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TMI Blog2020 (1) TMI 44X X X X Extracts X X X X X X X X Extracts X X X X ..... to the information furnished by the assessee including segmental profitability. Further, the assessee has also explained why it is not possible to furnish certain information sought by the TPO qua applicability of internal CUP method. In this regard, detailed written submission has been filed by the assessee before the TPO which has been properly evaluated by learned Commissioner (Appeals) and the difficulty in maintaining the information sought by the TPO has been well explained and analysed. Ultimately the TPO has accepted the benchmarking done by the assessee under TNMM and no variation/adjustment was made by him to the ALP. Even, assuming that the assessee has not maintained documents as required or was unable to support the benchma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see, an Indian company, is engaged in the business of purchasing rough diamonds, processing of rough diamonds and sale (including export) of rough and polished diamond. Noticing that during the year under consideration the assessee has entered into international transactions with its overseas Associated Enterprises (AEs) the Assessing Officer made a reference to the Transfer Pricing Officer (TPO) to determine the Arm s Length Price (ALP) of such transaction. In the course of proceedings under section 92CA of the Act, the Transfer Pricing Officer called upon the assessee to furnish various information, documents/details to demonstrate that the international transaction entered with AE are at arm's length. In response to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 92D(1) r/w rule 10D for enabling him to determine the ALP, the Transfer Pricing Officer initiated proceeding for imposition of penalty under section 271G of the Act and ultimately imposed penalty for an amount of ₹ 16,14,61,108/ . While deciding assessee s appeal challenging the imposition of penalty as aforesaid, learned Commissioner (Appeals) being satisfied with the submissions of the assessee deleted the penalty. 3. Shri Anand Mohan, Learned Departmental Representative, strongly relying upon the reasoning of the Transfer Pricing Officer submitted, onus is entirely on the assessee to prove that the price charged to the related parties is at arm s length. He submitted, though, the assessee applied TNMM as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ultimately accepted the ALP of the international transaction shown by the assessee. In support of his contention, learned Authorised Representative relied upon the following decisions: i) Dilipkumar V. Lakhi, IT(TP)A no.2142/Mum./ 2017, dated 02.08.2018; ii) Kiran Gems Pvt. Ltd., ITA no.5626/Mum./2016, dated 01.11.2018; iii) CIT v/s D. Navinchandra Exports P. Ltd., ITA no.6304/ Mum./2016, etc. dated. 25.10.2017; iv) DCIT v/s Blue Star Diamonds Pvt. Ltd., ITA no.6553/Mum./ 2017, dated 13.06.2019; v) DCIT v/s Leo Schachter Diamonds India P. Ltd., ITA no. 5931/Mum./2017, dated 28.02.2019; vi) DCIT v/s Laxmi Diamonds Pvt. Ltd., ITA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the compliance made by the assessee and observed that the assessee should have furnished the profitability at net margin level. It is observed, before the TPO the assessee has made submissions explaining why it is not possible for a person engaged in manufacturing and sale of rough and polished diamond to maintain segment wise profitability of sales made to the AE and non AEs. It was explained by the assessee that CUP method could not be applied as invoice of sale with AE and non AE include different types of goods sold at different price. It is further observed, in the preceding year also, the assessee had benchmarked international transaction with AE by applying TNMM which was accepted by the Revenue. It is relevant to observe, the TPO ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts as required or was unable to support the benchmarking done by it under TNMM, nothing prevented the TPO in discarding the benchmarking done by the assessee and determining the ALP of the international transaction with the AE independently by applying any one of the prescribed method. When the statutory provisions confer enough power on the TPO to benchmark the international transaction as per the provisions of the Act, the allegation of the TPO that due non furnishing of documents by the assessee he was prevented from determining the arm's length price under CUP or PS method is unacceptable. Therefore, when the TPO has accepted the benchmarking of the assessee, the imposition of penalty under section 271G of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X
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