TMI Blog2015 (11) TMI 1622X X X X Extracts X X X X X X X X Extracts X X X X ..... e the pricing is done in good faith and with due diligence. In the present case, the transfer pricing of the assessee is based on a study conducted by an independent expert, M/s.Price Waterhouse Coopers, Chartered Accountants. 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 transfer pricing study, questionable to us anyway, approves TNMM method for determination of arm’s length price - a proposition which has not been specifically rejected by the Revenue authorities. On these facts, lack of due diligence in determining the arm’s length price is neither indicted nor can be inferred. In such a s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gaged in the business of providing investment advisory services. For its international transactions, transfer pricing study report was filed alongwith the return of income. The matter was referred to the Transfer Pricing Officer (TPO) for the determination of arm s length price in respect of international transactions entered with the Associated Enterprises of the assessee. 5. After considering the facts and the submissions and the transfer pricing study report of the assessee, the TPO recommended an upward adjustment of ₹ 4,03,58,886/-. Objections were raised before the DRP, which were dismissed. The assessment was completed by making upward adjustment of ₹ 4,03,58,886/-. Simultaneously, penalty proceedings were initiated un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... method. It is the say of the Ld. Counsel for the assessee that in so far as the transfer pricing additions are concerned, Explanation -7 is the relevant explanation to be considered alongwith section 271(1)(c) of the Act. Strong reliance was placed on the decision of the Tribunal in the case of RBS Equity (India) Ltd., 13 Taxman.com 30 (Mum). Per contra, Ld. DR strongly supported the findings of the Revenue authorities. 9. We have given careful consideration to the orders of the authorities below. We have also considered carefully the decision of the Co-ordinate Bench relied upon by the Ld. Counsel for the assessee. The undisputed fact is that the assessee had adopted TNMM method as most appropriate method for determining the arm s leng ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roves TNMM method for determination of arm s length price - a proposition which has not been specifically rejected by the Revenue authorities. On these facts, lack of due diligence in determining the arm s length price is neither indicted nor can be inferred. In such a situation, it cannot be said that the assessee has not determined the arm s length price in accordance with the scheme of section 92C in good faith and with due diligence. The conditions precedent for invoking Explanation-7 to section 271(1)(c) did not exist on the facts of this case. 11. We, therefore, set aside the order of Ld. CIT(A) and direct the AO to delete the impugned penalty. 12. In the result, the appeal filed by the assessee is allowed. Order pronounced i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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