Penalty could not be imposed upon Shahrukh Khan in respect of deemed rent of Dubai villa [ITAT]
This appeal filed by revenue is directed against the order of Commissioner of Income Tax-52 [hereinafter referred to as the ld CITA], Mumbai dated 06/03/2017 for A.Y.2009-10 in the matter of imposition of penalty u/s.271(1)(c) of the Income Tax Act, 1961.
2. The only issue to be decided in this appeal is as to whether the Ld. CIT(A) was justified in deleting the penalty levied u/s.271(1)(c) of the Act in the facts and circumstances of the case.
3. With regard to ground No.1 & 2 raised by the revenue wherein penalty u/s.271(1)(c) of the Act was levied in respect of addition of Rs.10 Crores towards disallowance of expenditure of professional fees and Rs.7 Crores towards income for the presence of the assessee as brand ambassador are concerned, we find that this Tribunal in assessee’s own case for the A.Y.2009-10 reported in 164 ITD 18 had deleted the quantum addition made thereon.
4. The Ld. DR before us fairly agreed that the quantum addition has been indeed deleted by this Tribunal on the addition made on aforesaid two sums of Rs.10 Crores and Rs.7 Crores. In view of this, we hold that once the quantum is deleted, the concealment penalty u/s.271(1)(c) of the Act does not survive. Accordingly, grounds No.1 & 2 raised by the revenue are dismissed.
5. Ground No.3 raised by the revenue is with regard to deletion of penalty by the Ld. CIT(A) on the addition made towards deemed rental income of Rs.67,20,000/-.
6. Brief facts of this issue are that the assessee was gifted a Villa in Dubai by Nakheel PJSE and possession was received by the assessee in 2008. The Ld. AO estimated annual letting value of Villa at Rs.96 lakhs and thereafter, allowed deduction u/s.24(a) amounting to Rs.28,80,000/- and assessed the remaining sum of Rs.67,20,000/- as deemed rental income under the head ”income from house property”. The Ld. CIT(A) upheld the action of the Ld. AO.
7. Before this Tribunal during quantum appeal proceedings, assessee contended that Article-6 of Double Taxation Avoidance Agreement (DTAA) between India and UAE describes that income derived by a resident of a contracting state from immovable property situated in other contracting state may be taxed in that other state. Accordingly, the assessee pleaded that the rental income from Dubai Villa is not taxable in India. This Tribunal in the quantum appeal in assessee’s own case for A.Y.2009-10 reported in 164 ITD 18 had held that the income from Dubai Villa is liable to be taxed in India and whatever taxes that may have been levied in other contracting state, the credit thereof is required to be allowed to the assessee as per law. The Ld. AO levied penalty on this addition and which was deleted by the Ld. CIT(A).
8. Aggrieved, the revenue is in appeal before us.
9. We have heard the rival submissions. We find that the co-ordinate Bench of this Tribunal in assessee’s own case for the A.Y.2010-11 reported in 194 TTJ 777 dated 22/05/2010 had deleted the penalty on the very same issue on the ground that the revenue had placed reliance on Notification Nos. 90 & 91 of 2008 dated 28/08/2008 and whether such notification would supersede over the DTAA, was a debatable issue and that the very same issue have travelled up to the level of Tribunal in assessee’s own case wherein the scope and gamut of the term “may be taxed in such other state” was subjected to heavy deliberations and debate. Since, the issue per se was debatable, this Tribunal in assessee’s own case for the A.Y.2010-11 in the case referred to supra held that no concealment penalty u/s.271(1)(c) of the Act could be levied on a debatable issue. Respectfully following the said decision in assessee’s own case of this Tribunal referred to supra, we delete the penalty u/s.271(1)(c) of the Act and we find no infirmity in the order of the Ld. CIT(A) thereon. Accordingly, ground No.3 raised by the revenue is dismissed.
10. In the result, appeal of the revenue is dismissed.
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