ITAT Upholds Deletion of Penalty imposed u/s 271(1)(c) of Income Tax Act on ground of Genuine Disclose of Payment of Non-compete Fee [Read Order]

The New Delhi bench of the Income Tax Appellate Tribunal (ITAT) upheld the deletion of the penalty imposed under section 271(1)(c) of the Income Tax Act, 1961 on the ground of the genuine disclose of all the material facts relating to the payment of a non-compete fee. 

Hindustan Coca-Cola Beverages Pvt. Ltd, the respondent-assessee was a resident corporate entity engaged in the business of manufacture and trading of non-alcoholic beverages. 

The revenue appealed against the order passed by the Commissioner of Income Tax (Appeals) for deleting the penalty imposed under section 271(1)(c) of the Income Tax Act by the assessing officer. 

Neeraj Jain and Aditya Vohra, the counsels for the assessee contended that the only additions which survive in both the assessment years are the additions made on account of disallowance of non-compete fee claimed as revenue expenditure and it was a recurring issue between the assessee and the Revenue from past assessment years. 

It was further submitted that the assessee had been consistent in its position that the non-compete fee paid was allowable as revenue expenditure. Thus the penalties imposed by the assessing officer were not as per the law and were unsustainable. 

Gayasuddin Ansari, the counsel for the revenue contended that the assessing officer initiated proceedings for imposition of penalty under section 271(1)(c) of the Income Tax Act and ultimately passed orders imposing penalty under the said provision on the ground of furnishing inaccurate particulars of income by the assessee. 

The bench observed that the assessee had disclosed all material facts relating to the payment of the non-compete fee and the assessing officer was conscious of the assessee’s claim and that the imposition of penalty was not as per the law and is liable to be deleted. 

The two-member bench comprising Saktijit Dey (Judicial) and M. Balaganesh (Accountant) upheld the decision of the Commissioner of Income Tax (Appeals) for deletion of the penalty imposed under section 271(1)(c) of the Income Tax Act while dismissing the appeal filed by the revenue. 

To Read the full text of the Order CLICK HERE

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