M/s Michael Aram Export Pvt Ltd, New Delhi V. ITO, New Delhi

ITA 736/DEL/2009

• Counselvise Citation: 73620114 RSA 2009
• Duration Of Justice: 4 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-09-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 27-08-2013
• Assessment Year: 2004-2005
• Appeal Filed On: 27-02-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SAMEER SHARMA
• Assessee Lawyers: SANJEEV KAPOOR
• Keywords: Transfer pricing; Search and seizure; International transaction
• Section: 10B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH E EE E : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND SHRI SHRI SHRI SHRI CHANDRA MOHAN GARG CHANDRA MOHAN GARG CHANDRA MOHAN GARG CHANDRA MOHAN GARG, ,, , JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ITA NO. ITA NO. ITA NO. ITA NO.736/DEL/ 736/DEL/ 736/DEL/ 736/DEL/2009 2009 2009 2009 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR : : : : 2004 2004 2004 2004- -- -05 0505 05 M/S MICHAEL ARAM EXPORT M/S MICHAEL ARAM EXPORT M/S MICHAEL ARAM EXPORT M/S MICHAEL ARAM EXPORTS SS S PVT.LTD., PVT.LTD., PVT.LTD., PVT.LTD., F FF F- -- -61, SUJAN SINGH 61, SUJAN SINGH 61, SUJAN SINGH 61, SUJAN SINGH PARK, PARK, PARK, PARK, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 003. 110 003. 110 003. 110 003. PAN : PAN : PAN : PAN : AAACA7014M. AAACA7014M. AAACA7014M. AAACA7014M. VS. VS. VS. VS. INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, WARD WARD WARD WARD- -- -6(4), 6(4), 6(4), 6(4), NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) ITA NO. ITA NO. ITA NO. ITA NO.1055/DEL/2013 1055/DEL/2013 1055/DEL/2013 1055/DEL/2013 ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : 2004 2004 2004 2004- -- -05 0505 05 INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, WARD WARD WARD WARD- -- -6(4), 6(4), 6(4), 6(4), NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. VS. VS. VS. VS. M/S MICHAEL ARAM EXPORTS M/S MICHAEL ARAM EXPORTS M/S MICHAEL ARAM EXPORTS M/S MICHAEL ARAM EXPORTS PVT.LTD., PVT.LTD., PVT.LTD., PVT.LTD., F FF F- -- -61, SUJAN SINGH PARK, 61, SUJAN SINGH PARK, 61, SUJAN SINGH PARK, 61, SUJAN SINGH PARK, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 003. 110 003. 110 003. 110 003. PAN : AAACA7014M. PAN : AAACA7014M. PAN : AAACA7014M. PAN : AAACA7014M. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SANJEEV KAPOOR, CA. DEPARTMENT BY : SHRI SAMEER SHARMA, SR.DR. ORDER ORDER ORDER ORDER PER G. PER G. PER G. PER G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VP VPVP VP : : : : ITA NO.736 ITA NO.736 ITA NO.736 ITA NO.736/DEL/2009 /DEL/2009 /DEL/2009 /DEL/2009: :: :- -- - THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF LEARNED CIT(A)-XX, NEW DELHI DATED 26 TH DECEMBER, 2008 FOR THE AY 2004-05. 2. GROUND NOS.1 TO 4 RAISED BY THE ASSESSEE READ AS UNDER:- ITA-736/D/2009 & 1055/D/2013 2 1. THE ORDER PASSED BY THE HNB. CIT(A) XX IS BAD I N LAW AND ON THE FACTS OF THE CASE. 2. THE HNB. CIT(A) XX HAS ERRED IN REJECTING THE COMPARABLES ON THE FOLLOWING GROUNDS: DATA NOT AVAILABLE ON PUBLIC DOMAIN FOR THE A.Y. 20 04-05 THE FUNCTIONS PERFORMED BY THE COMPARABLES AND THE APPELLANT ARE ALL TOGETHER DIFFERENT. THE COMPARABLE IS A CONTINUOUS LOSS MAKING ENTITY F OR THE LAST FOUR YEARS. 3. THE LEARNED APPELLATE COMMISSIONER HAS ERRONEOUS LY CONFIRMED THE ACT OF THE ASSESSING OFFICER TO CONSI DER THE CURRENT YEAR DATA FOR CONDUCTING THE TRANSFER PRICI NG, INSTEAD OF THE PRECEDING TWO YEARS DATA AVAILABLE O N THE PUBLIC DOMAIN. THIS IS DESPITE THE FACT THAT THE CURRENT YEAR DATA OF THE COMPARABLES IS NOT AVAILABLE ON THE PUBLIC DOMAIN, TILL THE DUE DATE OF FILING THE INCOME TAX RETURN. FURTHER PROVISO TO RULE 10B(4) LAYS DOWN THAT DATA RELATING TO A PERIOD NOT BEING MORE THAN TWO YEARS PRIOR TO SUCH FINANCIAL YEAR MAY ALSO BE CONSIDERED IF SUCH DATA REVEALS FACTS WHICH COULD HAVE AN INFLUENCE ON THE DETERMIN ATION OF TRANSFER PRICES IN RELATION TO THE TRANSACTIONS BEING COMPARED. 4. THE DETERMINATION OF ARMS LENGTH PRICE AT RS.6,32,98,266/- AGAINST THE DECLARED VALUE OF RS.5,47,15,000/- IS UNJUST AND ARBITRARY. 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY WHICH IS IN THE BUSINESS OF MANUFACTURING A ND TRADING OF HOME DECORATIVE ITEMS, CUTLERY, TABLEWARE ETC. MADE FROM BRASS, ALUMINIUM, STAINLESS STEEL AND IRON. ADMITTEDLY, T HE ASSESSEE IS AN ASSOCIATED ENTERPRISE OF MICHAEL ARAM INC., USA. T HE GOODS MANUFACTURED BY THE ASSESSEE IN INDIA ARE SUPPLIED TO ITS ASSOCIATED ENTERPRISE VIZ., MICHAEL ARAM INC., USA. SINCE THE TRANSACTION OF SALE BETWEEN THE ASSESSEE AND THE AE WAS INTERNATIONAL T RANSACTION, THE TP STUDY WAS MADE BY THE ASSESSEE BY WHICH TNMM WAS CO NSIDERED AS ITA-736/D/2009 & 1055/D/2013 3 THE MOST APPROPRIATE METHOD. THE PLI OF THE ASSESS EE WAS COMPUTED AT -8.44% WHEREAS PLI OF THE AVERAGE EIGHT COMPARAB LES SELECTED BY THE ASSESSEE WORKED OUT AT -14.83% WHICH ARE AS UND ER:- S.NO. COMPANY NAME OP/TC% 1. BANARAS BEADS LTD. (11.25) 2. GOLKUNDA DIAMONDS & JEWELLERY LTD. (13.47) 3. HITKARI CHINA LTD. (89.47) 4. INNOVATIVE TECH PACK LTD. (5.28) 5. KISCO CUTLERY LTD. (2.99) 6. LIVING ROOM LIFESTYLE LTD. 2.34 7. PRATIK PANELS LTD. 4.45 8. S & Y MILLS LTD. (2.99) AVERAGE MEAN (14.83) 4. WHILE WORKING OUT THE OPERATIVE PROFIT, THE ASSE SSEE HAD TAKEN THE AVERAGE OF THE MULTI YEAR DATA I.E. ASSESSEE HA S TAKEN THE DATA OF THE COMPARABLE COMPANIES FOR FY 2001-02 AND 2002-03 . THE ASSESSING OFFICER REJECTED THE MULTI YEAR DATA TAKE N BY THE ASSESSEE FOR TP STUDY. HE ALSO REJECTED SOME OF THE COMPARA BLES AND INCLUDED FEW COMPARABLES ON ITS OWN AND THEREAFTER WORKED OU T THE PLI AT 5.99% AS UNDER:- S.NO. COMPANY NAME SALES OP OP/SALES % 1. CENTURY LAMINATING COL.LTD. 112.90 6.10 5.40 2. HANDICRAFTS & HANDLOOMS EXPORTS CORPORATION OF INDIA LTD. 1784.36 17.68 0.99 3. LIVING ROOM LIFESTYLE LTD. 17.10 0.25 1.46 4. PRATIK PANELS LTD. 12.37 0.62 5.01 5. GOLKUNDA DIAMONDS & JEWELLERY LTD. 23.99 1.01 4.21 6. KISHCO CUTLERY LTD. 5.94 1.11 18.68 AVERAGE 5.95% ITA-736/D/2009 & 1055/D/2013 4 5. ON APPEAL, LEARNED CIT(A) PARTLY ACCEPTED THE AS SESSEES CONTENTION AND REJECTED FEW ITEMS SELECTED BY THE T PO AND ALSO INCLUDED FEW ITEMS REJECTED BY THE TPO. HOWEVER, H E ALSO REJECTED THE ASSESSEES THEORY OF MULTI YEAR DATA AND CONSIDERED THE DATA OF THE RELEVANT FINANCIAL YEAR I.E. 2003-04 AND DETERMINED THE PLI AT 1.24% AS UNDER:- S.NO. COMPANY NAME PLI (OP/COST) (IN%) 1. BANARAS BEADS LTD. -3.38 2. LIVING ROOM LIFESTYLE LTD. 0.99 3. PRATIK PANEL LTD. 2.04 4. GOLKUNDA DIAMONDS & JEWELLERY LTD. 2.64 5. KISHCO CUTLERY LTD. 3.91 AVERAGE 1.24 6. THE REVENUE IS NOT IN APPEAL AGAINST THE ORDER O F LEARNED CIT(A) WHILE THE ASSESSEE, AGGRIEVED BY THE ORDER OF THE C IT(A), IS IN APPEAL BEFORE US. 7. AT THE TIME OF HEARING BEFORE US, THE ASSESSEES ARGUMENT WAS TWO FOLD (I) IT IS CONTENDED BY THE LEARNED COUNS EL THAT THE CIT(A) WAS NOT JUSTIFIED IN REJECTING THE USE OF MULTI YEAR DA TA IN TP STUDY BY THE ASSESSEE. HE STATED THAT RULE 10B(4) OF THE INCOME -TAX RULES, WHICH IS THE GUIDELINE FOR DETERMINING ARMS LENGTH PRICE, P RESCRIBED THE USE OF MULTI YEAR DATA. THEREFORE, THE CIT(A) SHOULD NOT HAVE REJECTED THE USE OF MULTI YEAR DATA IN THE TP STUDY. IN SUPPORT OF THIS CONTENTION, HE RELIED UPON THE DECISION OF ITAT IN THE CASE OF TNT INDIA P.LTD. VS. ACIT [2012] 15 ITR (TRIB) 263 (ITAT BANG-A). (II) THE REJECTION OF TWO COMPARABLES BY THE CIT(A). IT WAS STATED BY THE LE ARNED COUNSEL THAT THE CIT(A) REJECTED THREE COMPARABLES VIZ., HITKARI CHINA LTD., INNOVATIVE TECH PACK LTD. AND S & Y MILLS LTD. THE ASSESSEE DOES NOT HAVE MUCH GRIEVANCE AGAINST REJECTION OF S & Y MILL S LTD. BECAUSE, ADMITTEDLY, THEY ARE IN DIFFERENT PRODUCT THAN THE PRODUCT BEING ITA-736/D/2009 & 1055/D/2013 5 MANUFACTURED BY THE ASSESSEE. HOWEVER, IT IS CONTE NDED THAT THE LEARNED CIT(A) WAS NOT JUSTIFIED IN REJECTING THE T WO COMPARABLES CONSIDERED BY THE ASSESSEE IN ITS TP STUDY VIZ., HI TKARI CHINA LTD. AND INNOVATIVE TECH PACK LTD. HE STATED THAT THESE TWO COMPANIES ARE IN THE SAME LINE OF BUSINESS IN WHICH THE ASSESSEE IS CARRYING ON THE BUSINESS. HE ALSO STATED THAT MERELY BECAUSE THEY ARE LOSS MAKING COMPANIES WOULD NOT BE A GROUND FOR REJECTING THEM AS COMPARABLES. IN SUPPORT OF THIS CONTENTION, HE RELIED UPON THE D ECISION OF ITAT IN THE CASE OF TRILOGY E-BUSINESS SOFTWARE INDIA P.LTD. VS . DCIT [2013] 23 ITR (TRIB) 464 (ITAT BANG-A). HE FURTHER STATED TH AT IN THE CASE OF INNOVATIVE TECH PACK LTD., THE CIT(A) HAS ALSO OBSE RVED THAT THE COMPANY DOES NOT HAVE THE FUNDS BECAUSE ITS NET WOR TH IS NEGATIVE. IT IS STATED BY THE LEARNED COUNSEL THAT THE COMPANY H AD SUFFICIENT FUNDS THROUGH DEBT. THEREFORE, MERELY BECAUSE THE COMPAN Y HAS A NEGATIVE NET WORTH, IT SHOULD NOT BE A GROUND FOR REJECTING INNOVATIVE TECH PACK LTD. AS COMPARABLE. HE, THEREFORE, STATED THAT THE ASSESSEES TP STUDY MAY BE ACCEPTED AND THE ADDITION SUSTAINED BY THE C IT(A) SHOULD BE DELETED. 8. LEARNED DR, ON THE OTHER HAND, RELIED UPON THE O RDER OF CIT(A) AND STATED THAT CIT(A) WAS MORE THAN REASONABLE IN DETERMINING THE ARMS LENGTH PRICE JUST BY APPLYING THE PLI OF 1.24 %. HE FURTHER STATED THAT RULE 10B(4) PROVIDES FOR CONSIDERING THE CURRE NT YEAR DATA ONLY. ONLY PROVISO TO THE ABOVE RULE ENABLES THE APPLICAB ILITY OF MULTI YEAR DATA PROVIDED CERTAIN CONDITIONS PRESCRIBED IN THE PROVISO ARE SATISFIED. IT HAS NOWHERE BEEN PROVED BY THE ASSESSEE THAT THE CONDITION PRESCRIBED IN THE PROVISO HAS BEEN SATISFIED. THER EFORE, THE CIT(A) RIGHTLY REJECTED THE USE OF MULTI YEAR DATA BY THE ASSESSEE. WITH REGARD TO COMPARABLES, HE REFERRED TO THE ORDER OF LEARNED CIT(A) AND STATED THAT THE THREE COMPARABLES OF THE ASSESSEE R EJECTED BY THE CIT(A) WERE FOR GOOD AND SUFFICIENT REASONS. IN TH IS REGARD, HE REFERRED TO PAGE 13 OF THE CIT(A)S ORDER AND POINTED OUT TH AT IN THE CASE OF ITA-736/D/2009 & 1055/D/2013 6 HITKARI CHINA LTD., THE DATA RELATING TO FY 2003-04 WHICH IS RELEVANT TO ASSESSMENT YEAR 2004-05 WAS NOT AVAILABLE IN PUBLIC DOMAIN. THE ASSESSEE HAD ALSO CONSIDERED THE DATA OF TWO YEARS BACK WHICH WERE RELEVANT TO AY 2002-03 WHILE THE ASSESSEES APPEAL IS FOR AY 2004-05. WITH REGARD TO INNOVATIVE TECH PACK LTD., THE CIT(A ) HAS RECORDED THE FINDING THAT THEY ARE IN THE BUSINESS OF MANUFACTUR ING PLASTIC BOTTLES WHICH CANNOT BE COMPARED WITH THE BUSINESS OF THE A SSESSEE WHICH IS MANUFACTURING OF HOME DECORATIVE. HE, THEREFORE, S UBMITTED THAT THE ORDER OF LEARNED CIT(A) SHOULD BE SUSTAINED. 9. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF BOTH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. THE FIR ST ARGUMENT OF THE ASSESSEE WAS WITH REGARD TO USE OF MULTI YEAR DATA FOR DETERMINING THE ARMS LENGTH PRICE. RULE 10B OF THE INCOME-TAX RUL ES PROVIDES THE PROCEDURE FOR DETERMINATION OF ARMS LENGTH PRICE U NDER SECTION 92C. SUB-RULE (4) THEREOF READS AS UNDER:- (4) THE DATA TO BE USED IN ANALYZING THE COMPARABI LITY OF AN UNCONTROLLED TRANSACTION WITH AN INTERNATIONAL TRANSACTION SHALL BE THE DATA RELATING TO THE FINAN CIAL YEAR IN WHICH THE INTERNATIONAL TRANSACTION HAS BEEN ENT ERED INTO : PROVIDED PROVIDED PROVIDED PROVIDED THAT DATA RELATING TO A PERIOD NOT BEING M ORE THAN TWO YEARS PRIOR TO SUCH FINANCIAL YEAR MAY ALSO BE CONSIDERED IF SUCH DATA REVEALS FACTS WHICH COULD H AVE AN INFLUENCE ON THE DETERMINATION OF TRANSFER PRICES I N RELATION TO THE TRANSACTIONS BEING COMPARED. 10. FROM THE ABOVE, IT IS EVIDENT THAT AS PER SUB-R ULE (4), THE DATA TO BE USED IN ANALYZING THE COMPARABILITY OF AN UNCONT ROLLED TRANSACTION SHALL BE THE DATA RELATING TO FY IN WHICH THE INTER NATIONAL TRANSACTION HAS BEEN ENTERED INTO. ADMITTEDLY, IN THE CASE OF THE ASSESSEE, THE INTERNATIONAL TRANSACTION HAD TAKEN PLACE DURING TH E FY 2003-04 AND, THEREFORE, THE DATA TO BE USED SHOULD BE THE DATA R ELATING TO FY 2003- ITA-736/D/2009 & 1055/D/2013 7 04 WHILE THE ASSESSEE HAS TAKEN THE DATA RELATING T O FY 2001-02 & 2002-03. THE PROVISO ENABLES FOR THE USE OF DATA O F A PERIOD NOT BEING MORE THAN TWO YEARS PRIOR TO THE SAID FINANCIAL YEA R IF SUCH DATA REVEALS THE FACT WHICH COULD HAVE AN INFLUENCE ON THE DETER MINATION OF TRANSFER PRICES IN RELATION TO THE TRANSACTION BEING COMPARE D. IN THIS CASE, THE ASSESSEE WAS UNABLE TO POINT OUT HOW THE DATA OF TW O EARLIER YEARS WILL INFLUENCE THE DETERMINATION OF TRANSFER PRICES IN R ELATION TO THE TRANSACTION OF FY 2003-04. IN SUPPORT OF HIS CONTE NTION, THE LEARNED COUNSEL FOR THE ASSESSEE HAS RELIED UPON THE DECISI ON OF ITAT BANGALORE BENCH IN THE CASE OF TNT INDIA P.LTD. (SU PRA), WHEREIN THE ITAT HELD AS UNDER:- THAT THE RELEVANT FINANCIAL YEAR WAS 2001-02, WHIL E THE ASSESSEE HAD USED THE DATA PERTAINING TO THE ASSESS MENT YEARS 1999-2000 AND 2000-01. THE ASSESSEES ARGUME NT THAT AT THE TIME OF TRANSFER PRICING STUDY, IT DID NOT HAVE THE DATA RELATING TO RELEVANT COMPARABLE, I.E., FOR THE FINANCIAL YEAR 2001-02 WAS ACCEPTABLE, BUT AS HELD BY THE COMMISSIONER (APPEALS), THE ASSESSEE HAD TO ADOPT T HE DATA AVAILABLE FOR THE TRANSFER PRICING STUDY AT TH E TIME OF FILING OF THE INCOME-TAX RETURNS. IT WAS NOT THE C ASE OF THE ASSESSEE THAT BY THE TIME OF FILING OF THE INCOME-T AX RETURNS, THE DATA RELEVANT TO THE FINANCIAL YEAR 20 01-02, WAS NOT AVAILABLE. FURTHER, AS POINTED OUT BY THE COMMISSIONER (APPEALS), PRIOR YEARS DATA WAS RELEV ANT ONLY IF, THE ASSESSEE WAS ABLE TO PROVE THAT THE PR ICING PATTERN OF THE ASSESSEE FOR THE RELEVANT FINANCIAL YEAR HAD BEEN INFLUENCED BY THE MARKET CONDITIONS/BUSINESS CYCLE/PRODUCT LIFE CYCLE OF THE EARLIER YEARS. THE ASSESSEE BEING IN THE BUSINESS OF COURIER SERVICES, THE FLUC TUATION CAUSED BY BUSINESS/ECONOMIC/PRODUCT LIFE CYCLE WOUL D NOT IN ANY WAY AFFECT THE PRICING PATTERN OF THE SERVIC ES OF THE RELEVANT FINANCIAL YEAR. IN THE ABSENCE OF ANY COG ENT AND REASONABLE REASONS GIVEN BY THE ASSESSEE FOR JUSTIF ICATION OF USE OF MULTIPLE YEARS DATA, EXCEPT FOR PLACING RELIANCE UPON THE OECD GUIDELINES AND ALSO THE PROVISO TO RU LE 10B(4) OF THE INCOME-TAX RULES, 1962, THERE WAS NO REASON TO INTERFERE WITH THE ORDER OF THE COMMISSIONER (AP PEALS). ITA-736/D/2009 & 1055/D/2013 8 11. FROM A READING OF THE ABOVE DECISION, IT IS EVI DENT THAT THE SAID CASE SUPPORTS THE CASE OF THE REVENUE RATHER THAN T HE ASSESSEE. IN VIEW OF THE ABOVE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LEARNED CIT(A) IN REJECTING THE USE OF MULTI YEAR DATA BY T HE ASSESSEE IN ITS TP STUDY AND CONSIDERING THE DATA OF THE FINANCIAL YEA R IN WHICH THE INTERNATIONAL TRANSACTION TOOK PLACE. 12. THE ASSESSEE HAS ALSO DISPUTED THE REJECTION OF TWO COMPARABLES VIZ., HITKARI CHINA LTD. AND INNOVATIVE TECH PACK L TD. IN THIS REGARD, THE FINDING OF LEARNED CIT(A) READS AS UNDER:- 7.1.3 AS REGARDS REJECTION OF HITKARI CHINA LTD. I S CONCERNED, I UPHOLD THE TPOS ACTION BECAUSE, AS PE R PROVISION OF RULE 10B(4), ONLY SAME YEAR DATA IS TO BE TAKEN IN WHICH THE INTERNATIONAL TRANSACTION TAKEN PLACE. AS WE ARE DOING THE COMPARABILITY ANALYSIS FOR A.Y. 2004-05 AND SINCE THE DATA FOR THIS YEAR WAS NOT AVAILABLE IN THE PUBLIC DOMAIN HENCE, TPO IS RIGHT IN REJECTING THE APPELLANTS ACTION OF USING THE DATA FOR A.Y. 2002- 03 FOR THE PURPOSE OF COMPARABILITY. 7.1.6 AS REGARD INNOVATIVE TECH PACK LTD., I UPHOL D THE TPOS ACTION BECAUSE THE FUNCTION PERFORMED BY THE APPELLANT AND BY INNOVATIVE TECH PACK LTD. ARE ALTO GETHER DIFFERENT. APPELLANT HAS SUBMITTED THAT HIS MAIN A CTIVITY IS MANUFACTURING OF HANDICRAFTS THE ITEM DEALT IN BY T HE APPELLANT ARE HOME DECORATIVE, NOT MEANT FOR DAILY USE & INVOLVES LOT OF STYLING AND ARTISTIC IMAGINATION (R EFER APPELLANTS SUBMISSION PG 5 OF PAPER BOOK UNDER HEA DING PROFIT LEVEL INDICATOR) WHEREAS INNOVATIVE TECH PAC K LTD., IS ENGAGED IN MANUFACTURING OF PLASTIC BOTTLES WHICH IS A DAILY CONSUMABLE ITEM. THEREFORE BY NO STRETCH OF IMAGINATION ONE CAN HOLD THAT BOTH APPELLANT AND INNOVATIVE TECH PACK LTD. PERFORM SAME FUNCTIONS, U TILIZE SIMILAR ASSETS AND OPERATE IN SIMILAR RISK ENVIRONM ENT. 7.1.7 FURTHER IT IS NOT OUT OF PLACE TO MENTION HE RE THAT INNOVATIVE TECH PACK LTD. IS A CONTINUOUS LOSS MAKING ENTITY AND HAS A NEGATIVE NET WORTH. AS PER PROWE SS DATABASE THE PROFIT AND NET WORTH OF INNOVATIVE TEC H PACK FOR THE LAST 4 YEARS ARE AS UNDER: ITA-736/D/2009 & 1055/D/2013 9 YEAR ENDING PROFIT BEFORE TAXES (RS. IN CRORE) NET WORTH (RS. IN CRORE) 31.03.2001 -6.13 -0.04 31.03.2002 -3.47 -3.51 31.03.2003 -2.61 -6.13 31.03.2004 -0.68 -6.81 THE APPELLANT CLAIMS THAT INNOVATIVE TECH PACK MUST BE TAKEN AS COMPARABLE, AS IT IS DEALING IN THE HOME P RODUCT, THIS CLAIM OF THE APPELLANT IS NOT CORRECT AT ALL. AS MENTIONED ABOVE APPELLANT HIMSELF HAS STATED THAT H E DEALS IN HANDICRAFTS NOT MEANT FOR DAILY USE AND IT INVOLVES LOT OF STYLING AND ARTISTIC IMAGINATION. 13. FROM THE ABOVE, IT IS EVIDENT THAT IN THE CASE OF HITKARI CHINA LTD., THE DATA OF THE RELEVANT FINANCIAL YEAR IS NO T AVAILABLE IN PUBLIC DOMAIN. THE ASSESSEE ITSELF HAS USED THE DATA OF F Y 2001-02 WHICH WOULD BE RELEVANT FOR AY 2002-03. IN THE ABOVE CIR CUMSTANCES, WHEN THE DATA OF THE RELEVANT FINANCIAL YEAR OF THE SUFF ICIENT NUMBER OF OTHER COMPARABLES IS AVAILABLE, IN OUR OPINION, LEARNED C IT(A) RIGHTLY REJECTED THE USE OF DATA OF FY 2001-02 IN THE CASE OF HITKAR I CHINA LTD. FOR CONSIDERING THE TRANSACTION OF FY 2003-04. WITH RE GARD TO INNOVATIVE TECH PACK LTD., LEARNED CIT(A) HAS POINTED OUT THAT INNOVATIVE TECH PACK LTD. WAS IN THE BUSINESS OF MANUFACTURING OF P LASTIC BOTTLES WHILE THE ASSESSEE IS IN THE BUSINESS OF MANUFACTURING OF HANDICRAFTS. THEREFORE, THE FUNCTION PERFORMED BY THE ASSESSEE I S ALTOGETHER DIFFERENT THAN BY INNOVATIVE TECH PACK LTD. THE LE ARNED COUNSEL FOR THE ASSESSEE HAD ARGUED THAT PLASTIC BOTTLES ARE AL SO HOME APPLIANCES AND THE GOODS MANUFACTURED BY THE ASSESSEE ARE ALSO HOME APPLIANCES AND, THEREFORE, THEY ARE COMPARABLE WITH EACH OTHER. AFTER CONSIDERING THE ARGUMENTS OF BOTH THE SIDES, WE ARE UNABLE TO AGREE WITH THE LEARNED COUNSEL. THE ASSESSEE IS MANUFACT URING HOME DECORATIVES WITH THE USE OF BRASS, ALUMINIUM, STAIN LESS STEEL AND IRON ETC. THE MANUFACTURING OF PLASTIC BOTTLES CANNOT B E COMPARED WITH MANUFACTURING OF HOME DECORATIVE ITEMS. MOREOVER, LEARNED CIT(A) ITA-736/D/2009 & 1055/D/2013 10 HAS FURTHER POINTED OUT THAT IN THE CASE OF INNOVAT IVE TECH PACK LTD., ITS ENTIRE CAPITAL WAS ERODED DUE TO CONTINUOUS LOS SES AND ITS NET WORTH AS ON 1 ST APRIL, 2003 WAS (-) ` 6.13 CRORES WHILE AS ON 31 ST MARCH, 2004, IT WAS (-) ` 6.81 CRORES. THEREFORE, WHEN INNOVATIVE TECH PACK LTD. DID NOT HAVE SUFFICIENT FUNDS TO CARRY ON THE BUSINESS, NATURALLY, ITS PERFORMANCE CANNOT BE COMPARED WITH THE OTHER COMPA NIES. IT WAS CONTENDED BY THE LEARNED COUNSEL THAT INNOVATIVE TE CH PACK LTD. HAD SUFFICIENT FUNDS THROUGH DEBT. HOWEVER, WHEN ANY E NTITY HAD ERODED ITS ENTIRE NET WORTH AND IT IS IN NEGATIVE, THEN NA TURALLY, ITS DEBT WOULD BE PROPORTIONATELY TOO HIGH AND, THEREFORE, IT CANN OT BE CONSIDERED AS A COMPANY COMPARABLE TO ANOTHER COMPANY WHICH HAS S UFFICIENT CAPITAL BASE. IN ANY CASE, THE PRODUCT MANUFACTURE D BY THE ASSESSEE IS ALTOGETHER DIFFERENT THAN THE PRODUCT MANUFACTUR ED BY INNOVATIVE TECH PACK LTD. IN OUR OPINION, THE CIT(A) RIGHTLY REJECTED INNOVATIVE TECH PACK LTD. AS COMPARABLE. IN VIEW OF THE ABOVE , WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LEARNED CIT(A) WITH R EGARD TO GROUND NOS.1 TO 4 OF THE ASSESSEE. THE SAME ARE REJECTED. 14. GROUND NO.5 OF THE ASSESSEES APPEAL READS AS U NDER:- THE EMPLOYEES CONTRIBUTION TO PROVIDENT FUND FOR T HE ASSESSMENT YEAR 2004-05 HAS BEEN INCORRECTLY DISALL OWED ON THE GROUNDS THAT THE SAME WERE DEPOSITED BY THE ASSESSEE BEYOND THE STIPULATED TIME PERIOD READ WIT H THE PROVIDENT FUND ACT AND SECTION 2(24)(X) OF THE INCO ME TAX ACT 1961. THIS IS DESPITE THE FACT THAT A DECISION CONTRARY TO THE SAME HAS BEEN UPHELD BY THE HONOURABLE MUMBA I BENCH OF TRIBUNAL IN THE CASE OF FLUID AIR (INDIA) LTD. VS. DCIT 63 ITD 182. 15. AT THE TIME OF HEARING BEFORE US, IT IS STATED BY THE LEARNED COUNSEL THAT THE PAYMENT OF PF ETC. WAS DEPOSITED D URING THE FINANCIAL YEAR ITSELF AND, THEREFORE, DISALLOWANCE OF ` 1,12,064/- WAS NOT JUSTIFIED. IN SUPPORT OF THIS CONTENTION, HE RELIED UPON THE D ECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. DH ARMENDRA SHARMA ITA-736/D/2009 & 1055/D/2013 11 [2008] 297 ITR 320 (DELHI), OF HON'BLE SUPREME COUR T IN THE CASE OF CIT VS. VINAY CEMENT LTD. [2007] 213 CTR (SC) 268 AND OF ITAT, MUMBAI BENCH IN THE CASE OF FLUID AIR (INDIA) LTD. VS. DCI T [1997] 63 ITD 182. 16. LEARNED DR, ON THE OTHER HAND, RELIED UPON THE ORDERS OF AUTHORITIES BELOW. 17. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES A ND PERUSED THE MATERIAL PLACED BEFORE US. WE FIND THAT LEARNED CI T(A) SUSTAINED THE DISALLOWANCE WITH THE FOLLOWING FINDING:- 12. I HAVE GONE THROUGH THE ABOVE SUBMISSION OF TH E APPELLANT AND ALSO THROUGH THE JUDGMENT OF ITAT MUM BAI BENCH IN THE CASE OF FLUID AIR (INDIA) LTD. IN THE CASE OF FLUID AIR INDIA LTD. THE DETAILS OF LATE PAYMENT WE RE MADE AVAILABLE BEFORE THE APPELLATE AUTHORITIES AND SINC E THE DELAY WAS WITHIN 9 TO 22 DAYS HENCE TRIBUNAL STATED THAT PROVISIONS OF SEC. 36(1)(VA) AND 2(24)(X) SHOULD BE INTERPRETED LIBERALLY KEEPING IN VIEW PRINCIPLES OF EQUITY AND LEGISLATIVE INTENT. I AM AFRAID THAT THIS JUDG EMENT DOESNT COME TO THE RESCUE OF THE APPELLANT AS NO D ETAILS OF LATE PAYMENT ETC. WAS MADE AVAILABLE HENCE, IN THE ABSENCE OF SUCH DETAILS I UPHOLD THE ACTION OF THE AO IN ADDING THE SUM OF RS.1,12,064 UNDER SECTION 2(24)(X ) READ WITH 36(1)(VA). 18. THOUGH AT THE TIME OF HEARING BEFORE US IT IS S TATED BY THE LEARNED COUNSEL THAT ALL THE PAYMENTS WERE MADE DUR ING THE FINANCIAL YEAR, HOWEVER, IT SEEMS THAT NO SUCH CLAIM WAS MADE BEFORE THE ASSESSING OFFICER. BEFORE THE CIT(A) ALSO, THE ASS ESSEE DID NOT FURNISH THESE DETAILS. THE ASSESSEE HAS NOT RELIED UPON TH ESE DECISIONS BEFORE THE ASSESSING OFFICER. THEREFORE, HE HAD NO OCCASI ON TO EXAMINE THE ASSESSEES CASE IN THE LIGHT OF THE DECISION OF HON 'BLE JURISDICTIONAL HIGH COURT OR HON'BLE SUPREME COURT. WE, THEREFORE , SET ASIDE THE ORDER OF THE ASSESSING OFFICER ON THIS POINT AND RE STORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER AND DIRECT HIM TO EXAMINE THIS ISSUE ITA-736/D/2009 & 1055/D/2013 12 AFRESH IN THE LIGHT OF THE ABOVE PRONOUNCEMENTS OF HON'BLE JURISDICTIONAL HIGH COURT AS WELL AS HONBLE APEX C OURT. ITA NO.1055/DEL/2013 ITA NO.1055/DEL/2013 ITA NO.1055/DEL/2013 ITA NO.1055/DEL/2013: :: :- -- - 19. THIS APPEAL BY THE REVENUE IS AGAINST THE CANCE LLATION OF PENALTY OF ` 31,19,450/- LEVIED BY THE ASSESSING OFFICER UNDER S ECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961. 20. THE FACTS OF THE CASE ARE THAT THE ASSESSEE HAS FILED THE RETURN DECLARING LOSS OF ` 47,63,670/- WHICH WAS REVISED TO ` 46,50,758/-. THE ASSESSING OFFICER MADE THE ADDITION OF ` 1,16,20,046/- ON ACCOUNT OF DETERMINATION OF ARMS LENGTH PRICE OF THE INTERNAT IONAL TRANSACTION BY THE TPO. HE ALSO LEVIED THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT AMOUNTING TO ` 31,19,450/- ON THE ABOVE ADJUSTMENT WHICH WAS CANCELLED BY THE LEARNED CIT(A). HENCE, THIS APPEA L BY THE REVENUE. 21. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MA TERIAL PLACED BEFORE US. IN THIS CASE, THE ASSESSING OFFICER HAS MADE THE ADDITION OF ` 1,16,20,046/- AS PER ARMS LENGTH PRICE DETERMINED BY THE TPO. HOWEVER, AFTER THE ORDER OF THE CIT(A), THE ADDITIO N IS REDUCED TO ` 85,83,266/-. THE FACTS OF THE CASE HAVE ALREADY BE EN DISCUSSED IN DETAIL WHILE DECIDING THE ASSESSEES APPEAL IN QUAN TUM I.E. ITA NO.736/DEL/2009 WHEREIN WE HAVE MENTIONED THAT THE ASSESSEE COMPANY IS MANUFACTURING HOME DECORATIVE IN INDIA A ND SELLING TO ITS ASSOCIATED ENTERPRISE VIZ., MICHAEL ARAM INC., USA. AS PER TP STUDY BY THE ASSESSEE, THE SALE PRICE WAS AT ARMS LENGTH WH ICH WAS NOT ACCEPTED BY THE TPO AND WHICH IS PARTLY SUSTAINED B Y THE CIT(A). HOWEVER, THERE IS NO DISPUTE THAT WHATEVER SALE CON SIDERATION WAS RECEIVED BY THE ASSESSEE FROM ITS ASSOCIATED ENTERP RISE HAS DULY BEEN ACCOUNTED FOR. THERE IS NO CONCEALMENT OF ANY FACT OR FURNISHING OF ANY INCORRECT FACTS. MERELY BECAUSE SOME ADDITION HAS BEEN MADE ON ACCOUNT OF DETERMINATION OF ARMS LENGTH PRICE BY T HE TPO, IT CANNOT BE ITA-736/D/2009 & 1055/D/2013 13 SAID THAT THE ASSESSEE EITHER FURNISHED INACCURATE PARTICULARS OF ITS INCOME OR CONCEALED ITS INCOME. ON THESE FACTS, TH E DECISION OF HONBLE APEX COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT.LTD. 322 ITR 158 WOULD BE SQUARELY APPLICABL E, WHEREIN THEIR LORDSHIPS HELD AS UNDER:- WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIE D BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE THERE IS NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271(1)(C). A MERE TAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NO T AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INC OME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANN OT AMOUNT TO FURNISHING INACCURATE PARTICULARS. 22. THE LEARNED DR, AT THE TIME OF HEARING BEFORE U S, HAS RELIED UPON THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT I N THE CASE OF COMMISSIONER OF INCOME-TAX VS. ZOOM COMMUNICATION P .LTD. 327 ITR 510. 23. WE FIND THAT THE HONBLE JURISDICTIONAL HIGH CO URT IN THE CASE OF ZOOM COMMUNICATION P.LTD. (SUPRA) RELIED UPON BY TH E LEARNED DR CONSIDERED THE DECISION OF HONBLE APEX COURT IN TH E CASE OF RELIANCE PETROPRODUCTS PVT.LTD. (SUPRA) AND HELD AS UNDER:- IN THE CASE OF RELIANCE PETROPRODUCTS P.LTD. [2010 ] 322 ITR 158 (SC), THE ADDITION MADE BY THE ASSESSING OF FICER IN RESPECT OF THE INTEREST CLAIMED AS A DEDUCTION UNDE R SECTION 36(1)(III) OF THE ACT WAS DELETED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) THOUGH IT WAS LATER RESTORED, BY THE TRIBUNAL, TO THE ASSESSING OFFICER . THE APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF T HE TRIBUNAL WAS ADMITTED BY THE HIGH COURT. IT WAS, I N THESE CIRCUMSTANCES, THAT THE TRIBUNAL CAME TO THE CONCLU SION THAT THE ASSESSEE HAD NEITHER CONCEALED THE INCOME NOR FILED INACCURATE PARTICULARS THEREOF. IN RECORDING THIS FINDING, THE TRIBUNAL FELT THAT IF TWO VIEWS OF THE CLAIM OF THE ASSESSEE WERE POSSIBLE, THE EXPLANATION OFFERED BY IT COULD NOT BE SAID TO BE FALSE. THIS, HOWEVER, IS N OT THE ITA-736/D/2009 & 1055/D/2013 14 FACTUAL POSITION IN THE CASE BEFORE US. THE FACTS OF THE PRESENT CASE THUS ARE CLEARLY DISTINGUISHABLE. IT IS TRUE THAT MERE SUBMITTING A CLAIM WHICH IS INCORRECT IN LAW WOULD NOT AMOUNT TO GIVING INACCUR ATE PARTICULARS OF THE INCOME OF THE ASSESSEE, BUT IT C ANNOT BE DISPUTED THAT THE CLAIM MADE BY THE ASSESSEE NEEDS TO BE BONA FIDE. IF THE CLAIM BESIDES BEING INCORRECT IN LAW IS MALA FIDE, EXPLANATION 1 TO SECTION 271(1)(C) WOULD COME INTO PLAY AND WORK TO THE DISADVANTAGE OF THE ASSES SEE. THE COURT CANNOT OVERLOOK THE FACT THAT ONLY A SMAL L PERCENTAGE OF THE INCOME-TAX RETURNS ARE PICKED UP FOR SCRUTINY. IF THE ASSESSEE MAKES A CLAIM WHICH IS N OT ONLY INCORRECT IN LAW BUT IS ALSO WHOLLY WITHOUT ANY BAS IS AND THE EXPLANATION FURNISHED BY HIM FOR MAKING SUCH A CLAI M IS NOT FOUND TO BE BONA FIDE, IT WOULD BE DIFFICULT TO SAY THAT HE WOULD STILL NOT BE LIABLE TO PENALTY UNDER SECTI ON 271(1)(C) OF THE ACT. IF WE TAKE THE VIEW THAT A C LAIM WHICH IS WHOLLY UNTENABLE IN LAW AND HAS ABSOLUTELY NO FO UNDATION ON WHICH IT COULD BE MADE, THE ASSESSEE WOULD NOT B E LIABLE TO IMPOSITION OF PENALTY, EVEN IF HE WAS NOT ACTING BONA FIDE WHILE MAKING A CLAIM OF THIS NATURE, THAT WOULD GIVE A LICENCE TO UNSCRUPULOUS ASSESSEES TO MAKE WH OLLY UNTENABLE AND UNSUSTAINABLE CLAIMS WITHOUT THERE BE ING ANY BASIS FOR MAKING THEM, IN THE HOPE THAT THEIR R ETURN WOULD NOT BE PICKED UP FOR SCRUTINY AND THEY WOULD BE ASSESSED ON THE BASIS OF SELF-ASSESSMENT UNDER SECT ION 143(1) OF THE ACT AND EVEN IF THEIR CASE IS SELECTE D FOR SCRUTINY, THEY CAN GET AWAY MERELY BY PAYING THE TA X, WHICH IN ANY CASE, WAS PAYABLE BY THEM. THE CONSEQUENCE WOULD BE THAT THE PERSONS WHO MAKE CLAI MS OF THIS NATURE, ACTUATED BY A MALA FIDE INTENTION T O EVADE TAX OTHERWISE PAYABLE BY THEM WOULD GET AWAY WITHOU T PAYING THE TAX LEGALLY PAYABLE BY THEM, IF THEIR CA SES ARE NOT PICKED UP FOR SCRUTINY. THIS WOULD TAKE AWAY T HE DETERRENT EFFECT, WHICH THESE PENALTY PROVISIONS IN THE ACT HAVE. WE FIND THAT THE ASSESSEE BEFORE US DID NOT EXPLAI N EITHER TO THE INCOME-TAX AUTHORITIES OR TO THE INCO ME-TAX APPELLATE TRIBUNAL AS TO IN WHAT CIRCUMSTANCES AND ON ACCOUNT OF WHOSE MISTAKE, THE AMOUNTS CLAIMED AS DEDUCTIONS IN THIS CASE WERE NOT ADDED, WHILE COMPU TING THE INCOME OF THE ASSESSEE-COMPANY. WE CANNOT LOSE SIGHT OF THE FACT THAT THE ASSESSEE IS A COMPANY WH ICH MUST BE HAVING PROFESSIONAL ASSISTANCE IN COMPUTATI ON OF ITS INCOME, AND ITS ACCOUNTS ARE COMPULSORILY SUBJE CTED TO ITA-736/D/2009 & 1055/D/2013 15 AUDIT. IN THE ABSENCE OF ANY DETAILS FROM THE ASSE SSEE, WE FAIL TO APPRECIATE HOW SUCH DEDUCTIONS COULD HAVE B EEN LEFT OUT WHILE COMPUTING THE INCOME OF THE ASSESSEE-COMP ANY AND HOW IT COULD ALSO HAVE ESCAPED THE ATTENTION OF THE AUDITORS OF THE COMPANY. 24. THUS, AFTER CONSIDERING THE DECISION IN THE CAS E OF RELIANCE PETROPRODUCTS PVT.LTD. (SUPRA), IT WAS STATED BY THE HONBLE JURISDICTIONAL HIGH COURT THAT MERE SUBMITTING A CL AIM WHICH IS INCORRECT IN LAW WOULD NOT AMOUNT TO GIVING INACCUR ATE PARTICULARS OF THE INCOME OF THE ASSESSEE BUT IF THE CLAIM, BESIDE S BEING INCORRECT IN LAW IS MALA FIDE , EXPLANATION 1 TO SECTION 271(1)(C) WOULD COME INT O PLAY. HOWEVER, THE FACTS IN THE CASE OF THE ASSESS EE ARE ALTOGETHER DIFFERENT. THE ASSESSEE HAS NOT MADE ANY CLAIM FOR DEDUCTION WHICH IS FOUND TO BE NOT ALLOWABLE BY THE ASSESSING OFFICER. AS WE HAVE ALREADY NOTED EARLIER, THE ASSESSEE IS MANUFACTURING HOME D ECORATIVE ITEMS, CUTLERY, TABLEWARE ETC. WHICH ARE BEING SUPPLIED TO ITS ASSOCIATED ENTERPRISE VIZ., MICHAEL ARAM INC., USA. SINCE THE TRANSACTION OF SALE BETWEEN THE ASSESSEE AND ASSOCIATED ENTERPRISE WAS INTERNATIONAL TRANSACTION, THE MATTER WAS REFERRED TO TPO FOR DET ERMINING THE ARMS LENGTH PRICE. THE TPO DETERMINED THE ARMS LENGTH PRICE AT MORE THAN THE SALE CONSIDERATION SHOWN BY THE ASSESSEE WHICH IS PARTLY MODIFIED BY THE CIT(A) AND THE ORDER OF CIT(A) IS SUSTAINED BY US WHILE DECIDING THE ASSESSEES APPEAL IN ITA NO.736/DEL/2009. HOWE VER, THERE IS NO DISPUTE THAT WHATEVER SALE CONSIDERATION WAS RECEIV ED BY THE ASSESSEE FROM ITS ASSOCIATED ENTERPRISE WAS DULY ACCOUNTED F OR. IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEE HAS FURNISHED ALL THE PAR TICULARS WITH REGARD TO SALE MADE TO ASSOCIATED ENTERPRISE. THE DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN OF INCOME ARE NOT FOUND TO B E INCORRECT OR ERRONEOUS OR FALSE. MERELY BECAUSE SOME ADJUSTMENT IS MADE BY APPLYING TRANSFER PRICING PROVISIONS, IT CANNOT BE SAID THAT THERE WAS ANY CONCEALMENT OF INCOME OR FURNISHING OF INACCURA TE PARTICULARS. ON THESE FACTS, THE DECISION OF HONBLE APEX COURT IN THE CASE OF RELIANCE PETROPRODUCTS PVT.LTD. (SUPRA) WOULD BE SQUARELY AP PLICABLE AND THE ITA-736/D/2009 & 1055/D/2013 16 LEARNED CIT(A) RIGHTLY CANCELLED THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT. 25. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN IT A NO.736/DEL/2009 IS DEEMED TO BE PARTLY ALLOWED FOR STATISTICAL PURP OSES AND THE APPEAL OF THE REVENUE IN ITA NO.1055/DEL/2013 IS DISMISSED . DECISION PRONOUNCED IN THE OPEN COURT ON 27 TH SEPTEMBER, 2013. SD/- SD/- ( (( (CHANDRA MOHAN GARG CHANDRA MOHAN GARG CHANDRA MOHAN GARG CHANDRA MOHAN GARG) )) ) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT DATED : 27.09.2013 VK. COPY FORWARDED TO: - 1. ASSESSEE : M/S MICHAEL ARAM EXPORTS PVT.LTD., M/S MICHAEL ARAM EXPORTS PVT.LTD., M/S MICHAEL ARAM EXPORTS PVT.LTD., M/S MICHAEL ARAM EXPORTS PVT.LTD., F FF F- -- -61, SUJAN SINGH PARK, 61, SUJAN SINGH PARK, 61, SUJAN SINGH PARK, 61, SUJAN SINGH PARK, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 003. 110 003. 110 003. 110 003. 2. RESPONDENT : INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, WARD WARD WARD WARD- -- -6(4), NEW DELHI. 6(4), NEW DELHI. 6(4), NEW DELHI. 6(4), NEW DELHI. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR