TaxTMI 
TaxTMI 
2011 (11) TMI 504
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....ct claim for depreciation on non-compete fees and difference in the claim of deduction under Section 10A of the Act arose out of exclusion of foreign exchange expenditure from total turnover as well as export turnover. 4. When the matter was taken up, learned D.R. assailing the order of ld. CIT(Appeals), submitted that non-compete fee was not an intangible asset as per Section 32(1)(ii) of the Act and the claim of the assessee was totally baseless. In so far as exclusion of foreign exchange expenditure was concerned, learned D.R. submitted that assessee had initially included it as a part of its export turnover overlooking the definition of export turnover. Therefore, according to him, assessee was liable for penalty for raising the claims which were not at all acceptable in law. 5. Learned A.R. of the assessee, on the other hand, submitted that in so far exclusion of foreign exchange expenditure from export turnover as well as total turnover while working out deduction under Section 10A of the Act was concerned, assessee was successful in its appeal before CIT(Appeals) in quantum proceedings and further appeal of the Revenue was dismissed by the Tribunal in I.T.A. No. 2148/Mds/2....
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....rticulars. As held by Hon'ble Apex Court in the case of Reliance Petroproducts ((P.) Ltd. (supra), making an incorrect claim in law would not tantamount to furnishing of inaccurate particulars. Just because assessee's claim of deduction under Section 10A was not accepted by the Revenue, would not be sufficient to levy a penalty under Section 271(1)(c) of the Act. We, therefore, find that ld. CIT(Appeals) was justified in deleting the Penalty. No interference is called for. 7. Second appeal of the Revenue is regarding deletion of penalty levied on the assessee under Section 271AA of the Act. 8. Short facts apropos are that a reference under Section 92CA(1) of the Act was made by the Assessing Officer to the Transfer Pricing Officer (TPO) with reference to transactions reported by the assessee in Form No.3CEB. In the proceedings before the TPO, assessee had submitted the details called for by the TPO through a questionnaire issued on 19.8.2005. Ld. TPO came to a conclusion that assessee had not gathered and maintained sufficient information as envisaged under Rule 10D of Income-tax Rules, 1962 (in short "the Rules") for its claim that Cost Plus Method adopted by it for determining ....
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.... he has not gathered and maintained information as envisaged under Rule 10D. At the last stage of the Transfer Pricing Proceedings, TNMM method was adopted to determine the Arm's Length Price. Hence, the assessee becomes liable for penalty for non-maintenance of the required documentation. The Assessing Officer may initiate Penalty Proceedings u/s 271AA of the I.T. Act, 1961. 5. The case was discussed with the assessee's representative. After examining of international transactions as required, no adjustment is considered necessary to the value of international transactions entered into by the assessee. Accordingly, the international transactions referred, are accepted to be at Arms Length Price. It is hereby clarified that the findings and discussions made in this order are applicable only in respect of reference received for assessment year 2003-04 and not for subsequent assessment years." 13. Submission of the assessee is that it had maintained all records which were required under Rule 10D of the Rules. What comes out of the proceedings before the TPO and the Assessing Officer are that they had not come to any findings regarding the specific failure, if any, of the assessee. ....
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....d it to be a part of the profits derived from exports, for a reason that the deposits from which such interest was earned was kept as margin money with banks for getting Letter of Credit and bank guarantee, etc. However, this claim was not accepted in the assessment proceedings by the A.O. who treated it as income from other sources. Such treatment was confirmed by the CIT(Appeals) on an appeal filed by the assessee. Second item was a sum of Rs. 14,22,000/- coming under the head "Miscellaneous Income" which was again treated by the assessee as a business income, on which also deduction was claimed under Section 10B of the Act. A.O. was of the opinion that such miscellaneous income could not be treated as business income but had to be considered as income from other sources. So, this was also excluded for the purpose of computing deduction under Section 10B of the Act. This was also confirmed by ld. CIT(Appeals) on assessee's appeal. The third item was with regard to the mode of computation of deduction under Section 10B of the Act where assessee had not deducted foreign exchange expenditure from its export turnover. A.O. held that this was to be excluded from export turnover, but n....