TaxTMI 
TaxTMI 
2019 (9) TMI 1389
X X X X Extracts X X X X
X X X X Extracts X X X X
....der section 271G of the Act for the reason that the assessee has entered into an international transactions with its AE and has failed to furnish documents or informations as required under section 92D(3) of the Act. For this assessee has raised the identically worded grounds in all three years and facts and circumstances are also identical. Hence, we will take the facts from AY 2012-13 and will decide the issue. The assessee has raised the ground in AY 2012-13 in ITA No.1085/Mum/2019 as under: - "1. General On the facts and circumstances of the case, and in law, the order passed by Hon'ble Commissioner of Income-tax (appeals) ('CIT(A)'] is a vitiated order, as the Hon'ble CIT(A) erred both on facts and in law in confirming the penalty under section 271G levied by the Ld. Transfer Pricing Officer ("TPO") to the appellant's income. 2. On the facts and in the circumstances of the case and in law, the Ld. TPO/ CIT(A) erred in not appreciating that: a) There was no failure on the part of the Appellant keep and maintain any information required by sub-section (1) of section 92D of the Act r.w. Rule 10D of the Income-tax Rules, 1962 ('the Rules'); ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... and other markets as agreed between the assessee and its AEs. The assessee filed its returned income for the AY 2012-13 declaring total income at nil and the return of income was selected for scrutiny by issuing notice under section 143(2) of the Act. During the transfer pricing proceedings, the transfer pricing officer (TPO) disregarded the contention of the assessee and made Transfer Pricing adjustment amounting to Rs. 476,28,58,044/- vide his order dated 29.01.2016 under section 92CA(3) of the Act. The quantum adjustments made by TPO are now pending before the Tribunal in consequent appeal. In the meantime, the TPO issued notice under section 271G initiating the penalty proceedings vide notice dated 25.05.2016 providing the assessee an opportunity to show-cause as to why the penalty should not be levied. The Transfer Pricing Officer levied the penalty under section 271G of the Act vide order dated 29.07.2016 and CIT(A) upheld the order of the Transfer Pricing Officer on the following grounds: - "Non-furnishing of AE and non-AE audited segmental accounts: Non-furnishing of manufacturing of distribution audited segmental accounts; Non-....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... goods and Importer of finished goods. 4. Submission dated 16 December 2015 Response to Annexure dated 18 November 2015 regarding the following details -Product wise segmental profitability given under Note 38 to the financial statements of the Petitioner 5. Submission dated 22 December 2012 Response to Annexure dated 10 November, 18 November and 10 December 2015 providing Policy of the petitioner group 6. Submission dated 7 January 2016 Submission on benchmarking of royalty paid to the AE. 7. Submission dated 7 Submission on selection of overseas AEs as tested party and benchmarking the international transactions accordingly. 8. Submission dated 12 January 2016 January 2016 -Sample invoices of import of raw materials and finished goods. 6. The learned Counsel for the assessee also drew our attention to notice issued under section 92CA(2) read with section 92D(3) of the Act vide F No. 91/JT. CIT /TP-3(3)/TP Ref./2015-16/123 dated 07.09.2015, wherein general information was asked for and he particularly referred to Item No. 19 of the notice, wherein according to AO, the information provided is as regards to the CUP Method. According....
X X X X Extracts X X X X
X X X X Extracts X X X X
....isk credit risk, price risk, inventory risk, forex risk etc. is also stated in FAR analysis, which is enclosed at page 30 of assessee's paper book. It was contended that the information required to be maintained for transaction or class of transaction, the assessee has applied TNMM method and therefore, product wise information was not relevant. Even the Transfer Pricing Officer has not applied or proposed to apply the CUP method and therefore seeking such product wise information is irrelevant. According to the learned Counsel, the assessee is duly comply with the Rule 10D(i)(d) of the Rules. The assessee as regards to the description of functions performed, risk assumed, assets employed, employees of the assessee, a record of economic and market analysis, forecasts, budgets or any other financial estimates prepared by the assessee for the business as a whole and for each division or product separately which may have a bearing in the international transaction entered into by the assessee was completed in TP study report. According to the assessee, it has duly comply with the requirement of Rule 10(d)(i)c) and (f) of the Rules. Further, a record of uncontrolled transactions taken i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....re is no question of assessee adopting the same. Hence, no documentation is maintained as per CUP method. The assessee has also submitted confirmation letters from its AE stating the reason that the AEs had followed the global Transfer Pricing policy for pricing of goods and the details of the components including the costs are filed in assessee's paper book at pages 288 to 289. Further, the AE's have bene selected as the tested party based on FAR analysis and not based on any assessment. Accordingly, the learned Counsel for the assessee stated that all the requirement of Rule 10D(i) including Sub clause have been made with. The learned Counsel for the assessee relied on the following case laws: - "DCIT vs. Leroy Somer & Controls (India) (P) Ltd. 143 TTJ 285 (Del ITAT) CIT vs. Leroy Somer & Controls (India) (P) Ltd. 360 ITR 532 (Del HC) ACIT vs. Gillette India Ltd. (Sister Concern) 168 TTJ 392 (Jp. ITAT) CIT vs. Gillette India Ltd. (Sister Concern) 99 taxmann.com 230 (Raj HC)" 7. On the other hand, the learned Sr. Departmental Representative only stated that the assessee has not maintained audited segment financial results vis-à-vis tra....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he document and information, which was required to be furnished but was not furnished by the assessee within the specified time. The documentation or information should be one specified in rule 10D, which has been formulated in terms of section 92D(1). We noted that this has been clarified this issue in Para 11 to 14 by Hon'ble Delhi High Court by interpreting the provisions as under: - "11. Rule 10D(1) consists of clauses (a) to (m). Clause (m) states any other information, data or document, including information or data relating to the associated enterprises, which may be relevant for determination of arm's length price. A bare perusal of sub-clauses (a) to (m) would indicate that some of the information and details pertain to the assessee and the associated enterprise, their ownership, structure, address, name, broad description of business etc. The assessees are also required to maintain details like, nature and terms of international transaction, property or services provided and quantum and value of each transaction etc. However, some of the clauses are very broad and wide like clause (m) mentioned above. These clauses relate to record of economic and market anal....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ny end or limit to the documentation or information relating to data bases or third parties. When there is general and substantive compliance of the provisions of Rule 10D, it is sufficient. The Legislature was conscious of this fact and, therefore, had specifically stipulated in Section 92D(3) that the Assessing Officer or Commissioner (Appeals) may require a person to furnish any information or document in respect thereof and on failure of the said person to furnish the documentation within the specified time, penalty under Section 271G can be imposed. Thus, for imposing penalty the Revenue must first mention the document and information, which was required to be furnished but was not furnished by the assessee within the specified time. The documentation or information should be one specified in Rule 10D, which has been formulated in terms of Section 92D(1) of the Act. Looking from any quarter and angle, the appeal of the Revenue is misconceived, totally lacking in merits and is, therefore, dismissed." 9. Similarly, Jaipur Tribunal in assessee's sister concern case in the case of Gillette India Ltd (supra) has considered this issue and Hon'ble High court of Rajasthan High Cour....