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2019 (10) TMI 147

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..... e of CIT vs. Liquid Investment & Trading Co. [2010 (10) TMI 1021 - DELHI HIGH COURT] confirmed the order passed by the Tribunal setting aside the penalty confirmed by the ld. CIT (A) u/s 271(1)(c) on the ground that the issue has become debatable - We are of the considered view that the penalty levied by the AO and confirmed by the ld. CIT (A) for AYs 2007-08 & 2008-09 is not sustainable in the eyes of law, hence ordered to be deleted. Consequently, appeals filed by the assessee are allowed. - ITA No.4509/Del./2016, ITA No.4510/Del./2016 - Dated:- 1-10-2019 - Shri N.K. Billaiya, Accountant Member And Shri Kuldip Singh, Judicial Member For the Assessee : Shri Sumit Mangal, Advocate, Shri Saksham Singhal, CA For the Revenue : Smt. Nid .....

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..... ere two views are possible, no penalty is leviable under section 271(1)(c) of the Act. 5. The Ld. CIT(A) has erred in law and on the facts and circumstances of the case by not appreciating that the transfer pricing additions, made by the Learned Transfer Pricing Officer ("Ld. TPO") /Learned Assessing Officer (" AO") and sustained by the Ld. CIT(A), were made on account of difference of opinion between the appellant and the Ld. TPO. 6. The Ld. CIT(A) has erred in not considering the difference between assessment proceedings and penalty proceedings; and thereby applying a different burden of proof on the appellant (that of proving the case on merits) as opposed to the burden of proving disclosure made bone fide, in good fa .....

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..... utedly, in AY 2007-08, ld. CIT (A) vide impugned order confirmed the penalty levied by the AO on the income of ₹ 2,08,97,308/- qua cost recharges to AEs and confirmed the penalty levied by the AO qua transfer pricing adjustment pertaining to addition of ₹ 1,94,52,958/- on account of cost recharges to AEs for AY 2008- 09. It is also not in dispute that for AY 2007-08, the Tribunal in quantum appeal has deleted the addition on account of SAP maintenance charges and cost sharing charges and for AY 2008-09, the Tribunal deleted the addition on account of server charges and cost sharing charges. It is also not in dispute that so far as addition made on TP adjustment on account of sales commission is concerned, Hon ble Delhi High Cour .....

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..... opers (2015) 56 taxmann.com 335 (Bombay) and coordinate Bench of the Tribunal in Mitsui Prime Advanced Composites India (P.) Ltd. vs. DCIT (2016) 178 TTJ 490 (Delhi-Trib.). 9. When undisputedly addition has been made by the TPO on account of transfer pricing adjustment qua the international transactions by using a particular method, TNMM in this case, with best of its wisdom as per provisions contained u/s 92C, any further addition by changing the Most Appropriate Method (MAM) from TNMM to CUP by the TPO is not sufficient to attract provisions contained u/s 271(1)(c) of the Act as it is a mere change of opinion. Identical issue has been decided by the coordinate Bench of the Tribunal in case of Mitsui Prime Advanced Composites India (P.) Lt .....

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..... before the Hon ble Delhi High Court vide ITA 732/2018 & Ors. and Hon ble High Court vide order dated 12.11.2018 framed the following substantial question of law :- "Whether Income Tax Appellate Tribunal was right in holding that Royalty and Sales Commission paid were separate and independent international transactions which were required to be benchmarked separately by applying the Comparable Uncontrolled Price Method?" 11. It is settled principle of law that when substantial question of law has been framed by the Hon ble High Court in the appeal filed by the assessee challenging the addition confirmed by the Tribunal, the issue become debatable and no penalty in such circumstances can be levied. Hon ble Delhi High Court in c .....

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