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2011 (8) TMI 459 - AT - Income TaxPenalty u/s 271(1)(c) - ALP determination - TNMM - arm's length price (ALP) adjustments made to the value of international transactions entered into by the assessee - The grounds on which the ALP 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 outside 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 - Accordingly, the facts of the present case did not warrant or justify the imposition of penalty under section 271(1)(c) - Decided in favour of assessee.
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