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TMI Blog2012 (12) TMI 237X X X X Extracts X X X X X X X X Extracts X X X X ..... is a subjective exercise. The assessee has seriously contested the conclusions drawn by the TPO on selection of comparables for bench marking of international transactions. It is another matter that the assessee chose not to carry the issue in appeal, the reasons of which have been explained. the assessee acted in the bonafide manner in conducting its transfer pricing study and arriving at an arm's length price. The explanation is bonafide and under those circumstances the levy of penalty under Section 271(1)(c)is not warranted. In favour of assessee - IT APPEAL NO. 5566 (DELHI) OF 2011 - - - Dated:- 17-9-2012 - A. D. Jain And J . Sudhakar Reddy , JJ. N. Venkatram, Ms. Shikha Gupta and Rohit Tiwari for the Appellant. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the fact that the assessee is a loss making unit, is no justification for the Assessing Officer to levy the penalty. He relied on a number of case laws and submitted that the issue in question is debatable and the assessee had no malafide intention to evade taxes. It was submitted that the explanation furnished by the assessee was bonafide. The First Appellate authority confirmed the penalty by observing that the assessee has concluded its comparability analysis of the transactions based on earlier years data and not on the basis of current year data. The First Appellate Authority gave detailed reasons from para 18 to 37 of his order. Aggrieved the assessee is in appeal before us on the following grounds. 1. Based on the facts and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Asstt. CIT v. Firmenich Aromatics (India) (P.) Ltd. [ITA no. 4654/Mumbai/2009 F Bench of the Tribunal order dt. 17th May, 2010] iv. Dy. CIT v. Advanced Sysstek (P.) Ltd. [IT Appeal No. 878 (Ahd.) of 2009, dated 11-5-2012] 3. Ld. D.R. Mr. JH Ahalwal on the other hand submitted that the arguments of the Sr. Counsel that no penalty can be levied under Section 271(1)(c) on any adjustment made under transfer pricing provisions is not sustainable in law. He submitted that when a transfer pricing adjustment is made, it leads to a variation between the returned income and the assessed income. He relied on the order of the Ld. CIT(A) and submitted that not only comparables were added but also the assessee had taken multiple year data, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied in cases where adjustments have been made under transfer pricing provisions i.e. Section 92A(4). What has to be seen, is whether the assessee has undertaken a bonafide exercise for computing the arm's length price. The question whether penalty is attracted under Section 271(1)(c) of the Income Tax Act, 1961 or not is to be determined based on the facts and circumstances of each case. No general proposition of law can be laid down that in all cases of transfer pricing adjustements, where some comparables, referred to as 'samples' by the Ld. Sr. Counsel, are rejected and certain other comparables are added, penalty under Section 271(1)(c) of the Income Tax Act, 1961 cannot be levied. The position of law is that, when there is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Special Bench of the Tribunal in the case of Aztek Software Technology Services Ltd. v. Asstt. CIT [2007] 15 SOT 49 as well as the case of Mentor Graphics (Noida) (P.) Ltd. v. Dy. CIT [2007] 109 ITD 101 (Delhi). 8. It can be seen that both these decisions were delivered after July, 2007. Prior to that there was a legal debate as to whether multiple year data can be used or the current year data has to be used. The arguments of the parties on this issue can be found in these decisions. The Assessment Year in question is 2006-07. In the year 2006, when the assessee completed its Transfer Pricing study and filed the return of income, this debate was very much alive. Thus we are of the considered opinion that, this being a debatable iss ..... X X X X Extracts X X X X X X X X Extracts X X X X
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