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2016 (11) TMI 200 - AT - Income TaxPenalty u/s. 271(1)(c) - T.P. adjustment - Held that:- It is not a case of a disallowance of any claim of expenditure under section 37(1) albeit the value of the transaction has been taken at “Nil”. We find great substance in the arguments placed by the Ld. Counsel, because as reiterated above, here the issue related to transfer pricing adjustment which has been made by departmental authorities by taking the value of the international transaction at “Nil”. While arriving at such a conclusion, neither the TPO nor the DRP has given any analysis as to why such an adjustment is required to be made when TNMM has been applied and when overall profit margin and the method has not been disturbed. The TPO for making an adjustment in the ALP has to benchmark the transaction and the ALP with the comparables under the prescribed Indian Transfer Pricing Regulations. He cannot value the ALP of the transaction at “Nil” without adhering to the proper procedure of law laid down under the Act and relevant rules. It is further noticed that, no penalty was levied in the case of the assessee for non-furnishing of the information and documents as required under section 92D(3), for which separate penal provision under section 271G have been prescribed. Thus on these facts and circumstances, prima facie we are of the opinion that no case can be made for the levy of penalty u/s 271(1)(c). Accordingly, we hold that penalty levied by the AO under section 271(1) (c) cannot be legally and factually sustained and therefore, the deletion of penalty by the Ld. CIT(A) is affirmed. - Decided in favour of assessee
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