TaxTMI 
TaxTMI 
2016 (10) TMI 848
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.... briefly, are as under: - 2.1 The assessee-company, engaged in the business of export of pharmaceutical products, filed its return of income for A.Y. 2002-03 on 31.10.2002 declaring NIL income, after claiming deduction of Rs. 55,11,088/- under section 80HHC of the Act. The assessment was completed under section 143(3) of the Act vide order dated 28.02.2005, wherein the income of the assessee was determined at Rs. 57,42,830/- in view of, inter alia, the following disallowances: - (i) Proportionate interest Rs. 2,57,859/- (ii) TP adjustment Rs. 3,86,810/- Simultaneously penalty proceedings were initiated in the order of assessment by issue of notice under section 274 r.w.s. 271(1)(c) of the Act dated 28.02.2005 to the assessee....
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....0% of tax sought to be avoided. 2.3 Aggrieved by the order dated 15.03.2007 levying penalty of Rs. 2,30,146/- under section 271(1)(c) of the Act, for A.Y. 2002-03, the assessee preferred an appeal before the CIT(A)-15, Mumbai. The learned CIT(A) disposed off the appeal vide order dated 22.08.2014 allowing the assessee partial relief. In this impugned order, the learned CIT(A) deleted the penalty levied under section 271(1)(c) of the Act with reference to the disallowance of proportionate interest of Rs. 2,57,859/-; the learned CIT(A), however, proceeded to uphold the levy of penalty under section 271(1)(c) of the Act in respect of the adjustment of Rs. 3,86,810/- made on the basis of TP provisions holding as under at para 4.4(ii) of the im....
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....appellate forums. Thus the price charged by the appellant in the international transactions has not been computed in accordance with the provisions contained in section 92C in the manner prescribed under that section in good faith with due diligence. Accordingly, the provisions of explanation 7 to section 271(1)(c) are clearly applicable to the facts of the appellant's case. The case laws relied upon by the appellant are not with reference to explanation 7 to section 271(1)(c) and hence not relevant. In view of these facts penalty imposed with reference to transfer pricing adjustment of Rs. 8,36,810/- is upheld. 3.1 Aggrieved by the order of the CIT(A)-15, Mumbai dated 22.08.2014 for A.Y. 2002-03 the assessee has preferred this appeal rai....
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..... 3.3.1 Per contra, the learned D.R. for Revenue placed strong reliance on the decision of the learned CIT(A) in the impugned order in sustaining the levy of penalty under section 271(1)(c) of the Act on the transfer pricing adjustment of ALP at Rs. 3,86,810/-. According to the learned D.R., as per the facts of the case on hand, both the assessee and the TPO used CUP method for benchmarking the international transactions. The AO made the adjustment observing that the assessee-company had sold cold flu tablets at a price of $1.807 per unit to its AEs whereas Yatan Pharmaceuticals sold the tablets to Trigram Ltd., Cypress @$1.95 per unit. This difference of Rs. 3,86,810/- was computed under the CUP method itself. The learned D.R. contends th....
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....he assessee in international transactions was not in conformity with the provisions of section 92C neither in the manner prescribed nor in good faith or due diligence and was constrained to make the transfer pricing adjustment on the differences in prices charged to AEs and others in its international transactions. The learned D.R. submitted that in view of the above, the penalty levied/sustained by the authorities below under section 271(1)(c) of the Act on the transfer pricing adjustment of Rs. 3,86,810/- be upheld. 3.4.1 We have heard the rival contentions of both the parties and perused and carefully considered the material on record. On an appreciation of the facts on record, it is seen that the assessee adopted the CUP method for dem....
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....omputed in accordance with the provisions contained in section 92C and in the manner prescribed under that section, in good faith and with due diligence" A reading of the provisions of Explanation-7 to section 271(1)(c) of the Act (supra), provide that where in the case of an assessee who has entered into an international transaction, defined in section 92B, any amount added or disallowed in computing the total income under section 92C(4), then for the purposes of section 271(1)(c) of the Act, such addition or disallowance is deemed to represent income in respect of which particulars have been concealed or inaccurate particulars have been furnished. In our view the facts of the case on hand would clearly attract the application of Explana....