Case Law Details
DCIT Vs Global Cricket Corpn Pte Ltd. (ITAT Mumbai)
ITAT Mumbai held that as the assessee should be aware of the exact charge for which the penalty proceeding has been initiated, non-striking on the irrelevant limb under section 271(1)(c) of the Income Tax Act vitiates the entire penalty proceedings.
Facts- The assessee company is incorporated in Singapore and has obtained Worldwide Media and sponsorship right with regard to various cricketing events from 2000 to 2007 and had earned income from granting of broadcasting and sponsorship rights to various broad casters and sponsors.
The assessee had filed its return and the same was processed u/s. 143(1) of the Act. The assessee’s case was reopened u/s. 147 of the Act vide notice u/s. 148 of the Act for the reason that the assessee has earned revenue of USD 16,01,27,908 on account of grant of broad casting rights, out of which only USD 1,16,611 was offered for tax as ‘royalty income’ as per the provisions of Article 12 of India-Singapore treaty and the balance amount has been treated as ‘business profit’ not taxable in India. Further, AO had reopened the assessee’s case for the reason that the assessee is not entitled to treaty benefit as per Article 24 for the reason that the payment received for broad casting and sponsorship agreements were not received in Singapore and the same is liable to be taxed as ‘royalty’ u/s.9(1)(vi) of the Act and also the payment from sponsorship agreement is to be treated as payment for the use of ‘commercial equipment’.
AO passed the assessment order u/s. 143(3) r.w.s. 147 of the Act and determined the total income at Rs.153,47,12,241/- and initiated the penalty proceeding u/s. 271(1)(c) of the Act for furnishing of inaccurate particulars of income and for concealment of income. AO vide order dated 31.03.2010 passed u/s. 271(1)(c) of the Act levied a penalty of Rs.35,41,86,182/-.
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