Itxa/1096/2013 Of The Commissioner Of Income Tax - 7 v. M/S. Yahoo India Pvt.ltd

sas IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL (LOD) NO.2014 OF 2012 The Commissioner of Income Tax-7, Mumbai ..Appellant. V/s. M/s. Yahoo India Pvt. Ltd. ..Respondent. Ms. S.V. Bharucha with D.K.Kamwal for the appellant. Mr. R. Murlidharan with A.K. Jasani for the respondent. CORAM : J.P. DEVADHAR AND M.S. SANKLECHA, JJ. DATED : 8TH MARCH, 2013 P.C. :- 1.In this appeal by the revenue for the assessment year 2004-05, following points of law are raised for our consideration:- “ Whether on the facts and circumstances of the case and in law, the Tribunal was justified in deleting the penalty under Secrion 271(1)(c) of the income Tax Act, 1961 without properly appreciating the factual and legal matrix of the case as clearly brought out by the order imposing penalty ? ” 2.Penalty under Section 271(1)(c) of the Income Tax Act, 1961 (the Act) was levied upon the assessee on the ground that in the regular assessment, the deduction of the amount paid by the assessee to Yahoo Holdings (Hong Kong) Ltd. without deducting tax at source has been disallowed by invoking the provisions of Section 40(a) of the Act. The CIT(A) upheld the penalty imposed by the assessing officer. 3.The Tribunal deleted the penalty on the ground that in quantum appeal, the disallowance made by the assessing officer has been deleted by the Tribunal. Challenging the order of the Tribunal in deleting the disallowance, the revenue has filed appeal before this Court, wherein the revenue has sought to justify the disallowances by placing reliance on Explanation 5 introduced to Section 9 of the Act by the Finance Act, 2012 with retrospective effect from 1[st] June, 1976. The very fact that the law has been amended with retrospective effect clearly shows that the issue was debatable and in the absence of any failure to disclose material facts necessary for the purpose of assessment, the deletion of penalty levied under Section 271(1)(c) of the Act cannot be faulted. 4.In the result, we see no merit in the appeal. Accordingly, the appeal is dismissed with no order as to costs. (M.S. SANKLECHA, J.) (J.P. DEVADHAR, J.)