9911796707
TMI Blog2019 (5) TMI 1424X X X X Extracts X X X X X X X X Extracts X X X X ..... 69,50,435/- imposed u/s 271(1)(c) of the Income Tax Act, 1961 (hereinafter called 'the Act'). 2.0 The brief facts of the case are that the assessee company is a wholly owned subsidiary of Mary Kay Inc., USA and was incorporated in November 2006. The assessee company is engaged in the business of marketing and distribution of Mary Kay products in India. The return of income for the year under consideration was filed at a loss of Rs. 9,81,15,974/-. The income of the assessee was assessed at a loss of Rs. 5,64,18,900/- after making a total addition of Rs. 4,16,97,074/- on account of Advertisement and Marketing Promotion (AMP) expenses after making reference to the Transfer Pricing Officer. Penalty proceedings u/s 271(1)(c) of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nitiated on account of concealment of income, or furnishing of inaccurate particulars by the Appellant. 3. On the fact, in law and in circumstances of the case Ld. CIT(A) erred in upholding penalty under section 271(1)(c) of the Act read with Explanation 1 without appreciating that, being a Transfer Pricing addition under section 92C of the Act, the Explanation 1 to Section 271(1)(c) had no implication, as such this issue is governed by the conditions prescribed under Explanation 7 to section 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as "the Act"). 4. On the fact, in law and in circumstances of the case Ld. CIT(A) erred by disregarding the order of the Hon'ble High Court of Delhi in Appellant's own case for AY 2010- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on the following judgements: * CIT vs Manjunatha Cotton & Ginning Factory (359 ITR 565) (Karnataka) * HPCL Mittal Energy Ltd. vs. ACIT (IT Appeal Nos. 510, 554 TO 556 (ASR.) OF 2014) * CIT vs. SSA'S Emerald Meadows (Special Leave To Appeal (C) No. 11485 of 2016) 3.2.0 It was further submitted by the Ld. AR that the penalty has been imposed in relation to the addition made under Chapter-X of the Act. Thus, Explanation 1 to Section 271(1)(c) of the Act, cannot be invoked. On the contrary, the Explanation 7 to Section 271(1)(c) of the Act was applicable. It was submitted that the assessee had submitted all the requisite details in respect of its all international transactions. In this regard, reliance was placed on the following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or even before the Ld. First Appellate Authority and, therefore, the same had caused no prejudice to the assessee as the assessee clearly understood as to what was the purport and import of the notice issued u/s 274 of the Act. The Ld. Sr. DR also filed written submissions in support of her contentions and list of judicial precedents on which she has vehemently relied on and which have been placed on record. 4.1 It was also submitted that even though the Hon'ble Delhi High Court for assessment year 2010-11 in assessee's own case might have held that the AMP expenses should not be treated as a separate independent international transaction, under the Income Tax Act, assessment years are independent of each other and it might be possible th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. The department also could not point out any distinguishing facts between Assessment Year 2009-10 and 2010-11. Further, we also note that the Hon'ble Delhi High Court in assessee's own case for assessment year 2010-11 has dismissed the department's appeal and has held that there were no good grounds and reasons to treat advertisement and sales expenses as a separate and independent international transaction in the case of the assessee. The Hon'ble High Court held that the revenue had erred in not treating this activity as a function performed by the assessee who was engaged in marketing and distribution. Undisputedly, the assessee is engaged in marketing and distribution of Mary Kay products in India and the observation of the Hon'ble Del ..... X X X X Extracts X X X X X X X X Extracts X X X X
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