AI Drafter 
TaxTMI 
TaxTMI 
2020 (3) TMI 603
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....1 (for short "the Act"). 2. Brief facts are, the assessee, a resident company, is engaged in the business of importing rough diamond, getting them cut & polished and thereafter exporting to various parties outside the Country including the Associated Enterprises (AEs) of the assessee situated abroad. In the transfer pricing study report, the assessee benchmarked the international transaction with the AEs relating to sale of polished diamond amounting to Rs. 27,65,09,328, adopting Transactional Net Margin Method (TNMM) as the most appropriate method with operating profit / sales as the profit level indicator (PLI). Since, the margin shown by the assessee @ 2.70% is within the tolerance range of the average margin of the comparables worked....
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....rved that it is extremely difficult for a diamond trader / manufacturer to identify conversion of a particular rough diamond into a polished diamond. Therefore, it is very difficult for the assessee to identify each rough diamond piece-wise and equally difficult to identify each cut and polished diamond vis-a-vis the original rough diamond from which it was cut and polished. He observed, though, the Transfer Pricing Officer called for the segment-wise Profit & Loss account in respect of exported as well as all the diamond, however, ultimately, he accepted the arm's length price declared by the assessee. The learned Commissioner (Appeals) observed, the Transfer Pricing Officer could have worked out the gross profit and net profit by averagin....
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....t. In support of such contention, the learned Authorised Representative relied upon the following decisions:- i) PCIT v/s D. Navinchandra Exports Pvt. Ltd., R-Tax Appeal no.788/2018, dated 9th July 2018 (Guj.); and ii) DCIT v/s Ankit Gems Pvt. Ltd., [2019] 106 taxmann.com 243 (Mum.). 7. We have considered rival submissions in the light of the decisions relied upon and perused the material on record. The material on record makes it clear that the assessee has maintained primary books of account / documents in respect of its business activity. The fact that the documents relating to transaction with the AE have also been maintained by the assessee is evident from the transfer pricing study report, wherein, the transaction....
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....l facts and circumstances, the Tribunal in Ankit Gems Pvt. Ltd. (supra) observed as under:- "5. We have considered rival submissions and perused material on record. We have also applied our mind to the decisions relied upon. On a careful reading of the penalty order passed under section 271G of the Act, it is evident, the Transfer Pricing Officer has proceeded to impose penalty under the aforesaid provision alleging that the assessee has failed to furnish certain information/documents which prevented him from determining the arm's length price properly. However, on a perusal of the orders passed by the Departmental Authorities as well as the material placed on record, it is noticed that the assessee has maintained books of acco....
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....case, it is not a fact that the assessee has not maintained any information as required under section 92D(1) r/w rule 10D(1). The facts on record clearly indicate that the assessee indeed has maintained a number of information/documents as required under the statutory provisions. Further, the assessee has also explained why it is not possible to furnish certain information sought by the Transfer Pricing Officer qua applicability of CUP method. In this regard, detailed written submission has been filed by the assessee before the Transfer Pricing Officer which has been properly evaluated by the learned Commissioner (Appeals) and the difficulty in maintaining the information sought by the Transfer Pricing Officer has been well explain....