Itxa/2456/2011 Of The Director Of Income Tax ( International )-Ii v. M/S Fidelity Management Trust

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.2449 OF 2011 The Director of Income Tax (International Taxation)-II..Appellant.V/s.M/s. Fidelity Management Trust Co.,A/c. Fidelity Group Trust for Employee Benefit Plans..Respondent. WITHINCOME TAX APPEAL NO.2454 OF 2011 The Director of Income Tax (International Taxation)-II..Appellant.V/s.M/s. Fidelity Management Trust Co.,A/c. Fidelity Investment Trust forEmployee Benefit Plans..Respondent. WITH INCOME TAX APPEAL NO.2455 OF 2011 The Director of Income Tax (International Taxation)-II..Appellant.V/s.M/s. Fidelity Management Trust Co.,A/c. Fidelity Investment Trust forFidelity Emerging Market Fund..Respondent. WITH INCOME TAX APPEAL NO.2456 OF 2011 The Director of Income Tax (International Taxation)-II .. Appellant. V/s.M/s. Fidelity Management Trust Co.,A/c. Fidelity Investment Trust -Fidelity Diversified International Fund..Respondent. Mr. Suresh Kumar, for the Appellant in all the matters.Mr. Prakash Shah with Mr. Jas Sanghavi i/b. PDS Legal, for the Respondent in all the matters. P.C:- CORAM: J.P.DEVADHAR & M.S.SANKLECHA,JJ.DATE : 5[th] MARCH, 2013. Heard. 2In these Appeals by the Revenue, following common question has been raised for our consideration. Whether on the facts and in circumstances of the case and in law, the Tribunal was correct in deleting the penalty levied under Section 271(1)(c) of the Income Tax Act, 1961 when the quantum appeal withdrawn by the assessee before CIT(A)? 3In all these Appeals, the Respondent-Assessee has originally filed their returns of income declaring their income arising on sale of securities in India under the head 'Capital Gains'. Thereafter, on the basis of decision of the Authority for Advance Ruling (AAR) in the case of Fedelity Advisor Services VIII reported in 271 ITR 1, the Respondent- S.R.JOSHI Assessee filed a revised return of income claiming their income from sale of securities to be taxable under the head 'Business Income'. In the revised return of income, the Respondent-Assessee disclosed the above reason viz. decision of the AAR for filing of revised return of income. The Assessing Officer, however, determined income under the head 'Capital Gain'. Further, penalty was levied under Section 271(1)(c) of Income Tax Act, 1961 (the said Act) alleging that a false claim had been made in the revised return of income. 4In appeal, the CIT(A) deleted the penalty. On further appeal, the Tribunal while upholding the order of the CIT(A) held that the revised return which was filed on 25/3/2005 by the Respondent-Assessee consequent to the decision of the AAR on 27/9/2004. The original return of income was filed on 17/8/2004 i. e. prior to the decision of the AAR. The Tribunal also records the fact that the appeal filed in quantum proceeding by the Respondent-Assessee was withdrawn as the AAR on 2/1/2007 reviewed its earlier decision recorded on 27/9/2004 and held the income on sale of securities to be taxable under the head 'Capital Gain' (Fidelity North Star Funds reported in 288 ITR 641). In the above circumstances, the Tribunal held that the explanation given by the Respondent-Assessee for filing the revised return of income declaring the income under the head 'Business Income' was a bona fide explanation and that merely making of a claim which was not sustainable in law would not by itself amounts to furnishing inaccurate particulars of income. The Tribunal while deleting the penalty relied upon the decision of the Apex Court in the matter of CIT v/s. Reliance Petroproducts Pvt. Ltd. reported in 322 ITR 158. In view of the fact that the Tribunal had returned a finding of fact viz. the explanation offered was bona fide, we see no reason to entertain the reframed question of law. 5Accordingly, all the appeals are dismissed with no order as to costs. (M.S.SANKLECHA,J.) income under the head 'Business Income' was a bona fide explanation and that merely making of a claim which was not sustainable in law would not by itself amounts to furnishing inaccurate particulars of income. The Tribunal while deleting the penalty relied upon the decision of the Apex Court in the matter of CIT v/s. Reliance Petroproducts Pvt. Ltd. reported in 322 ITR 158. In view of the fact that the Tribunal had returned a finding of fact viz. the explanation offered was bona fide, we see no reason to entertain the reframed question of law. 5Accordingly, all the appeals are dismissed with no order as to costs. (M.S.SANKLECHA,J.) (J.P.DEVADHAR,J.)