld.CIT(A) erred in upholding the levy of penalty u/s 271(1)(c) of the Act by the Ld. AO on the disallowance u/s 40(a)(i) of ....
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....ticulars of income for initiating the penalty proceedings under section 271(1)(c) of the Act, and therefore, the notice u/s 274 dated 30 November 2011 is invalid. 2. Brief facts of the case are as under: Assessee is a wholly owned subsidiary of Google international LLC, USA and is engaged in business of providing information technology and information technology enabled services to its group companies. It also acted as distributor for AdWord programmes in India. Assessee thus entered into distribution agreement with Ireland PE, whereby assessee was granted marketing and distribution rights of AdWord Program to advertisers in India, and assessee was remunerated on cost plus market basis for distribution services under AdWord Programmes. Ld....
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....cess in favour of assessee under the ad word distribution agreement as held by Ld.AO and therefore payment made under this agreement would not be termed to be payment of royalty and was chargeable to tax under section 9 (1) (vi) as deemed income accrued in India. Per contra revenue argued that payment was towards purchase of AdWord space for its resale to advertisers and payment was made after deducting particular percentage from the advertisement receipts received from the advertisers, though as per service agreement assessee rendered certain technical services, that too for AdWord Programs only, for which assessee received certain payments as per terms of agreement with U.S. AE. Revenue was also of the opinion that after sales services a....
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....be discharged under the ITES agreement is perverse given that the same is contrary to facts and mat3erial on record which would demonstrate that the two Agreements are for separate and distinct purposes?. 3. Whether the Tribunal erred in law in not appreciating that the revenues from the Distribution Agreement (superseded by Reseller agreement) constituted 'business income' in the hands of GIL and in the absence of any Permanent Establishment of GIL in India, such receipts could not be brought to tax in India and consequently the provisions of Section 195 and 201 of the Act had no application?. 4. Whether the Tribunal completely failed to appreciate that the rights granted under the Distribution Agreement were in the nature of 'Commerci....
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.... "........... The mere admission of the appeal by High Court on the substantial questions of law would make it up apparent that the additions made were debatable. There was no concealment of income or furnishing of inaccurate particulars of such income. The penalty could not be imposed under section 271 (1) (c )." Similar is the view taken by Hon'ble Karnataka High Court in a subsequent decision in case of CIT vs Dr Hirsha N. Biliangady reported in (2017) 79 Taxmann.com 376. Ld.CIT.DR on contrary placed reliance on orders passed by authorities below. 6. We have perused submissions advanced by both sides in light of records placed before us. It is pertinent to observe that while passing assessment order Ld.AO initiated penalty proceed....