2020 (9) TMI 33

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....ed reads 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'); b) The appellant was not required to maintain the following information/ documents called for under section 92D(3) of the Act: -Information vis-à-vis the audited segmental account for AE and non-AEs transactions undertaken as the Appellant had select the foreign AE as the tested party in its TP study benchmarking analysis; -Information vis-à-vis the audited segmental accounts for its manufacturing and distribution segment as it operated as ....

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....electing the Appellant as the tested party and consequently made that T.P adjustment. 5. Separately, the TPO also initiated penalty proceedings under section 271G of the Act for non-furnishing of certain TP documentation with respect to the aforesaid international transactions of import of raw material and finished goods and export of finished goods. The Ld.CIT(A) upheld the order of the TPO on the following grounds:- (a) Non-furnishing of AE and non-AE audited segmental accounts; (b) Non-furnishing of manufacturing and distribution audited segmental accounts; (c) Non-furnishing of documents regarding choice of foreign AE as tested parts and (d) Non-furnishing of documents regarding applicability of TNMM as MAM 6. Aggrieved by the order of the Ld. CIT(A), the assessee is in appeal before us. 7. At the Outset the learned counsel of the assessee Ms. Hirali Desai contended that the issue is squarely covered by ITAT order in the group concern case namely Procter & Gamble Home Products Private Limited in ITA No 1095 to 1097/Mum/2019, A.Y 2012-13, 2013-14 and 2014-15 order dated 09.09.2019, wherein on identical facts and similar learned CIT(ap....

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.... overseas AEs as tested party and benchmarking the international transactions accordingly. 8. Submission dated 12 January 2016 -Sample invoices of import of raw materials and finished goods. In this case also the learned CIT appeals has noted that assessee has maintained following documents S. No. Submission Information/ document provided 1. Submission dated 8 April 2015 Transfer Pricing Study report, copy of Form 3CEB, the financial statements of the Assessee, Computation of Income, Tax Audit report and the relevant agreements with its Associated Enterprises (AEs). 2. Submission dated 12 October 2015 The copy of ledger account of the AEs in Assessee's books, details of international transactions benchmarked using Transactional Net Margin Method ('TNMM') considering the overseas AEs as tested parties, details of payment of royalty and payment for intra group services. 3. Submission dated 2 November 2015 Responses to Annexures issued by your goodself seeking details on Import of raw material, Export of finished goods and Import of finished goods. 4 Submission dated 16 December 2015 Response to Annexure dated 18 Nov....

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....he assessee is to support its transfer pricing study report and international transaction entered into with its AE that the assessee has completely complied with Rule 10D(i) of the Rules. We noted that from the letter issued by revenue dated 07.09.2015 i.e. notice under section 92CA(2) read with section92D(3) of the Act requiring information to be furnished in connection with the TP proceedings that a general notice is issued by the Assessing Officer. We noted that this issue has been considered by Hon'ble Delhi High Court in the case of CIT vs. Leory Somer & Controls (India) (P) Ltd. (2014) 360 ITR 532 (Del), wherein it is held that when there is a general notice and no specific information of document which is required to be submitted by the assessee under section 92D(3) of the Act, is asked for, the penalty levied under section 271G cannot be sustained. We noted that the assessee in the present case has made 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 the Commissioner (Appeals) may require a person to furnish any infor....

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....ty market quotations, agreement contracts with unrelated enterprises etc. The word used in sub-section (3) to Rule 10D is "may". 13. It is clear from the reading of Section 10D (sic) that it will include almost anything and everything relating to international transactions, including data bases, reports, publications, data bases from Governments or bodies outside India. Some other stipulations are assessee specific and not general, broad or heterogeneous. 14. Sub-rule (4) further states that the documents specified in sub-rules (1) and (2), as far as possible, be contemporaneous and should be latest by the specified date referred to in Section 92F(iv), i.e., due date in Explanation 2 below Section 139(1). Thus, indicating the documentation/information may be floating, transient and changeable. Constant assimilation may be required. Besides, data/information can also vary. The tribunal has rightly concluded that with such a broad rule, which requires documentation and information voluminous and virtually unlimited, Section 271G has to be interpreted reasonably and in a rational manner. Information or documentation, which is assessee specific or sp....