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Issues involved: Appeal against deletion of penalty u/s 271(1)(c) of the Act for the assessment year 2007-2008.
The judgment pertains to an appeal by the Revenue against the deletion of a penalty of Rs. 16,02,393 imposed by the Assessing Officer u/s 271(1)(c) of the Act for the assessment year 2007-2008. The case involved the assessee claiming certain reimbursements in the nature of link charges on a cost to cost basis, which was contested by the Assessing Officer. The Assessing Officer treated the amount as fees for technical services, leading to an addition in the income. The penalty imposed on this amount was subsequently deleted in the first appeal. The Tribunal considered the submissions and precedents cited, emphasizing that the mere acceptance of an addition does not automatically warrant the imposition of a penalty u/s 271(1)(c). The Tribunal highlighted that both assessment and penalty proceedings are distinct, and the chargeability of the amount in the hands of the recipient is crucial. The Tribunal also noted that the payer deducting tax at source does not conclusively establish tax liability for the recipient. Precedents were cited to support the argument that bandwidth charges cannot be equated to fees for technical services. The Tribunal observed that the assessee had made a complete disclosure of the relevant particulars regarding the reimbursements in the computation of income. Citing a Supreme Court case, it was emphasized that penalty u/s 271(1)(c) cannot be imposed merely due to the non-sustainability of the claim in law, especially when the furnished particulars were not inaccurate. The Tribunal upheld the deletion of the penalty by the CIT(A) based on the possible view of non-taxability of the line charges. In conclusion, the Tribunal dismissed the Revenue's appeal and upheld the decision to delete the penalty, emphasizing the proper disclosure made by the assessee and the possible non-taxability of the line charges. The order was pronounced on July 31, 2012.
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