DCIT CIR 6(2), MUMBAI V. DIAMOND SYE CHEM LTD, MUMBAI

ITA 3134/MUM/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 48890 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-05-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: L
• Next Hearing Date: 18-05-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 13-05-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MALATHI SHRIDHARAN
• Keywords: Transfer pricing
• Section: 92C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'L' BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO. 3134/MUM/2009 (ASSESSMENT YEAR: 2002-03) DCIT, CIRCLE 6(2) M/S. DIAMOND DYE CHEM LTD. ROOM NO. 564, 5TH FLOOR PLOT NO. 37, CIBA HOUSE, CH ANDIVALI AAYAKAR BHAVAN, M.K. ROAD VS. FARM ROAD, CHANDIVALI MUMBAI 400020 ANDHERI (E), MUMBAI 400072 PAN - AAACD 3478 N APPELLANT RESPONDENT APPELLANT BY: SMT. MALATHI SHRIDHARAN RESPONDENT BY: SHRI KANCHUN KAUSHAL/ SHRI DHANESH BAFNA/ SHRI ALISAGAR RAMPURWALA O R D E R PER D. MANMOHAN, V.P. THIS APPEAL, FILED BY THE REVENUE, IS DIRECTED AGAI NST THE ORDER OF THE CIT(A) XIX, MUMBAI DATED 05.03.2009. PENALTY LEVIED BY THE ASSESSING OFFICER UNDER SECTION 271(1)(C) HAVING BEEN CANCELL ED BY THE LEARNED CIT(A), REVENUE IS IN APPEAL BEFORE US. 2. AT THE TIME OF HEARING LEARNED COUNSEL APPEARING ON BEHALF OF THE ASSESSEE PLACED BEFORE US A COPY OF THE ORDER OF TH E ITAT MUMBAI L BENCH IN ASSESSEES OWN CASE FOR A.Y. 2002-03 (IN QUANTUM PROCEEDINGS) WHEREIN THE BENCH SET ASIDE THE MATTER TO THE FILE OF THE A .O. FOR CALCULATING NECESSARY VOLUME DISCOUNT AND DIRECTED HIM TO GIVE PROPER RELIEF TO THE ASSESSEE ON THE BASIS OF THE METHODOLOGY ADOPTED IN THE SUBSEQUENT YEARS. HE HAS ALSO ADVERTED OUR ATTENTION TO THE ORDER OF THE LEARNED CIT(A), IN THE PENALTY PROCEEDINGS, TO SUBMIT THAT THE ASSESSEE IN FACT COMPLIED WITH THE PROVISIONS OF SECTION 92C OF THE ACT AND ITS CLAIM FOR VOLUME DISCOUNT, THOUGH NOT ALLOWED IN THIS YEAR, WAS ACCEPTED BY TH E TPO IN THE SUBSEQUENT YEARS, AND BASED ON THESE FACTS, THE LEARNED CIT(A) OBSERVED THAT BY GIVING SIMILAR VOLUME DISCOUNT IN THIS YEAR THERE WOULD HA VE BEEN NO NEED FOR ITA NO. 3134/MUM/2009 M/S. DIAMOND DYE CHEM LTD. 2 ADJUSTMENT TO THE ARMS LENGTH PRICE OF EXPORTS IN THIS YEAR AND CONSEQUENTLY THERE WOULD HAVE NO OCCASION TO LEVY P ENALTY. BY APPLYING EXPLANATION 7 TO SECTION 271(1)(C) OF THE ACT, IT W AS CONCLUDED THAT ASSESSEE SATISFIED THE TWIN CONDITIONS, I.E. GOOD FAITH AND DUE DILIGENCE. 3. ON THE OTHER HAND, THE LEARNED D.R. RELIED UPON THE ORDER PASSED BY THE ASSESSING OFFICER, THOUGH, IT WAS FAIRLY ADMITT ED THAT IN THE LIGHT OF THE ORDER PASSED BY THE ITAT, THE PENALTY LEVIED BY THE ASSESSING OFFICER DOES NOT SURVIVE AND THE PENALTY PROCEEDINGS, IF ANY, CA N BE INITIATED AFTER PASSING THE CONSEQUENTIAL ORDER GIVING EFFECT TO TH E ORDER OF THE ITAT IN THE QUANTUM PROCEEDINGS (ITA NO. 3073/MUM/2006 DATED 14 TH MAY 2010). 4. HAVING REGARD TO THE RIVAL SUBMISSIONS, WE CANCEL T HE PENALTY (IN THE LIGHT OF THE ORDER OF ITAT CITED ABOVE) AND UPHOLD THE ORDER PASSED BY LEARNED CIT(A). HOWEVER, THE ASSESSING OFFICER IS A T LIBERTY TO INITIATE PENALTY PROCEEDINGS IN THE EVENT OF ANY ADJUSTMENT MADE IN THE ASSESSMENT WHILE GIVING EFFECT TO THE ORDER OF THE ITAT. 5. WITH THESE OBSERVATIONS, APPEAL OF THE REVENUE IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH MAY 2011. SD/- SD/- (R.K. PANDA) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT MUMBAI, DATED: 18 TH MAY 2011 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) XIX, MUMBAI 4. THE CIT VI, MUMBAI CITY 5. THE DR, L BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.