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2011 (7) TMI 538 - ITAT, NEW DELHIPenalty u/s 27(1)(c) - Professional receipt - sum received from an international consultancy firm DTTI was not reflected by the assessee in its P/L a/c but directly credited to partners accounts. Assessee is in the profession of chartered accountancy - Held that:- In this case, as a part of its profession, it entered into a partnership with DTTI, a non-resident professional undertaking, for the furtherance of its professional pursuit DTTI gave choice to assessee either to continue with it or discontinue with a compensation - Assessee thought, in its professional wisdom, chose to remain an independent player instead of an associate, so it preferred to disassociate from DTTI - If it had continued, the earning would have been professional receipt and the alternate receipt also takes same analogy and has no trapping of having any doubt about its being a purely professional receipt or the revenue receipt - The assessee is a firm of Chartered Accountants and it is not understandable that for such an issue about a clearly professional receipt, which is very basic in character, assessee had any doubt about its nature - If it is so, it is unable to be understand how the assessee can discharge its role as a professional consultant, auditing number of clients, giving them valuable advices on the accounting and taxation aspects - There is no whisper in the agreement between DTTI and the assessee which creates any doubt at all - unable to agree with the assessee that the impugned professional receipt created any debate about its nature as the receipt was patently a revenue receipt - It is clear that the assessee firm has attempted to evade tax on a purely professional receipt by propping up theory of doubt as a capital receipt - Besides, in the case of a partnership firm, receipt whether capital or revenue are to be credited to P/L A/c. The assessee in order to minimize disclosure, has taken a smart route of directly crediting the above receipt in the capital accounts of partners - The strategy saved the firm from taxation and the partners took plea that this was a capital receipt in the hands of the firm and not taxable in their hands, result - the Indian revenue looses due tax in the hands of the firm as well as partners - Decided against the assessee.
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