TMI Blog2019 (9) TMI 1389X X X X Extracts X X X X X X X X Extracts X X X X ..... ase has made substantive compliance of the provisions of rule 10D, it is sufficient. The Legislature was conscious of this fact and, therefore, had specifically stipulated in section 92D(3) that the AO or the Commissioner (Appeals) may require a person to furnish any information or document in respect thereof and on failure of the said person to furnish the documentation within the specified time, penalty under section 271G can be imposed. Thus, for imposing penalty the Revenue must first mention the document and information, which was required to be furnished but was not furnished by the assessee within the specified time. The documentation or information should be one specified in rule 10D, which has been formulated in terms of section 92D(1). Assessee has sufficiently complied with the requirement of Rule 10D(i) of the Rules and moreover the AO has not raised any specific issue which specific documents is not produced under section 92D(3), hence, we conclude that the assessee has furnished all the informations as asked for by the AO and unless and until a specific defect is pointed out in the submissions of documents, penalty under section 271G cannot be levied. We delete the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransactions undertaken as the Appellant had select the foreign AE as the tested party in its TP study benchmarking analysis; -Information vis- -vis the audited segmental accounts for its manufacturing and distribution segment as it operated as an entrepreneur in the Indian market and therefore, does not have such segmental bifurcation. c) Notice under section 92D(3) of the Act can be issued, only if after application of mind, the Ld. TPO requires more information for determination of the Arm s Length price. d) Notice under section 92D(3) of the Act cannot be vague or casualty issued, but must require furnishing of specific information or documents which the taxpayer failed to furnish under section 92CA(2) of the Act. 3. On the facts and circumstances of the case and in law, the Ld. TPO/ CIT(A) erred in not taking cognizance of section 92C(3), 92CA(2) and 92CA(3) of the Act, which requires: a) the appellant to furnish evidence in support of its own determination of the arm s length price wherein the same has been maintained by the Appellant in good faith in terms of above mentioned section; and b) The ld. TPO to determine arm s length price on the basis of material ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer has initiated the penalty proceedings on International Transactions of import of raw material, import of spare of finished goods, export of raw materials and export of finished goods. The only allegation of the Transfer Pricing Officer is that the assessee has not maintained a sufficient document as prescribed under Rule 10D of the Income Tax Rules, 1962 (hereinafter the Rules ). It means that the short dispute before us is regarding levy of penalty under section 271G of the Act is for non-maintenance of audited segmental financial vis- -vis the transactions of the associated enterprise and non-associate enterprise. The learned Counsel stated that the assessee has maintained following information as per Rule 10D, which has been submitted before the Transfer Pricing Officer and its transfer pricing study as under: - Analysis of the functions performed, risks assumed and assets employed by the petitioner; Analysis of comparing the price of international transactions under consideration with comparable third party transactions; Analysis of the industry in which the petitioner operates; Selection of the most appropriate method and an analysis to conclude that the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice, wherein according to AO, the information provided is as regards to the CUP Method. According to the learned Counsel this information required under section 92CA(2) of the Act is very general information running into six pages. The learned Counsel for the assessee stated that the assessee has maintained and furnished the documents and information under Rule 10D of the Rules i.e. the description of the ownership structure of the assessee with details of shares and other ownership interest held therein by way of submitting financial statements, from 3 CEB and transfer pricing study Report. He stated that the relevant information is available on page 15 of the assessee s paper book before Tribunal. According to him, the assessee has duly comply with the requirement of Rule 10D(i)(a) of the Rules is regards to the profile of multinational group. He stated that profile of the multinational group is forming part of TP study report and form No. 3CCB which were filed before the Transfer Pricing Officer as well as before CIT(A) and have been now before Tribunal which is enclosed at page Nos 13 to 16 of the assessee s paper book. Thereby, he contended that the assessee has duly compl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement of Rule 10(d)(i)c) and (f) of the Rules. Further, a record of uncontrolled transactions taken into account for analyzing their compatibility with the international transactions, the assessee applied external TNMM method and therefore, there was no requirement for it to maintain information with respect to sales made by AE to third parties and accordingly AE s account supplied similar finished goods to any third party in India. It was contended by the learned Counsel for the assessee before us that information under section 92(3) of the Act is required to be maintained with respect to method and analysis of debited by the assessee and not with respect to the method that could have been adopted according to the Transfer Pricing Officer, further clarified that in case, the description of the uncontrolled transactions considered by the assessee under external TNMM method is provided in assessee s paper book at page Nos 102 to 105 and 110 to 114. In regard to the analysis performed to evaluate the comparability of uncontrolled transactions with the relevant international transactions i.e. search process is already given in the TP study report. Even the contention of the Transfer P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see has not maintained audited segment financial results vis- -vis transactions of the associate enterprises and non-associate enterprises and hence, the assessee has not maintain proper data for transfer pricing of international transactions. He only relied on the penalty order passed by the AO and further on the order of CIT(A) confirming the levy of penalty. 8. We have heard rival contentions and gone through the facts and circumstances of the case. From the above, we noted that the main allegation of the revenue is that of non-furnishing of audited AE and non AE segmental as well as documents regarding choice of foreign entity as tested party. We also noted that any other reason for levy of penalty is for non-furnishing of audited manufacturing and distribution of segmental accounts. Further, reason for levy of penalty is non-furnishing of documents on applicability of TNMM as per Rule 10D. We noted from the arguments of the learned Counsel for the assessee as noted above in detail and the details submission made by the assessee is to support its transfer pricing study report and international transaction entered into with its AE that the assessee has completely complied wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bove. These clauses relate to record of economic and market analysis, forecasts, budget and other financial estimates prepared by an assessee, record of uncontrolled transactions for realising their comparability with international transactions including record of nature, terms and conditions relating to uncontrolled transactions with third parties, record of analysis performed to evaluate comparability of uncontrolled transactions. These are general clauses relating to data, details etc. of third parties etc. These details, data, information etc. can be voluminous, fluctuating and otherwise capacious. 12. Sub-rule (3) to Rule 10D states that information specified in Rule 1 shall be supported by authentic documents, which may include the documents mentioned in sub-clauses (a) to (g). These include official publication report, status and data bases of Government of countries of residents of associated enterprises or other countries, market research studies, price publications including stock exchange and commodity market quotations, agreement contracts with unrelated enterprises etc. The word used in sub-section (3) to Rule 10D is may . 13. It is clear from the reading of Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Hon ble High court of Rajasthan High Court in the case of CIT v. Gillette India Ltd. has finally held as under: - 8. Copy of the notice dated 23.03.2011 issued by the Assessing Officer has not been filed on record by the Revenue along with the present grounds of appeal. We do not know what was requisitioned and asked for by the said notice and which/what documents and details were supplied. We also do not know whether any extension of time was prayed for or granted by the Transfer Pricing Officer and whether any hearing was fixed by the Transfer Pricing Officer pursuant to notice dated 12.03.2007. It appears that the Transfer Pricing Officer had asked for specific details and documents vide letter dated 12.06.2008 and these details were fully complied with on 25.06.2008 and 23.07.2008. Compliance of the letter dated 12.06.2008 was made within period of 30 days on 25.06.2008 and then subsequently on 23.07.2008. The date 23.07.2008 is within 60 days of issue of notice/letter dated 12.06.2008. We do not know the documents filed on 25.06.2008 and which documents or details were subsequently filed on 23.07.2008. There is no discussion on the said aspect in the order passed by t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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