CHEROKEE INDIA P. LTD, MUMBAI V. DECIT (OSD) RANGE -8(1), MUMBAI

ITA 45/MUM/2016

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3345 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2008-2009
• Appeal Filed On: 06-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N PADMANABHAN
• Keywords: Transfer pricing; International transaction; Wholly owned subsidiary; Difference of opinion
• Section: 92C; 92B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH K, MUMBAI BEFORE SHRI G.S.PANNU, ACCOUNTANT MEMBER AND SHRI AMARJIT SINGH, JUDICIAL MEMBER ITA NO. 45/MUM/2016 (ASSESSMENT YEAR : 2008-09) CHEROKEE INDIA PRIVATE LIMITED, UNIT 94/95, SDF III, SEEPZ, ANDHERI (EAST) MUMBAI 400 096 PAN:AABCC 5420G ... APPELLANT VS. THE DY. COMMISSIONER OF INCOME TAX-(OSD)- RANGE 8(1), AAYKAR BHAVAN, M.K.ROAD, MUMBAI 400 020 .... RESPONDENT APPELLANT BY : SHRI RAMESH IYER RESPONDENT BY : SHRI N. PADMANABHAN DATE OF HEARING : 22/02/2016 DATE OF PRONOUNCEMENT : 16/03/2016 ORDER PER G.S. PANNU,AM: THE CAPTIONED APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-16, MUMBAI DATED 05/10/2015 PE RTAINING TO THE ASSESSMENT YEAR 2008-09, WHICH IN TURN HAS ARISEN F ROM AN ORDER DATED 30/03/2014 PASSED UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) . 2 ITA NO. 45/MUM/2016 (ASSESSMENT YEAR : 2008-09 2. IN THIS APPEAL, THE SOLITARY GRIEVANCE OF THE AS SESSEE IS AGAINST THE ACTION OF THE INCOME TAX AUTHORITIES IN IMPOSING PE NALTY UNDER SECTION 271(1)(C) OF THE ACT AMOUNTING TO RS.60,72,210/-. 3. BRIEFLY PUT, THE RELEVANT FACTS ARE THAT THE APP ELLANT IS A COMPANY INCORPORATED UNDER THE PROVISIONS OF THE COMPANIES ACT, 1956 AND IS A WHOLLY OWNED SUBSIDIARY OF CHEROKEE INTERNATIONAL, LLC USA. THE ASSESSEE COMPANY HAS A MANUFACTURING FACILITY AT SE EPZ, ANDHERI (E), MUMBAI, WHEREIN IT UNDERTAKES MANUFACTURING OF VARI OUS MAGNETIC COMPONENTS LIKE TRANSFORMERS, INDUCTORS AND PRINTED CIRCUIT BOARDS ASSEMBLIES ENTIRELY FOR ITS PARENT COMPANY IN USA, I.E. ASSOCIATED ENTERPRISE. NOTABLY, ASSESSEE RECEIVES 95% OF THE RAW MATERIAL FROM ITS HOLDING COMPANY ON FREE OF COST BASIS AND AFTER UND ERTAKING MANUFACTURING ACTIVITY, IT EXPORTS BACK THE ENTIRE PRODUCTION TO ITS PARENT COMPANY IN USA. IN TERMS OF ARRANGEMENT WIT H ITS ASSOCIATED ENTERPRISE IN USA, ASSESSEE IS REMUNERATED ON THE B ASIS OF MARK-UP ON COST OF 6%. PERTINENTLY, SUCH MARK-UP COST ON 6% IS CALCULATED WITH REFERENCE TO THE STANDARD COST INCURRED FOR THE OPE RATIONS CARRIED OUT BY THE ASSESSEE COMPANY. WITH THE AFORESAID BUSINE SS MODEL, THE ASSESSEE COMPANY FILED THE RETURN OF INCOME FOR ASS ESSMENT YEAR 2008- 09 ON 29/09/2008 DECLARING A LOSS OF RS.1,14,58,725 /-, WHICH WAS SUBJECT TO A SCRUTINY ASSESSMENT. IN THE COURSE O F THE ASSESSMENT PROCEEDINGS, IT WAS NOTICED THAT ASSESSEE HAD ENTER ED INTO AN INTERNATIONAL TRANSACTION WITH THE ASSOCIATED ENTER PRISE WITHIN THE MEANING OF SECTION 92B OF THE ACT AND ACCORDINGLY, THE MATTER RELATING TO THE DETERMINATION OF ARMS LENGTH PRICE (ALP) W AS REFERRED TO THE TRANSFER PRICING OFFICER (TPO) UNDER SECTION 92CA( 1) OF THE ACT. THE 3 ITA NO. 45/MUM/2016 (ASSESSMENT YEAR : 2008-09 TPO PASSED AN ORDER UNDER SECTION 92CA(3) OF THE AC T, WHEREBY AN UPWARD ADJUSTMENT WAS PROPOSED TO THE STATED VALUE OF THE INTERNATIONAL TRANSACTION WITH THE ASSOCIATED ENTE RPRISE. THE ADJUSTMENT WORKED OUT BY THE TRANSFER PRICING OFFIC ER WAS TO THE EXTENT OF RS.2,33,24,680/- AND THE ASSESSING OFFICE R PASSED AN ORDER IN CONFORMITY WITH THE SAME. SUBSEQUENTLY, SUCH AN AD JUSTMENT HAS BEEN SCALED DOWN TO RS.1,78,64,680/- BY THE ORDER OF THE CIT(APPEALS), WHICH HAS BECOME FINAL, AS STATED BY THE LEARNED REPRESE NTATIVE BEFORE US. THE ASSESSING OFFICER VIDE AN ORDER DATED 30/03/201 4(SUPRA) HELD THE ASSESSEE GUILTY OF DEFAULT UNDER SECTION 271(1)(C) OF THE ACT R.W. EXPLANATION7 THEREOF, WHEREBY HE TREATED THE ASSES SEE OF HAVING FURNISHED INACCURATE PARTICULARS OF INCOME QUA THE ADDITION ON ACCOUNT OF TRANSFER PRICING ADJUSTMENT OF RS.1,78,64,860/- . ACCORDINGLY, THE ASSESSING OFFICER IMPOSED PENALTY UNDER SECTION 271(1)(C) OF THE ACT OF RS.60,72,210/-, WHICH WAS EQUIVALENT TO 100% OF THE TAX SOUGHT TO BE EVADED ON THE ADDITION OF RS.1,78,64,680/- MAD E TO THE RETURNED INCOME. THIS ACTION OF THE ASSESSING OFFICER HAS S INCE BEEN AFFIRMED BY THE CIT(APPEALS) ALSO AND, THEREFORE, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4. BEFORE US, THE PRIMARY ARGUMENT OF THE LD. REPRE SENTATIVE FOR THE ASSESSEE IS THAT THE LOWER AUTHORITIES HAVE ERRED I N IMPOSING A PENALTY UNDER SECTION 271(1)(C) OF THE ACT BECAUSE THE TRAN SFER PRICING ADJUSTMENT WAS ONLY AS A RESULT OF A DIFFERENCE OF OPINION BETWEEN ASSESSEE AND THE REVENUE IN THE MANNER OF CALCULAT ION OF ARMS LENGTH PRICE OF THE INTERNATIONAL TRANSACTION AND THERE W AS NO OCCASION WHERE ASSESSEES METHOD OF DETERMINING ARMS LENGTH PRIC E WAS FOUND TO BE 4 ITA NO. 45/MUM/2016 (ASSESSMENT YEAR : 2008-09 UNACCEPTABLE. AT THE TIME OF HEARING, LD. REPRESEN TATIVE FOR THE ASSESSEE EMPHASIZED THAT THE TRANSFER PRICING STUDY UNDERTAKEN BY THE ASSESSEE HAS NOT BEEN FOUND TO BE ERRONEOUS OR UNAC CEPTABLE AND, THEREFORE, IT IS NOT A CASE WHERE THERE WAS ANY CON CEALMENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. T HE LD. REPRESENTATIVE FOR THE ASSESSEE ALSO REFERRED TO THE FACT THAT E FFICACY OF IMPOSITION OF PENALTY IN THE PRESENT CASE CAN BE EXAMINED IN TERMS OF EXPLANATION - 7 TO SECTION 271(1)(C) OF THE ACT; THEREFORE, RELI ANCE PLACED BY THE CIT(APPEALS) ON THE PROVISIONS OF EXPLANATION -1 TO SECTION 271(1)(C) OF THE ACT TO JUSTIFY THE PENALTY IS MISPLACED. APAR T FROM THE AFORESAID, THE LD. REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT SINCE THE ASSESSMENT YEAR 2005-06, THE DETERMINATION OF THE ARMS LENGTH PRICE OF THE IMPUGNED TRANSACTIONS HAVE BEEN FINALIZED BY THE INCOME TAX AUTHORITIES IN THE SAME MANNER AS WAS DONE IN THE Y EAR UNDER CONSIDERATION, AND THAT IN THE EARLIER ASSESSMENT Y EAR OF 2005-06 AND 2007-08, NO PENALTY UNDER SECTION 271(1)(C) OF THE ACT HAS BEEN LEVIED. THEREFORE, ACCORDING TO HIM UNDER IDENTICAL CIRCUMS TANCES, IN THIS YEAR THE ASSESSING OFFICER ERRED IN LEVYING THE PENALTY. 5. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATI VE HAS DEFENDED THE ORDERS OF THE LOWER AUTHORITIES IN LEV YING PENALTY UNDER SECTION 271(1)(C) OF THE ACT. IN PARTICULAR, THE L D. DEPARTMENTAL REPRESENTATIVE POINTED OUT THAT THE TRANSFER PRIC ING ADJUSTMENT MADE IN THIS YEAR IS VERY MUCH BASED ON THE METHOD ADOPT ED IN THE EARLIER YEARS, WHICH THE ASSESSEE HAS EVENTUALLY ACCEPTED A ND, THEREFORE, THERE IS NO REASON FOR THE ASSESSEE TO JUSTIFY NON-INCORP ORATION OF SUCH ADJUSTMENT IN THE RETURN OF INCOME ITSELF. 5 ITA NO. 45/MUM/2016 (ASSESSMENT YEAR : 2008-09 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. SECTION 271(1)(C) OF THE ACT PRESCRIBES FOR LEVY OF PENAL TY IN A CASE WHERE IT IS FOUND THAT ASSESSEE HAS CONCEALED THE PARTICULARS O F HIS INCOME OR THAT ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. COMING TO THE SPECIFIC CASE ON HAND, PENALTY UNDER SECTION 271(1)(C) HAS BEEN IMPOSED IN THE CONTEXT OF COMPUTING INCOME ARISING FROM AN INTERNATIONAL TRANSACTION, HAVING REGARD TO ITS ARM S LENGTH PRICE, AS MANDATED BY SECTION 92(1) OF THE ACT. IN THIS CON TEXT, EXPLANATION 7 TO SECTION 271(1)(C) IS RELEVANT, WHICH READS AS U NDER:- EXPLANATION 7. WHERE IN THE CASE OF AN ASSESSEE WHO HAS ENTERED I NTO AN INTERNATIONAL TRANSACTION [OR SPECIFIED DOMESTIC TRANSACTION] DEFINED IN SECTION 92B , ANY AMOUNT IS ADDED OR DISALLOWED IN COMPUTING TH E TOTAL INCOME UNDER SUB-SECTION (4) OF SECTION 92C , THEN, THE AMOUNT SO ADDED OR DISALLOWED SHALL, FOR THE PURPOSES OF CLAUSE ( C ) OF THIS SUB-SECTION, BE DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED OR INACCURATE PARTICULARS HAVE BEEN FURNI SHED, UNLESS THE ASSESSEE PROVES TO THE SATISFACTION OF THE ASSESSING OFFICER OR THE COMMISSIONER (APPEALS) [OR THE [ PRINCIPAL COMMISSIONER OR ] COMMISSIONER] THAT THE PRICE CHARGED OR PAID IN SUCH TRANSACTION WAS COMPUTED IN ACCORDANCE WITH THE PROVISIONS CONTAINED IN SECTION 92C AND IN THE MANNER PRESCRIBED UNDER THAT SECTION, IN GOOD FAITH AND WITH DUE DILIGENCE.] 6.1 AS PER THE AFORESAID, IT IS PRESCRIBED THAT WHERE A N AMOUNT IS ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME U NDER SECTION 92C(4) OF THE ACT, THEN THE AMOUNT SO ADDED OR DIS ALLOWED SHALL BE DEEMED TO REPRESENT AN INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED OR THAT THE INACCURATE PARTICULARS OF SUCH INCOME HAVE BEEN FURNISHED FOR THE PURPOSES OF CLAUSES (C) OF S ECTION 271(1) OF THE ACT. SO, HOWEVER, SUCH A DEEMING IMPORT WOULD N OT OPERATE, IF THE ASSESSEE IS ABLE TO PROVE THAT THE PRICE CHARGED O R PAID IN SUCH AN INTERNATIONAL TRANSACTION WAS COMPUTED IN ACCORDAN CE WITH THE PROVISIONS CONTAINED IN SECTION 92C OF THE ACT AND IN THE MANNER 6 ITA NO. 45/MUM/2016 (ASSESSMENT YEAR : 2008-09 PRESCRIBED IN SUCH SECTION IN GOOD FAITH AND WITH DUE DILIGENCE. IN OTHER WORDS, THE CIRCUMSTANCES PRESCRIBED IN CLAUSE (C) OF SECTION 271(1) OF THE ACT, NAMELY, CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME ARE DEEMED TO BE SATISFIED WHERE AN ADDITION IS MADE IN THE COURSE OF DETERMINING THE A RMS LENGTH PRICE OF AN INTERNATIONAL TRANSACTION WHILE COMPUTING TOTAL INCOME UNDER SECTION 92C(4) OF THE ACT . SO, HOWEVER, THE RIGOR S OF SUCH A DEEMING FICTION ARE MITIGATED, IF, THE ASSESSEE IS ABLE TO PROVE THAT THE PRICE CHARGED OR PRICE PAID IN SUCH AN INTERNATIONAL TRAN SACTION WAS COMPUTED IN ACCORDANCE WITH AND IN THE MANNER PRESC RIBED IN SECTION 92C OF THE ACT IN GOOD FAITH AND WITH DUE DILIGENC E. IT IS ABUNDANTLY CLEAR THAT THE ONUS SHALL BE ON THE ASSESSEE TO DEM ONSTRATE THAT THE PRICE CHARGED OR PAID IN SUCH AN INTERNATIONAL TRAN SACTION WAS COMPUTED IN THE MANNER PRESCRIBED IN SECTION 92C IN GOOD FAITH AND WITH DUE DILIGENCE. QUITE CLEARLY, THE FACTS AND CIRCUMSTANCES OF EACH CASE WOULD ESTABLISH AS TO WHETHER OR NOT THE ASSES SEE HAS BEEN ABLE TO DISCHARGE THE BURDEN OF PROVING THAT PRICE CHARGED OR PAID IN AN INTERNATIONAL TRANSACTION HAS BEEN COMPUTED IN TERM S OF SECTION 92C IN GOOD FAITH AND WITH DUE DILIGENCE. 6.2 IN THIS BACKGROUND, WE MAY NOW BRIEFLY TOUCH UP ON THE MANNER IN WHICH THE INCOME TAX AUTHORITIES HAVE ARRIVED AT AN ADJUSTMENT OF RS.1,78,64,680/- IN ORDER TO ARRIVE AT THE ARM S LENGTH PRICE OF ASSESSEES INTERNATIONAL TRANSACTION WITH ASSOCIATE D ENTERPRISE. IN THIS CONTEXT, IT IS RELEVANT TO OBSERVE THAT THE TRANSFE R PRICING OFFICER EXAMINED ASSESSEES ARRANGEMENT ENTERED WITH ASSOCI ATED ENTERPRISE ABROAD AND FOUND THAT THE ENTIRE MANUFACTURING ACT IVITY WAS 7 ITA NO. 45/MUM/2016 (ASSESSMENT YEAR : 2008-09 UNDERTAKEN SOLELY FOR ITS HOLDING COMPANY ABROAD I. E. THE ASSOCIATED ENTERPRISE IN QUESTION. THE ASSESSEE WAS BEING COM PENSATED ON THE BASIS OF A MARK-UP OF 6% OF STANDARD COST INCURRED FOR THE OPERATIONS CARRIED OUT BY IT. THE ASSESSEE HAD DECLARED A LOS S FOR THE YEAR UNDER CONSIDERATION. IN ITS T.P STUDY, THE ASSESSEE COMP ANY HAD CONSIDERED THE TRANSACTION NET MARGIN METHOD(TNMM) AS MOST APP ROPRIATE METHOD, WHICH HAS NOT BEEN DISPUTED BY THE TRANSFER PRICING OFFICER. THE ONLY AREA OF DIFFERENCE BETWEEN THE ASSESSEE AN D THE TRANSFER PRICING OFFICER WAS THE NATURE OF THE MARK-UP OF 6 %, AT WHICH ASSESSEE WAS BEING COMPENSATED BY ITS ASSOCIATED EN TERPRISE. THE ASSESSEE CALCULATED THE MARK-UP OF 6% ON THE STAND ARD COST OF OPERATIONS BEING CARRIED OUT BY IT WHEREAS, THE T RANSFER PRICING OFFICER WAS OF THE VIEW THAT THOUGH MARK-UP OF 6% WAS AN ARMS LENGTH RATE BUT APPLICATION OF THE 6% MARK-UP ON THE STANDARD C OST WAS NOT PROPER. ACCORDING TO THE TRANSFER PRICING OFFICER, THE MARK -UP OF 6% OUGHT TO HAVE BEEN CALCULATED WITH REFERENCE TO THE TOTAL C OSTS INCURRED BY THE ASSESSEE ON ITS OPERATIONS RATHER THAN THE STANDARD COST OF OPERATIONS. THIS IS THE AREA OF DIFFERENCE BETWEEN THE ASSESS EE AND THE REVENUE, WHICH HAS RESULTED IN AN ADDITION OF RS.1,78,64,680 /-. 6.3 FACTUALLY SPEAKING, IN THE ORDER OF TRANSFER PR ICING OFFICER OR THE ASSESSING OFFICER THERE IS NO ADVERSE COMMENT WITH REGARD TO THE APPLICATION OF THE TNM METHOD SELECTED BY THE ASS ESSEE FOR DETERMINATION OF ARM'S LENGTH PRICE OF ITS INTER NATIONAL TRANSACTION WITH ITS ASSOCIATED ENTERPRISE. IN FACT, IN THE C OURSE OF HEARING, LD. REPRESENTATIVE FOR THE ASSESSEE EXPLAINED THAT THE AFORESAID ISSUE CROPPED UP FOR THE FIRST TIME IN THE COURSE OF TRAN SFER PRICING 8 ITA NO. 45/MUM/2016 (ASSESSMENT YEAR : 2008-09 PROCEEDINGS FOR ASSESSMENT YEAR 2005-06, WHEREIN TH E TRANSFER PRICING OFFICER DISAGREED WITH THE ASSESSEE ON THE ADOPTIO N OF COST BASE FOR APPLYING THE 6% MARK-UP RATE, AND AN ADDITION WAS M ADE TO THE RETURNED INCOME. FURTHER, IN ASSESSMENT YEAR 2007- 08 ALSO, SIMILAR ADDITION WAS MADE BY THE INCOME TAX AUTHORITIES BUT NEITHER IN ASSESSMENT YEAR 2005-06 AND NOR IN ASSESSMENT YEAR 2007-08 PENALTY UNDER SECTION 271(1)(C) OF THE ACT WAS IMPOSED. W HILE IN ASSESSMENT YEAR 2005-06, PENALTY PROCEEDINGS UNDER SECTION 271 (1)(C) WERE NOT INITIATED AT ALL, WHEREAS IN ASSESSMENT YEAR 2007-0 8 THOUGH THE PROCEEDINGS WERE INITIATED BUT WERE EVENTUALLY DROP PED BY THE ASSESSING OFFICER HIMSELF. THE AFORESAID FACTUAL M ATRIX IS NOT IN DISPUTE AND, IN OUR VIEW, THE AFORESAID ITSELF RENDERS THE IMPUGNED ACTION OF THE ASSESSING OFFICER SUSPECT, BECAUSE IT IS NOT OPEN F OR THE ASSESSING OFFICER TO HOLD AN ASSESSEE GUILTY UNDER SECTION271 (1)(C) OF THE ACT IN ONE YEAR AND NOT IN OTHER PRECEDING TWO YEARS UNDER IDENTICAL CIRCUMSTANCES. 6.4 ON THIS ASPECT, THE LD. DEPARTMENTAL REPRESENTA TIVE ECHOED THE STAND OF THE CIT(APPEALS) WHICH IS TO THE EFFECT T HAT FOR ASSESSMENT YEARS 2005-06 AND 2007-08, THE ASSESSING OFFICER G AVE BENEFIT OF DOUBT TO THE ASSESSEE IN NOT LEVYING PENALTY UNDER SECTIO N 271(1)(C) OF THE ACT. IT IS FURTHER ARGUED THAT SO FAR AS THE INSTANT AS SESSMENT YEAR IS CONCERNED, THE ASSESSEE WAS AWARE ABOUT WRONG DETER MINATION OF THE ARM'S LENGTH PRICE IN RELATION TO THE INTERNATIONAL TRANSACTION WITH ASSOCIATED ENTERPRISE AND, THEREFORE, THE ASSESSING OFFICER WAS JUSTIFIED IN IMPOSING PENALTY UNDER SECTION 271(1)(C)OF THE A CT IN THIS YEAR. THE AFORESAID ARGUMENTS OF THE LD. DEPARTMENTAL REPRESE NTATIVE HAVE 9 ITA NO. 45/MUM/2016 (ASSESSMENT YEAR : 2008-09 BEEN COUNTERED BY THE ASSESSEE BY POINTING OUT THAT AT THE TIME OF FILING RETURN OF INCOME FOR INSTANT ASSESSMENT YEAR I.E. ON 29/09/2008, THE ASSESSEE HAD NOT ACCEPTED THE STAND OF THE TRANSFER PRICING OFFICER TAKEN FOR THE FIRST TIME IN ASSESSMENT YEAR 2005-0 6, IN AS MUCH AS, IT WAS ONLY AFTER PASSING OF THE ORDER BY THE CIT(APPE ALS) FOR ASSESSMENT YEAR 2005-06 I.E. ON 19/11/2009 THAT THE ASSESSEE ACCEPTED THE SAID POSITION AND NO APPEAL WAS FILED WITH THE TRIBUNAL. THEREFORE, ACCORDING TO THE ASSESSEE THE PLEA OF THE LD. DEPAR TMENTAL REPRESENTATIVE WAS UNFOUNDED. IN OUR CONSIDERED O PINION, THE RETURN OF INCOME FILED BY THE ASSESSEE QUA THE DETERMINATI ON OF ARM'S LENGTH PRICE OF ITS INTERNATIONAL TRANSACTION WITH ASSOCIA TED ENTERPRISE CANNOT BE FAULTED FOR NOT BEING IN GOOD FAITH UNDER THE AF ORESAID FACTUAL MATRIX. OSTENSIBLY, THE METHODOLOGY ADOPTED BY THE DEPARTM ENT IN ASSESSMENT YEAR 2005-06 CAME TO BE ACCEPTED BY THE ASSESSEE ONLY AFTER THE FILING OF RETURN OF INCOME FOR THE CURREN T ASSESSMENT YEAR, THEREFORE, THE RETURN OF INCOME FILED BY THE ASSESS EE CANNOT BE CONSIDERED AS NON-BONAFIDE. 6.5 IN FACT, THE ORDERS OF THE AUTHORITIES BELOW I N THE QUANTUM ASSESSMENT PROCEEDINGS REVEAL THAT ALL INFORMATION AND DOCUMENTS AS REQUIRED BY SECTION 92C OF THE ACT READ WITH RULE 1 0B OF THE INCOME TAX RULES, 1962 FOR THE PURPOSE OF DETERMINATION OF AR MS LENGTH PRICE WERE FURNISHED BY THE ASSESSEE. MOREOVER, THE ADDI TION DETERMINED BY THE INCOME-TAX AUTHORITIES IS NOT ON ACCOUNT OF ANY INACCURACY, DISCREPANCY OR CONCEALMENT FOUND IN THE INFORMATION AND DOCUMENTS FURNISHED BY THE ASSESSEE FOR DETERMINING THE ARMS LENGTH PRICE OF THE INTERNATIONAL TRANSACTION WITH THE ASSOCIATED ENTER PRISE. THE ADDITION IS 10 ITA NO. 45/MUM/2016 (ASSESSMENT YEAR : 2008-09 DUE TO THE DIFFERENCE IN THE PRICING METHODOLOGY AD OPTED BY THE INCOME-TAX AUTHORITIES FOR DETERMINING THE EXPECTED PROFITS FROM THE ASSOCIATED ENTERPRISE. THEREFORE, IN OUR VIEW, THE FACT-SITUATION IN THE PRESENT CASE DOES NOT SUGGEST THAT THE COMPUTATION OF PRICE CHARGED IN THE IMPUGNED INTERNATIONAL TRANSACTION DONE AS P ER SECTION 92C OF THE ACT IS LACKING IN GOOD FAITH OR DUE DILIGENCE, SO AS TO RENDER THE ASSESSEE LIABLE FOR PENALTY UNDER SECTION 271(1)(C) OF THE ACT R.W. EXPLANATION-7 THEREOF. 6.6 AS A CONSEQUENCE, WE SET-ASIDE THE ORDER OF CIT (APPEAL) AND DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY IMPOSED UNDER SECTION 271(1)(C) OF THE ACT OF RS. 60,72,210/-, HAVING RE GARD TO THE AFORESAID DISCUSSION. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED , AS ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 16/03/2016 SD/- SD/- (AMARJIT SINGH) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT ME MBER MUMBAI, DATED 16/03/2016 VM , SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT , 2. THE RESPONDENT. 3. THE CIT(A)- 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI