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2019 (4) TMI 1978 - ITAT MUMBAIPenalty u/s. 271G - non furnishing segmental profitability of AE transactions and non AE transactions - assessee had clearly failed in maintaining the documentation as required u/s. 92D(3) - profits split method adopted by the assessee to benchmark its international transaction - failure to comply with the provisions of Rule 10D(1) (d)(g)(h)(i)(j) & (m) of I.T. Rules, 1962 - HELD THAT:- When we go through the reasons given by the assessee for not complying with the provisions of Rule 10D(1), in light of industry specific, ie. diamond trading industry, we find that it was unable to ascertain the corresponding cost when the rough diamond has been cut and polished, it loses its individual identity and gets mixed in the lots purchased from AE as well as non AE. Therefore, considering the nature of trade, it is not possible for the assessee to prepare separate accounts for trading and manufacturing activities so as to compare its international transactions with its AE segment-wise. Assessee has chosen profits split method in order to benchmark its international transactions with AE. We further noted that the department has accepted profits split method adopted by the assessee to benchmark its international transaction in the past and during the year under consideration as there is no adjustment is made u/s 92C - When there is no adjustment is made u/s 92CA in respect of international transactions with its AE, the AO was erred in levying penalty u/s 271G for not furnishing segmental profitability of AE transactions and non AE transactions even though the assessee has made out a case that it is difficult to furnish segment-wise P&L Account of AE segment and non AE segment considering the nature of industry and its complexity. Therefore, we are of the considered view that the AO was erred in levying penalty u/s 271G of the Income-tax Act, 1961. - Decided against revenue.
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