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2017 (12) TMI 1042 - AT - Income TaxAdjustment on international transactions on account of difference in arm’s length price - Held that:- CIT(A) has not given detailed findings as to how no adjustment is warranted on international transactions on account of difference in arm’s length price. The order of CIT(A) in our opinion is not elaborate and is very cryptic. The issue of Transfer Pricing Adjustment whether at Arm’s Length price or not, has to be thoroughly verified which in the instant case has not been done. Remand back this issue to the file of the TPO/A.O. While computing the adjustment the TPO and the CIT(A) did not allow the benefit of +/-5% in terms of proviso to section 92C(2) of the Act. Since the price charged/paid by the assessee fall within the +/-5% range of the arm’s length price, no adjustment is warranted in terms of the proviso to section 92C(2). Since, there is a calculation error and thereby impacting the Transfer Pricing Adjustment, it will be appropriate to remand back this issue to the file of the TPO/A.O. Needless to say, all the contentions be kept open and the assessee be given proper opportunity of hearing as per due process of law. Sham transactions of lease rentals disallowed - Held that:- As in the assessee’s own case for Assessment Year 2002-03 [2017 (2) TMI 1290 - ITAT DELHI] A.O did not take into account the accounting of the sale proceeds in the year ended 31/3/2000 and also the interest factor for the the existence of assets itself is in doubt or when an asset subject matter of transfer actually from a physical part of another larger asset or such sham transaction takes place that the revenue can rightly object to the arrangements, in the present case, there was no doubt about existence of the assets, the sale proceeds and consequent short term capital gains were duly assessed in Assessment Year, 2000-01, and the transaction entitled the assessee to the use of the sale proceeds at a cost lower than borrowing through debentures. The CIT(A) has rightly deleted the same. This ground is dismissed. Penalty on addition u/s 43(A) and on disallowance on previous year expenses - Held that:- It is well settled principle that ignorance of law is not excused and cannot be a ground to avoid tax liability. The Assessee in the instant case is renowned Limited Company and accounts of the company are duly audited by the qualified auditors. Before filing the returns of income, the same are verified by the Directors of the Company. Therefore, it cannot be considered as mere clerical error on part of the Assessee Company. In fact, the CIT(A) rightly observed that had the assessee’s case not been selected for scrutiny, the assessee would have got away with the excess claim of depreciation. As relates to expenses pertaining to earlier years, the assessee has not filed any documentary evidence and was unable to given the proper explanation. Here also if the assessee’s case was not selected for scrutiny, the assessee would have been allowed to claim the excess expenditure to the extent of ₹ 16,40,786/-. In view of the above and the findings given by the CIT(A), we do not find any infirmity in the same. Accordingly, the penalty in this respect is upheld and grounds raised by the Assessee in Cross objection on this issue is dismissed.
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