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TMI Blog2014 (4) TMI 471X X X X Extracts X X X X X X X X Extracts X X X X ..... he ALP of the International Transaction at Rs.41,54,91,785/- as against Rs.39,04,34,858/- disclosed by the assessee. The TPO while determining the ALP of International Transaction rejected the TP study report of the assessee basically on the ground that the assessee had used multiple year data instead of using the current year data. Further, out of 14 companies selected as comparables by the assessee in his TP study report, the TPO accepted only four companies and rejected the balance 10 companies. On the basis of the ALP determined by the TPO, the Assessing Officer completed the assessment u/s 143(3) of the Act by making an addition of Rs.2,50,56,927/- being the transfer pricing adjustment on account of difference in ALP determined by the TPO. The assessee being aggrieved of the addition made, preferred an appeal before the CIT (A). 4. The CIT (A) while upholding the finding of the TPO with regard to the use of current year data and rejection of comparables however allowed marginal relief by allowing +/-5% deduction u/s 92CA(2) of the Act. Against the order passed by the CIT (A), both the assessee as well as department carried appeals before the Income-tax Appellate Tribunal. 5. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an order imposing penalty u/s 271(1)(c) of the Act of an amount of Rs.89,89,172/-. Being aggrieved of the penalty order, the assessee went in appeal before the CIT (A). 6. In course of hearing of appeal before the CIT (A), the assessee contended that since it has made full and complete disclosure of all relevant particulars in its return of income, it cannot be accused of either concealment particulars of income or furnishing inaccurate particulars of income. It was submitted that all necessary details and documentary evidence were produced before the Assessing Officer/TPO which clearly establishes the bonafide intention of the assessee. It was submitted that the additions based on which the penalty was levied are themselves based on the information furnished by the assessee and arise purely on account of a difference of interpretation of law and facts between the Assessing Officer and the assessee, with regard to the interpretation of statutory provisions and their applicability. 7. In support of such contention, the assessee relied upon various judicial precedents. The CIT (A) after considering the submission of the assessee in the light of the orders passed by the TPO/Assessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid that there is either concealment of income or furnishing inaccurate particulars on the part of the assessee when TP report has been obtained from an outside expert and the methodology adopted in the TP report for determining the ALP has not been disputed by the TPO. It was therefore submitted that in the given circumstances the imposition of penalty u/s 271(1) (c) of the Act is not called for in support of such contention, the learned authorised representative for the assessee relied upon the following decisions:- 1. Reliance Petro products (P.) Ltd. (supra) 2. Dy. CIT v. VertexCustomer Services India (P.) Ltd. [2009] 34 SOT 532 (Delhi) 3. Verizon Communications India Private Limited (140 ITD 122) 4. Dilip N. Shroff vs. JCIT (291 ITR 519) 5. Union of India vs. Dharmendra Textiles and Ors (306 ITR 277) 6. Dy. CIT v. Lexmark International (India) [IT Appeal No. 490 (Kol.) of 2011, dated 4-11-2011] 7. RBS Equities India Ltd. (supra) 10. We have considered submissions of the parties and perused the mat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... LP determination by the assessee has been rejected are thus reasonably debatable. Lack of good faith and due diligence cannot be inferred when the grounds on which ALP determined by the assessee has been rejected are reasonably debatable, even If correct. The assessee has obtained a transfer pricing study from an oats/de expert, and this transfer pricing study, objectivity of which is neither called into question or seems to be, upon perusal of this TP study, questionable to us anyway, approves TNMM for determination of ALP- a proposition which has not been specifically rejected by the revenue authorities. On these facts, lack of 'due diligence in determining the ALP is neither indicated nor can be inferred In such a situation it cannot be said that the assessee has not determined the ALP in accordance with the scheme of Section 92C in good faith and with due diligence. In our considered viel1j therefore, the conditions pre3cedent for invoking Explanation 7 to section 271(l)(c) did not exist on the facts of this case. Neither the case of the assessee is covered by the main section 271(1)(c), nor Explanation 7 thereto can be invoked on the facts of this case. Explanation 1 to Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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