TMI Blog2021 (5) TMI 102X X X X Extracts X X X X X X X X Extracts X X X X ..... Such sale of assets after valuation and the adjustment by the TPO by resorting to CUP method cannot be a ground for levy of penalty u/ s 271(1)(c). The case of concealment or furnishing of inaccurate of particulars of income cannot attract the provisions of penalty u/ s 271 (1)(c). Hence, we hold that penalty levied on this ground has been rightly deleted by the ld. CIT (A). Disallowance on account of expenses - claim of the assessee with regard to personnel expenses, operative expenses and finance expenses cannot be accepted as the assessee has not carried out any business activities during the year under consideration - HELD THAT:- On going through the assessee's activities it can be held that the assessee is continuing to carr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sh. Amit Shukla, Judicial Member And Dr. B. R. R. Kumar, Accountant Member For the Assessee : Sh. Ravi Sharma, Adv. And Sh. Rishabh Malhotra, Adv. For the Revenue : Sh. Ved Prakash Mishra, Sr. DR ORDER PER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER: The present appeal has been filed by the revenue against the order of ld. CIT(A)-19, New Delhi dated 16.12.2016. 2. Following grounds have been raised by the revenue: 1. On the facts and circumstances of the case, the ld. CIT (A) has erred in deleting the penalty u/ s 271(1)(c) of the IT Act, relevant to assessment year 2010-11. 3. Ikea Trading (India) Private Limited is an Indian company incorporated in India on 13th June 1994. The assessee, a Merchant Exporter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Reimbursement of rework and other expenses 42,419,195 - 6. For arriving at the ALP of the international transaction pertaining to transfer of fixed assets to AEs, the assessee had relied upon valuation report of an external valuer, who had valued these assets at ₹ 57, 501,821/-. The sale proceeds received from the AE were much higher at ₹ 63,680,884 /- than the valuation made of ₹ 57,501, 821/-. 7. During the assessment proceedings, the TPO disregarded the valuation report of an external valuer relied upon by the assessee and instead, used Written Down Value ( WDV ) of such assets for determining the arm s length price. The TPO held that the ALP of the fixed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounds that the claim of the assessee with regard to personnel expenses, operative expenses and finance expenses cannot be accepted as the assessee has not carried out any business activities during the year under consideration. 11. The assessee submitted that the observations of the Assessing Officer were not correct on facts of the case as the assessee has conducted business operations as mentioned in the table below: S. No. Transaction Flow Supporting Documents 1 Goods purchased by Ikea India from the domestic Vendor/ Manufacture (i. e. Manufacturer to Ikea India) Purchase Invoice from the Vendor in India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in connection with terms of contract. It cannot be said that the business ceased to exist just because there was no activity of trading or manufacturing during the given period. The assessee has undertaken the activities of reworking and removing of defects in respect of goods sold earlier and also exported certain goods. The assessee has also filed the statutory returns. The disallowance has been made on the grounds that the business has not been carried out but not on the grounds that the expenses are not related to the business. 13. With regard to the penalty levied on such issue, we find that such disallowance do not fall under the category of furnishing of inaccurate particulars or concealment of such particulars of income. 14. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r erroneous. In this case, there is no finding that any details supplied by the assessee in its return were found to be incorrect or erroneous or false. Such not being the case, there would be no question of inviting the penalty under section 271(1)(c). Mere making of a claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. 18. On going through the entire facts and circumstances of the case, we hereby confirm the order of the ld. CIT (A) which held that it a mere disallowance of an expense does not warrant a penalty for filing inaccurate particulars of income u/s 271(1)(c). 19. In the result, the appeal of the revenue is dismissed. Order Pronou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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