2015 (3) TMI 237 - AT - Income Tax

Tribunal Upholds Penalty Deletion for 2007-08 Assessment Year

Dy. Commissioner of Income Tax Circle–10(1), Mumbai Versus M/s. Kodak Graphic Communication India Limited

The Tribunal affirmed the Commissioner's order, upholding the deletion of the penalty under section 271AA for the assessment year 2007-08. The assessee's ... Deletion of penalty levied under section 271AA - transfer pricing adjustment disallowance - Non maintenance and furnishment of the required documentation in accordance with section 92B r/w rule 10D - Held that:- it is an admitted fact that the assessee has filed its audit report in Form no.3CEB, highlighting the international transaction and has also done the bench marking of the arm’s length price in relation to the transaction undertaken with the A.E. and how such bench marking has been done after following the most appropriate method. The assessee had submitted its transfer pricing documentation vide letter dated 30th July 2010, before the Assessing Officer as well as before the Transfer Pricing Officer. The statement explaining the self–adjustments done by the company was also furnished which has been reproduced by the Transfer Pricing Officer in his order. The assessee has also complied with all the notices sent by the Transfer Pricing Officer which is evident from the Transfer Pricing Officer’s order where it is mentioned that the assessee has attended from time–to–time in respect to the notice and also submitted clarification and documents. The learned Commissioner (Appeals) has also examined the requirement of each and every clauses of rule 10D, and has come to the conclusion that clause by clause documentation required under rule 10D, has been made by the assessee not only in its transfer pricing study report but also in the documents filed before the Transfer Pricing Officer. Thus, we do not find any infirmity in such an order of the learned Commissioner (Appeals) - Decided against Revenue. Issues:Appeal against deletion of penalty under section 271AA for assessment year 2007-08.Analysis:The appeal was filed by the Revenue challenging the deletion of a penalty of &8377; 82,13,778 under section 271AA for the assessment year 2007-08. The assessee, a subsidiary of a Netherlands-based company, dealt in graphic art products and had international transactions with its associated enterprise (A.E.). The Transfer Pricing Officer suggested a higher adjustment than the assessee's self-made adjustment, leading to penalty proceedings under section 271AA by the Assessing Officer. The assessee contended that it had fulfilled all documentation requirements under rule 10D and section 92D, providing detailed submissions to support its claim. The Assessing Officer, however, imposed the penalty, prompting the appeal.Before the Commissioner (Appeals), the assessee reiterated its compliance with rule 10D, submitting detailed responses and evidence to the Transfer Pricing Officer's queries. The Commissioner analyzed the submissions, finding that the assessee had fulfilled the documentation requirements and had responded adequately to the Transfer Pricing Officer's queries. The Commissioner's detailed findings supported the assessee's position, leading to the deletion of the penalty.During the hearing, the Department Representative argued that the documentation was inadequate, relying on the Transfer Pricing Officer and Assessing Officer's orders. In contrast, the assessee's Counsel emphasized the Commissioner's findings, asserting full compliance with documentation and rule 10D. The Tribunal reviewed the contentions, examined the Commissioner's findings, and noted the assessee's compliance with documentation requirements, including filing audit reports and responding to notices. The Tribunal affirmed the Commissioner's order, upholding the deletion of the penalty under section 271AA. Consequently, the Revenue's appeal was dismissed, and the penalty deletion was affirmed.In conclusion, the Tribunal's decision upheld the Commissioner's order, emphasizing the assessee's compliance with documentation requirements and ruling in favor of deleting the penalty imposed under section 271AA for the assessment year 2007-08.