TaxTMI 
TaxTMI 
2011 (12) TMI 224
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....75/- u/s 271G of the Act stating that the assessee did not furnish information called for by the Assessing Officer for the purpose of determining the ALP under international transaction with an associated enterprise. 2. The assessee firm is engaged in the business of software development and export of the same. It had claimed exemption u/s 10A, in respect of its income from business of Rs. 3,50,13,962/- for the asst. year 2005-06. Since the assessee had entered into international transactions with VLS Systems Inc., USA, vide a letter dated 19.11.2007, the Assessing Officer called for certain information u/s 92D of the Income Tax Act, 1961. The Assessing Officer provided further opportunities on 30.11.2007 and 12.12.2007 to furnish the re....
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...., the assessee had furnished a note on CUP method stating that it was charging for services at around $25 per hour, keeping in view the rates prevailing in the industry in general. He averred that it was also submitted that it is highly impossible for the assessee to furnish the invoices, price quotation, ownership of other companies to establish the rate adopted by such companies for the services rendered by them. Accordingly, it was contended that the Assessing Officer was not justified in levying the penalty for not furnishing the information which was beyond the control of the assessee. It was submitted that the reason for adopting the above referred price was that it is the normal rate adopted by a medium sized company in the industry ....
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....e issued in this regard. Such requirement can be made in the course of any proceedings under the Act. If any such a person fails to furnish any such information or document, a penalty u/s 271G may be directed to be paid. 7. On appeal the CIT(A) held as follows "From the facts of the assessee's case it is not disputed that the assessee had entered into international transactions accordingly it was required to maintain and keep information and documents as required in terms of sec 92D(1). During the course of assessment proceedings the Assessing Officer required the assessee to furnish such information and documents so as to justify the adoption if CUP method, as stated in audit report. However, despite having been given sufficient oppo....
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....e levy of penalty of Rs. 7,73,975/- by the Assessing Officer. In the result, appeal is dismissed." 8. The facts are that the Assessee in respect of its transaction with the Associated Enterprise, has concluded it to be at Arm's length as they are charging $25 per hour which is the usual price in such International transaction. They could not substantiate it with samples of Invoices by other companies because such information is not in public domain. The AO's main objection is that the Assessee had not replied/furnished documents in respect Questions no 2 and 4 raised in his letter 19.11.2007. The Assessee submitted as under in letter dated 19.11.2007: "2. It is seen that you have applied CUP method for calculation of A.L.P. In this....
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....m sized companies are charging from US $20 to US $35 depends upon their services and market conditions. Our organization is also charging our services rates at an average rate of US $25 per hour approximately being a medium sized company in line with the industry." 10. As could be seen from the above note the assessee has already submitted that it is charging for services at around 25$ per hour keeping in view the rates prevailing in the industry in general. Before us, the assessee submitted that it is highly impossible for the assessee to furnish the invoices, price quotation, ownership of other companies to establish the rate adopted by such companies for the services rendered by them. Therefore the Assessing Officer is not at all just....