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TMI Blog2017 (11) TMI 1498X X X X Extracts X X X X X X X X Extracts X X X X ..... y levied u/s. 271(1)(c) - Held that:- The assessee cannot be deemed to have concealed the particulars of income with respect to profit on FOB supplies during the Assessment Year 2007-08. Besides, the department did not initiate any penalty on the similar addition made in A.Y. 2002-03, and the penalty imposed for A.Y. 2004-05, stood cancelled by ld. CIT(A) vide order dated 27th April 2009, which has been accepted by the Department and no further appeal against the order of CIT (Appeals) was filed by Revenue. In presence of all these facts, the penalty imposed by the AO has rightly been deleted by the ld. CIT(A). Accordingly, the appeal of the Revenue, being devoid of merit - ITA Nos. 1364 & 1365/Del./2011, ITA No. 5833/Del./2010 And ITA No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of any economic connection between the PE and the Offshore supply of the plant and machinery of ₹ 10,25,91,309/-, the addition of ₹ 1,02,59,131/- as made by the Assessing Officer, thereby applying the presumptive rate of profit @ 10% as provided u/s. 44BB and 44BBB of the IT act, is arbitrary, unjust, bad in law and at any rate very excessive. 3). That the assessee denied its liability to pay interest charged u/s. 234B of the IT Act in the computation form at ₹ 9,06,131/-. 3. ITA No. 5586/Del./2012 for A.Y. 2007-08 is filed at the instance of Revenue against the order dated 06.08.2012 of ld. CIT(A), Noida, challenging the penalty imposed u/s. 271(1)(c) of the IT Act on the following grounds : 1. Whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the judgment of the ITAT in the case of the appellant for the Assessment Year 2002-03 wherein the Hon ble ITAT held that though the FOB supplies made outside India are not taxable but because the contract has been signed in India, hence 20% of the global profits relating to such supplies is taxable in India, whereas in Assessment Year 2007-08, the assessee has filed the appeal directly before the ITAT against the order of AO and DRP u/s. 144C/143(3) of the IT Act on the same issue. For the sake of convenience, the facts for the Assessment Year 2005-06 in ITA No. 1365/Del/2011 are being discussed. 5. The facts leading to appeal for assessment year 2005-06 are that the assessee, Global Thermoelectric Inc (hereinafter referred to as Globa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessable in addition to income returned by the assessee. The assessee pointed out before the AO that in Assessment Year 2002-03, on the similar issue, the Hon ble Tribunal vide order dated 12th May 2006 in ITA No. 3686/Del/ 2005 held that the provision of Section 44BB of the IT Act does not apply to the assessee s case and the profit on the offshore supplies of the equipments, which were made at Vancouver Port, Canada is not chargeable to tax in India, but because the considerable part of contract and planning thereof has been done by the assessee in India, hence following the decision of Delhi Special Bench in the case of Motorola, 20% of profits on the sale of offshore supplies of equipments should be treated to have accrued in India a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and have gone through the entire material available on record. During the course of hearing, the assessee has brought to the notice of the Bench that in Assessment Year 2002-03, the Department as well as the assessee both had approached the Hon ble Allahabad High Court. The Department had filed the appeal against the order of ITAT where the ITAT held that profit on FOB supplies is not chargeable to tax in India and profit in relation thereto cannot be determined @ 10% as provided u/s 44BB of the IT Act, whereas the assessee had filed appeal against the order of ITAT in respect of sustaining the addition to the extent of 20% of the profits on sale of offshore supply of equipments. Both the appeals of the Department and the assessee were re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g our hands on the decisions of Hon ble Allahabad High Court, we hold that on sale of offshore supplies made on FOB basis outside India, no profit is chargeable to tax in India. Since the facts and issue involved in all the three appeals of the assessee are identical, therefore, the above decision will equally apply to all these three appeals of assessee for A.Yrs. 2004-05, 2005-06 and 2007-08. Accordingly, the appeals of the assessee deserve to be allowed. 12. Adverting to the appeal of the Revenue pertaining to penalty u/s. 271(1)(c) of the Act for A.Y. 2007-08, we observe that as already discussed above, the only addition made by the AO was in respect of the profits determined in respect of FOB supplies, thereby applying the rate of 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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