TaxTMI 
TaxTMI 
TaxTMI 
2011 (11) TMI 82
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.... provisions of section 271, if any person fails to keep and maintain any such information and document as required by sub-section (1) or sub-section (2) of section 92D, the Assessing Officer or Commissioner (Appeals) may direct that such person shall pay, by way of penalty, a sum equal to two per cent. of the value of each international transaction entered into by such person. The provisions of Sec.271AA were introduced by the Finance Act, 2001, w.e.f. 1-4-2002. Sec.92D provides as follows: "Sec.92D: Maintenance, keeping of information and document by persons entering into an international transaction.-(1) Every person who has entered into an international transaction shall keep and maintain such information and document in respect thereof, as may be prescribed. (2) Without prejudice to the provisions contained in sub-section (1), the Board may prescribe the period for which the information and document shall be kept and maintained under that sub-section" Rule 10D of the Income Tax Rules, 1962 prescribes the information and documents required to be maintained by every person who has entered into an international transaction. The same reads as follows: "10D. Information and do....
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.... was applied in each case ; (j) a record of the actual working carried out for determining the arm's length price, including details of the comparable data and financial information used in applying the most appropriate method, and adjustments, if any, which were made to account for differences between the international transaction and the comparable uncontrolled transactions, or between the enterprises entering into such transactions ; (k) the assumptions, policies and price negotiations, if any, which have critically affected the determination of the arm's length price ; (l) details of the adjustments, if any, made to transfer prices to align them with arm's length prices determined under these rules and consequent adjustment made to the total income for tax purposes ; (m) any other information, data or document, including information or data relating to the associated enterprise, which may be relevant for determination of the arm's length price. (2) Nothing contained in sub-rule (1) shall apply in a case where the aggregate value, as recorded in the books of account, of international transactions entered into by the assessee does not exceed one crore rupees : Provided that....
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....iness of manufacturing and distributing non-pharmaceutical healthcare products. They include all kinds of surgical dressings, bandages, wound closures/dressings, varieties of surgical instruments, casting materials, supports, rehabilitation equipment, all kinds of orthopedic implements, plates, screws, nails and all types of material and equipment for arthroscopic and minimally invasive surgery. The Assessee during the previous year relevant to AY 03-04 had entered into international transactions with its Associate Enterprises(AE) and therefore in terms of Sec.92 of the Act, income from such transactions has to be computed having regard to the Arm's Length Price. The Assessee did not file report of an Accountant in Form No.3CEB as required by Sec.92E of the Act in respect of the international transaction entered into by it with its AE. The Assessee had paid penalty for such default u/s.271BA of the Act. In the course of assessment proceedings, the Assessee filed a Transfer Pricing Report in respect of International transactions with its AE on 3.1.2006. Thereafter the AO called upon the Assessee to furnish information and documents relating to the International Transaction with AE. ....
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.... produced the same before the AO from time to time as and when required by the learned Assessing Officer. It was submitted that these information and documents are only required to be maintained by the Assessee and there is no statutory requirement that they should be filed along with the return of income. The AO however held that the Assessee failed to maintain information and documents as prescribed by Rule 10D of the Rules and imposed penalty u/s.271AA of the Act. 6. Before CIT(A), the Assessee pointed out that it had filed a Transfer Pricing Study Report before the AO which contained all the details as are required by Rule 10D of the Rules. It was also pointed out that the Assessee in its submission dated January 10, 2006, filed the following details in respect of the international transactions entered into by it during the financial year ended March 31, 2003: - Key international transactions entered into by the Assessee with associated enterprises; and - Details of the methods used by the Assessee to determine the arm's length nature of the international transactions Further, the fact that the Assessee had duly maintained the prescribed documentat....