Quote for the Day

"Give me six hours to chop down a tree and
I will spend the first four sharpening the axe."
                                                                                    Abraham Lincoln

Previous Webinar:

Click below links for Recording of Voice of CA’s Webinar on Changes in ITR Forms dated 28.06.2024 and Study Material by CA. Deepak Bholusaria:

Important Case Law:

[Contributions by CA. A. K. Srivastava]

• Delhi High Court judgment on immunity from Penalty u/s 270AA

GE Capital US Holdings Inc Vs Dy Commissioner of Income-tax (International Taxation’s ) Circle 1(3), New Delhi And Ors. Judgment dated 31.05.2024, (2024)163Taxmann.com 146(Delhi)

In the assessment framed, certain receipts towards IT support service, were held to be taxable as Royalty in terms of section 9(1)(vi) and Article 12 of DTAA between India and USA. The AO further held that the assessee has under reported its income which is consequence of misreporting thereof. AO considered it a fit case to initiate penalty proceedings u/s 270A and imitated penalty. 

The judgment of Supreme Court in Engineering Analysis Crntre of Excellence Pvt Ltd. Vs CIT & Anr. (2022) 3 SCC 321, was sought to be distinguished.

In order to avoid protracted litigation, the assessee accepted the order framed by the AO and moved an application to avail statutory remedy u/s 270AA and sought granting of immunity. AO rejected the application for immunity.

Before the high court it was contended on behalf of the assessee that  the allegation of misrepresentation or suppression clearly does not stand evidenced in the assessment order.

It was further submitted that in the notice u/s 270A, the AO failed to state the limb under which penalty was initiated. Parallel was drawn between 271(1)(c) and 270A.

Held - The high court held that the show cause notice itself was vague and unclear as it failed to specify whether the assessee was charged with under-reporting or misreporting of income. It further held that the exceptions in sub-section(9) have neither been returned nor recorded in the assessment order. The SCN also did not allege violation of sub-section(9).

The SCN was held to be unsustainable.

The orders of rejection of applications u/s 270AA were quashed.

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