ITAT deleted penalty under section 271(1)(c) imposed on transfer...

ITAT deleted penalty under section 271(1)(c) imposed on transfer pricing adjustments involving manufacturing and trading segments. TPO made adjustments by using PBIT/Sales instead of assessee's PBDIT/Sales as Profit Level Indicator, modifying filters and comparables for benchmarking, and excluding certain operating items. Revenue authorities levied penalty solely because TPO's adjustments were upheld by CIT(A) and partly confirmed by ITAT. ITAT held that assessee furnished accurate details in return and transfer pricing study report using prescribed TNMM method under section 92C. Adjustments arose from interpretational differences on debatable issues, not inaccurate particulars. Neither TPO nor CIT(A) found arm's length price computed without good faith or due diligence. Explanation 7 to section 271(1)(c) governing transfer pricing penalties was neither invoked nor discussed. Penalty unsustainable as necessary conditions under Explanation 7 not satisfied. Appeal allowed.