Itxa/905/2013 Of Director Of Income Tax (It) - I v. M/S. Satellite Television Asion Region Ltd

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL (L)NO.1879 OF 2012WITHINCOME TAX APPEAL NO.181 OF 2013WITH INCOME TAX APPEAL NO.183 OF 2013 Director of Income Tax (IT)-I..Appellant.V/s.M/s. Satellite Television Asian Region Limited..Respondent. Mr. Arvind Pinto, for the Appellant.Mr. Porus Kaka, Sr. Advocate with Mr. Divesh Chawala with Mr. A. K. Jasani, for the Respondent. CORAM: J.P.DEVADHAR & M.S.SANKLECHA,JJ.DATE : 6[th] FEBRUARY, 2013. P.C:- Heard. In all these Appeals by the Revenue, the following question has been proposed:- “Whether on the facts and in the circumstance of the case and in law, the ITAT was correct it holding that penalty u/s 271 C is not leviable.” 2The basic dispute is; whether the failure of Respondent-Assessee to deduct tax in respect of the payments made by it to various Channel Companies belonging to star groups of Companies warrant penalty under Section 271(1)(c) of the Income Tax Act, 1961? 3The Tribunal by the impugned order concluded that there was no warrant for imposition of penalty in view of the following finding of facts:- (a)The Respondent-Assesee as well as the Channel Companies are a non-resident companies having its principal place of business outside India. Hence, the payments are made outside India by one non-resident to another; (b)In its return of income, the Respondent-Assessee while computing the taxable income had claimed deduction of the costs of advertising air time procured from channel companies on principal to principal basis outside India; and (c)At the time of filing its return, there was a prevalent view in favour of Respondent-Assessee by the ITAT in the matter of Shree Kumar Poddar v/s. CIT, reported in 65 ITD 248 that in such cases, no tax was deductable under Section 195 of the Act. 4Thus, on the aforesaid facts, Tribunal came to the conclusion that S.R.JOSHI2 of 3 there was a bonafide belief on the part of the Respondent-Assessee that there was no liability to deduct tax at source under Section 195 of the Income Tax Act, 1961. Since the decision of the Tribunal is based on a finding of fact and also on the finding that at the time when the returns were filed, issue of deduction of tax at source, in the present facts was a debatable issue. Thus, we see no reasons to interfere with the order of the Tribunal. 5Accordingly, all the appeals are dismissed with no order as to costs. (M.S.SANKLECHA,J.) (J.P.DEVADHAR,J.)