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TMI Blog2016 (1) TMI 680X X X X Extracts X X X X X X X X Extracts X X X X ..... ew, and accordingly there could not have been any reasonable cause for non-deduction of TDS on the impugned payments”. In our considered opinion, the decision with regard to the obligation of the assessee for deduction of TDS on the aforesaid payments was highly debatable, in the given facts of the case and legal scenario discussed above. The view adopted by the assessee based upon the certificate of the C.A., was one of the possible views and can be said to be based upon bonafide belief of the assessee. Therefore, under these circumstances we can hold that there was reasonable cause as envisaged u/s 273B for not deducting tax at source by the assessee on the aforesaid payments, and therefore, the assessee was not liable for levy of penalty u/s 271C - Decided in favour of assessee - ITA NO.4552/Mum/2013 - - - Dated:- 30-11-2015 - Shri Saktijit Dey, Judicial Member, and Shri Ashwani Taneja, Accountant Member For The Revenue : Shri Amerender Reddy (DR) For The Respondent : Shri Paras Savla Shri Harsh Kapadia (AR) ORDER Per Ashwani Taneja (Accountant Member): This appeal has been filed by the Revenue against the order of Ld. Commissioner of Income Tax (Appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Singapore Pte. Ltd., Singapore (iii) ₹ 49,084/- for purchase of shrink wrapped software from Insight Technology Solution Pte. Ltd., Singapore. (iv) ₹ 33,47,404/- for purchase of shrink wrapped software from Q.A. Software, Australia. (v) ₹ 35,189/- for purchase of shrink wrapped software i.e. Microsoft's Visio software from Software One Pte. Limited, Singapore. 3.2 It has been informed by the parties to us that no appeal was filed by the assessee company against the aforesaid order, and it was accepted so as to bury the litigation and to buy peace, otherwise there was no failure on the part of the assessee, as no TDS was liable to be deducted on the aforesaid remittances/payments, as per law. 3.3. Subsequently, be that as it may, the JDIT, initiated proceedings u/s 271C for levy of penalty on the failure of the assessee in deducting tax as source. During the penalty proceedings, the assessee made detailed submissions. It was noted from the records that during the penalty proceedings, the assessee company submitted that assessee was not liable to deduct TDS on the aforesaid payments and consequently it was not liable for the penalty u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trying to make out case that the impugned payments were not subject to deduction of TDS. These arguments are after thought in view of clear position of law. It was further submitted that the argument of debatable issue is not available to the assessee as he has accepted the order u/s 201, holding the assessee in default. It was further submitted that assessee has not been able to demonstrate the reasonable cause and that assessee s case does not fit into the scope of reasonable cause. It has been further submitted that some of the cases relied upon by the Ld. Counsel pertain to the penalty u/s. 271(1)(c) which is not comparable to section 271C, since there is no mention of section 271(1)(c) in the section 273B. It was further submitted that there is no provision of relying upon CA s certificate u/s 195. He has relied upon section 195(2), to submit that the assessee has to strictly comply with the provisions of section 195 and he cannot justify his failure in deduction of TDS by relying upon any CA s certificate, in view of specific and clear provisions of section 195. It was, thus, requested by the Ld. DR that penalty was rightly levied by the AO and therefore, it should be conf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch said person would have taken in the normal circumstances, but for the said cause. It can be described as a probable cause, and it means an honest belief founded upon reasonable grounds of the existence of a state of circumstances, which, assuming them to be true would reasonably lead any ordinary prudent and cautious man, placed in the position of the person concerned, to come to the conclusion that the same was the right thing to do. 3.10. In this regard we can take reference from the judgment of Hon ble Delhi High Court in the case of Woodward Governor India (P.) Ltd. v. CIT (253 ITR 745) (Delhi) relevant para of the said judgment is reproduced below: Levy of penalty under section 271C is not automatic. Before levying penalty, the concerned officer is required to find out that even if there was any failure referred to in the concerned provision the same was without a reasonable cause. The initial burden is on the assessed to show that there existed reasonable cause which was the reason for the failure referred to in the concerned provision. Thereafter the officer dealing with the matter has to consider whether the explanation offered by the assessee or the person, as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is charged merely to use the design services provided by the services providers and that the assessee is not eligible to apply technology contained therein. On the other hand, to make payments of these services taxable in India, into form of FTS or otherwise, the development and transfer of technical plan or technical design services should be made available to the assessee in such a way in which the assessee should be in a position to apply the technology contained in the technical services availed by the assessee from these parties. In absence of the same, the payments cannot be categorised as FTS under the treaty law, and consequently, there would arise no obligation to deduct tax at source. 3.14. It has been submitted by the assessee that on this issue clear law was not available, and therefore, assessee adopted one of the views available in a bonafide manner. The submissions of the assessee was rejected by the AO on the ground that there was no debate on this issue, and the assessee was clearly liable to deduct tax at source. 3.15. We have analysed this controversy. In our considered opinion, not much is required to be deliberated to say that whether a particular servi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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