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2019 (10) TMI 147

..... particulars of such income during assessment proceedings? - HELD THAT:- 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 case 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 .....

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..... ith due diligence. 3. The Ld. CIT(A) has erred in law and on the facts and circumstances of the case in holding that the appellant has concealed the particulars of its income / furnished inaccurate particulars of income as the appellant had made full and complete disclosure. 4. The Ld. CIT(A) has erred in law and on the facts and circumstances of the case by not appreciating that where 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. CI .....

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..... rmed the penalties by dismissing the appeals. Feeling aggrieved, the Revenue has come up before the Tribunal by way of filing the present appeals. 5. We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case. 6. Undisputedly, 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 .....

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..... sue on which penalty has been levied/upheld by AO/CIT(A) has since become debatable as Hon ble High Court has admitted the appeal by framing substantial question of law and relied upon the decision rendered by Hon ble Delhi High Court in CIT vs. Liquid Investment & Trading Co. in ITA 240/2009 order dated 05.10.2010, Hon ble Bombay High Court in CIT vs. Nayan Builders & Developers (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 o .....

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..... y case it was a case of duplication of services, is not only unsubstantiated but contrary to the material on record. The mere fact that the TPO determined Nil ALP of the international transactions cannot be a reason to impose penalty u/s 271(l)(c) of the Act. 10. Undisputedly, assessee has challenged the addition on the basis of which penalty has been levied u/s 271(1)(c) of the Act 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 benchmark .....

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