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TMI Blog2019 (3) TMI 134X X X X Extracts X X X X X X X X Extracts X X X X ..... orms and these are fixed place PE, Office PE, construction PE and agency PE and in case of oil and gas business, involves in installation and commissioning would also constitute construction PE and since the assessee has earned global profit of 10% on the sales made to the customer in India, the income chargeable to tax as attributable to the PE was computed at 3.5% of the sales made. The question as to whether the assessee is having fixed place PE in India is “debatable one” and in these circumstances, penalty levied by the AO is not sustainable in the eyes of law. Identical issue has been decided in favour of the assessee. Since substantial question of law has been framed by Hon’ble High Court on the issue if the assessee is having fixed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e period of limitation prescribed under Section 275(1)(a) of the Act. 3. That on the facts and circumstances of the case and in law, the CIT(A) erred in upholding the initiation of penalty by way of issue of penalty notice under Section 274 of the Act without specifying whether the penalty is initiated for concealment of income or for furnishing of inaccurate particulars of income. 4. That on the facts and circumstances of the case and In law, the CIT(A) erred in alleging that the Appellant had concealed particulars of income, without appreciating that the Appellant made complete disclosure in the notes accompanying the return of income. 5. That on the facts and circumstances of the case and in law, the CIT(A) erred in upholding the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT (Appeals)-42, New Delhi qua the Assessment Year 2008-09 on the grounds inter alia that :- "1. That on the facts and circumstances of the case and in law, the Commissioner of Income-tax (Appeals) ["CIT(A)"] erred in confirming the action of the Assessing Officer ("AO") in levying penalty of ₹ 26,35,620/- under Section 271(1)(c) of the Income Tax Act, 1961 ("the Act") 2. That on the facts and circumstances of the case and in law, the Ld. AO erred in passing the penalty order under Section 271(1)(c) of the Act which are wholly without jurisdiction and clearly barred by limitation inasmuch as the same have been passed beyond the period of limitation prescribed under Section 275(1)(a) of the Act. 3. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oyce, which formed the bedrock and sole basis of the addition made by the AO, on which penalty has now been levied. 8. That on the facts and circumstances of the case and in law, the CIT(A) erred in confirming the levy of penalty under Section 271 (1)( c) of the Act on the basis of profits attributed to the alleged PE of the Appellant, which was based on estimation, and, therefore, do not tantamount to concealment of income or furnishing of inaccurate particulars of income." 5. Briefly stated the facts necessary for adjudication of the controversy at hand are : On the basis of completed assessment under section 143 (3) read with section 144C (5) of the Income-tax Act, 1961 (for short 'the Act') at an income of ₹ 48,59,954/- & ͅ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee has earned global profit of 10% on the sales made to the customer in India, the income chargeable to tax as attributable to the PE was computed at 3.5% of the sales made. It is also not in dispute that the findings returned by the Tribunal have been challenged before the Hon'ble Delhi High Court in a batch of petitions bearing No.ITA 660/2017 & Ors. and vide order dated 15.01.2018, questions of law have been framed which are extracted for ready perusal as under :- "(1) Did ITAT fell into error in its findings with respect to existence of a fixed place Permanent Establishment (PE) of the assessee in India; (2) Did ITAT fell into error in concluding that assessee/appellant's separately independent agent PE, was located in India; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income Tax Act, 1961 on the ground that the issue of deduction under Section 14A of the Act was a debatable issue. We may also note that against the quantum assessment hereunder deduction under Section 14A of the Act was prescribed to the assessee, the assessee has preferred an appeal in this Court under Section 260A of the Act which has also been admitted and substantial question of law framed. This itself shows that the issue is debatable. For these reasons, we are of the opinion that no question of law arises in the present case. This appeal is accordingly dismissed." 11. Consequently, penalty levied by the AO and confirmed by ld. CIT (A) of ₹ 17,32,921/- & ₹ 26,35,620/- in AYs 2002-03 & 2008-09 respectively is ordered to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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