Deputy Commissioner of Income-tax, Circle - 1(1), Pune V. M/s. Applied Micro Circuits India Private Limited, Pune

ITA 2620/PUN/2017

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 5809 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 29-04-2021
• Assessment Year: 2010-2011
• Appeal Filed On: 13-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MAHADEVAN A M KRISHNAN
• Assessee Lawyers: NIKHIL KULTHE
• Keywords: Transfer pricing; International transaction
• Section: 271(1)(c)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUNE BEFORE SHRI R . S . SYAL , VP AND SHRI S.S. VISWANETHRA RAVI , JM . / I TA NO. 2620 /PUN/20 17 / ASSESSMENT YEAR : 2010 - 11 THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE - 1(1), PUNE. ....... / APPELLANT / V/S. M/S. APPLIED MICRO CIRCUITS INDIA PVT. LTD. 601, 6 TH FLOOR, CEREBRUM IT PARK, KALYANI NAGAR, PUNE - 411 006. PAN : AAHCA3503C / RESPONDENT A SSESSEE BY : SHRI NIKHIL KULTHE & SHRI SIDDHESH CHAUGULE REVENUE BY : SHRI MAHADEVAN A M KRISHNAN / DATE OF HEARING : 29.04.2021 / DATE OF PRONOUNCEMENT : 29 .04.2021 / ORDER PER R.S. SYAL, VP : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 18.08.2017 PA * SSED BY THE LD. CIT(APPEALS) - 13, PUNE IN RELATION TO THE ASSESSMENT YEAR 2010 - 11 , DELETING PENALTY OF RS.74,87,580/ - IMPOSED BY THE ASSESSING OFFICER (AO) U/S.271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 2 ITA NO. 2620 /PUN/20 17 A.Y. 2010 - 11 2. BRIEFLY STATED , THE FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF DESIGNING AND DEVELOPMENT OF CHIP, INTEGRATED CIRCUITS AND STORAGE COMPONENTS AND PROVIDING ALLIED SERVICES FOR ITS HOLDING COMPANY AMCC, USA. THE ASSESSEE FILED RETURN DECLARING TOTAL INCOME AT RS. NIL AND BO OK PROFIT OF RS.2,25,12,625/ - U/S.115JB OF THE ACT. THE ASSESSEE CLAIMED DEDUCTION U/S.10A OF THE ACT AT RS.2.05 CRORE ON THE INCOME OF ITS STPI UNIT. BECAUSE OF CERTAIN INTERNATIONAL TRANSACTIONS ENTERED INTO BY THE ASSESSEE, THE A O MADE A REFERENCE TO TH E TRANSFER PRICING OFFICER ( TPO ) FOR DETERMINING THE ARMS LENGTH PRICE OF THE INTERNATIONAL TRANSACTIONS. THE TPO PASSED ORDER U/S.92CA(3) OF THE ACT PROPOSING TRANSFER PRICING ADJUSTMENT OF RS.2,74,67,960/ - . IN THE FIRST APPEAL, THE TRANSFER PRICING ADJU STMENT WAS REDUCED TO RS.2,20,29,573/ - . THE ASSESSING OFFICER INVOKED EXPLANATION 7 TO SECTION 271(1)(C) OF THE ACT AND IMPOSED PENALTY OF RS.74,87,850/ - ON THE AMOUNT OF TRANSFER PRICING ADDITION SUSTAINED IN THE FIRST APPEAL . THE LD. CIT (APPEALS) DELETED THE PENALTY , AGAINST WHICH THE REVENUE HAS COME UP IN APPEAL BEFORE THE TRIBUNAL. 3. WE HAVE HEARD THE RIVAL CONTENTIONS THROUGH VIRTUAL COURT AND GON E THROUGH THE RELEVANT MATERIAL ON RECORD. IT IS SEEN THAT THE TRANSFER PRICING ADDITION SUSTAINE D BY THE LD. CIT(APPEAL) AT RS.2.20 CRORE, WHICH FORMS THE BEDROCK OF THE PENALTY, CAME UP FOR CONSIDERATION BEFORE THE TRIBUNAL . V IDE ORDER (ITA NO.1250/PUN/2015) DATED 24.11.2017 , THE TRIBUNAL HAS DELETED THE SAID ADDITION . A COPY OF THE ORDER HAS BEEN PLACED AT P AGE 5 ONWARDS OF THE PAPER BOOK. THE AO , WHILE GIVING EFFECT TO THE ORDER PASSED BY THE TRIBUNAL , HAS DETERMINED TOTAL INCOME OF THE ASSESSEE AT RS.36 , 117/ - . SINCE THE VERY FOUNDATION OF IMPOSITION OF PENALTY , BEING T HE TRANSFER PRICING ADDITION OF RS.2.20 C RORE , DOES NOT SURVIVE ANY MORE , W E DO NOT FIND ANY 3 ITA NO. 2620 /PUN/20 17 A.Y. 2010 - 11 REASON TO DISTURB THE VIEW TAKEN BY THE LD. CIT(APPEALS) IN DELETING PENALTY U/S.271(1)(C) OF THE ACT . THE SAME IS HEREBY UPHELD. 4. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRO NOUNCED ON 29 TH DAY OF APRIL, 2021 SD/ - SD/ - S.S. VISWANETHRA RAVI R . S . SYAL JUDICIAL MEMBER VICE - PRESIDENT / PUNE; / DATED : 29 TH APRIL, 2021 SB / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(APPEALS) - 13, PUNE. 4. THE PR. CIT - 1, PUNE. 5 . , , , / DR, ITAT, A BENCH, PUNE. 6 . / GUARD FILE. / BY ORDER, // TRUE COPY // / PRIVATE SECRETARY , / ITAT, PUNE . 4 ITA NO. 2620 /PUN/20 17 A.Y. 2010 - 11 DATE 1 DRAFT DICTATED ON 29.04.2021 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 29.04.2021 SR.PS/PS 3 DRAFT PROPOSED AND PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/JM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 DATE OF UPLOADING OF ORDER SR.PS/PS 8 FILE SENT TO BENCH CLERK SR.PS/PS 9 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 10 DATE ON WHICH FILE GOES TO THE A.R 11 DATE OF DISPATCH OF ORDER