Case Law Details
CIT Vs Shell Global Solutions International B.V. (Gujarat High Court)
Gujarat High Court held that initiation of penalty proceedings u/s 271(1)(c) of the Income Tax Act in the absence of any material to establish the concealing of income or furnishing inaccurate particulars unsustainable-in-law.
Facts- The respondent assessee company is a Foreign Company registered in Netherlands, deriving income from Royalties or fees for technical services. A return of income of Rs.9,19,53,530/- was filed. On verification of Form 3CEB, it was noticed that the assessee company had entered into international transactions. The case of the assessee was referred to TPO. The upward total adjustment by way of an order u/s. 92CA(3) of Rs.29,43,61,998/- was made. By assessment order penalty proceedings were also proposed to be initiated u/s. 271(1)(C) for furnishing inaccurate particulars of income and thereby concealing income.
In the penalty proceedings it was the case of the respondent assessee that the whole mechanism known as the Base Erosion Theory was adopted and the application of arm’s length principles for making TP adjustment was not proper.
The whole issue was therefore a debatable issue where views of various Tribunals were at variance and therefore it was not a concealment of income. In the penalty proceedings invoking Explanation 7 to Section 271(1)(C) to DCIT, International Taxation Division held the assessee liable to penalty. ITAT accepted the appeal and dropped the penalty proceedings. Being aggrieved, revenue has preferred the present appeal.
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