Law:

Section:

Section 271(1)(c) of the Income-tax Act, 1961 - Penalty - For concealment of income - Assessee entered into a technical know-how agreement with a company SNIC - It paid technical know-how fees to SNIC and claimed deduction on expenditure incurred on same - Claim of assessee was disallowed by Assessing Officer holding expenditure to be of capital in nature - On this basis penalty proceedings were also initiated by Assessing Officer under section 271(1)(c) - Lower authorities held that issue involved questions as to whether proprietary rights in know-how were invested in technical know-how fee; whether expenditure incurred was related to carrying on of business of assessee; whether assessee had any right to retain technical know-how after termination of agreement; as to what was object of expenditure; as to what were services rendered; as to what was nature of advantage obtained by assessee; as to what was impact of contents of agreement on nature of claim of expenditure and said question being debatable, lower authorities deleted penalty - Whether lower authorities were justified in deleting penalty - Held, yes Sanjeev Sabharwal for the Appellant. Piyush Kaushik for the Respondent. JUDGMENT I.T.A. Nos. 1935/2010, 1937/2010 and 1938/2010 1. The respondent-assessee had claimed certain expenditure allowable as revenue expenditure. This claim of the assessee was disallowed in the assessment proceedings by the Tribunal holding the expenditure to be of capital in nature. On this basis penalty proceedings were also initiated by the Assessing Officer under section 271(1)(c) of the Income-tax Act, 1961. This penalty, however, has been set aside by the Commissioner of Income-tax (Appeals) as well as by the Income-tax Appellate Tribunal, holding that the claim made by the assessee that expenses incurred were revenue in nature, is debatable and…

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