2013 (10) TMI 522 - AT - Income Tax

Interpretation of Section 92C(2) - Benefit of -5% - Held that - The benefit under the proviso to Section 92C(2) is only in the nature of tolerance range of 5% and not standard deduction. By virtue of retrospective amendment in the proviso to Section 92C(2) of the Income Tax Act, the legislature has made it clear that the benefit of 5% is only a tolerance range and therefore it is available only when the prices of international transaction is within the range of 5% of the arithmetic mean of more than one comparable prices - Decided against assessee.

Summary

Issues:
1. Non-appearance of the assessee during the appeal hearing.
2. Interpretation of Section 92C(2) of the Income Tax Act, 1961 regarding the benefit of -5% relief.

Issue 1: Non-appearance of the assessee during the appeal hearing
The judgment addresses the non-appearance of the assessee during the appeal hearing despite the notice being duly served. The Tribunal notes that the absence of the assessee indicates a lack of interest in prosecuting the appeal. Citing precedents, the Tribunal dismisses the appeal as not admitted. However, the Tribunal leaves room for the assessee to provide a valid reason for non-appearance, allowing for a possible recall of the order at its discretion.

Issue 2: Interpretation of Section 92C(2) of the Income Tax Act, 1961
The Revenue raised grounds related to the interpretation of Section 92C(2) concerning the benefit of -5% relief. The Tribunal, after hearing the arguments and examining the records, clarifies that the benefit under the proviso to Section 92C(2) is a tolerance range of 5% and not a standard deduction. It highlights that the legislative amendment made it explicit that the benefit of +/-5% is applicable only when the prices of international transactions fall within the specified range. Consequently, the Tribunal sets aside the CIT(A)'s order on this issue and rules in favor of the Revenue, dismissing the appeal of the assessee and allowing the appeal of the Revenue.

In conclusion, the judgment addresses the non-appearance of the assessee during the appeal hearing and provides insights into the interpretation of Section 92C(2) of the Income Tax Act, 1961 regarding the benefit of -5% relief. The Tribunal's decision reflects a strict approach towards non-appearance while also emphasizing the specific conditions under which the benefit of +/-5% tolerance range applies in international transactions, ultimately ruling in favor of the Revenue on this issue.