THE ACIT RG 8(3), MUMBAI v. M/S. SMITH & NEPHEW HEALTHCARE (P) LTD, MUMBAI

ITA 5779/MUM/2007 | 2003-2004
Pronouncement Date: 09-11-2011 | Result: Dismissed

Appeal Details

RSA Number 577919914 RSA 2007
Assessee PAN AAACS8136N
Bench Mumbai
Appeal Number ITA 5779/MUM/2007
Duration Of Justice 4 year(s) 2 month(s) 1 day(s)
Appellant THE ACIT RG 8(3), MUMBAI
Respondent M/S. SMITH & NEPHEW HEALTHCARE (P) LTD, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 09-11-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted L
Tribunal Order Date 09-11-2011
Date Of Final Hearing 08-11-2011
Next Hearing Date 08-11-2011
Assessment Year 2003-2004
Appeal Filed On 07-09-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH L MUMBAI BEFORE SHRI R.S.SYAL (A.M) & SHRI N.V.VASUDEVAN(J. M) ITA NO.5779/MUM/07(A.Y.2003-04) THE ACIT RANGE 8(3) ROOM NO.204 2 ND FLOOR AAYKAY BHAVAN M.K.ROAD MUMBAI 400 020. (APPELLANT) VS. M/S. SMITH & NEWPHEW HEALTHCARE (P) LTD. 323/B CHINTAMANI PLAZZA ANDHERI KURLA ROAD ANDHERI (E) MUMBAI -99 PAN:AAACS 8136N (RESPONDENT) APPELLANT BY : SHRI JITENDRA YADAV RESPONDENT BY : SHRI ARVIND SONDE & SHRI NIRAJ SHETH ORDER PER N.V.VASUDEVAN J.M THIS IS AN APPEAL BY THE REVENUE AGAINST THE ORDER DATED 12.06.2007 OF CIT(A)-XXIX MUMBAI RELATING TO AY 03-04. THE GROUND OF APPEAL OF THE REVENUE READS AS FOLLOWS: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN DELETING THE PENALTY OF RS.13 57 72 0/- LEVIED U/S. 271AA FOR NON-COMPLIANCE OF PROVISION OF SEC. 92D W ITHOUT APPRECIATING THE PROVISIONS OF SEC. 92D/92D(3) 2. IN THIS APPEAL THE REVENUE HAS CHALLENGED THE AC TION OF THE CIT(A) IN CANCELING THE PENALTY IMPOSED ON THE ASSESSEE U/S.2 71AA OF THE INCOME TAX ACT 1961 (ACT). SEC.271AA OF THE ACT PROVIDES AS FOLLOWS: 271AA. PENALTY FOR FAILURE TO KEEP AND MAINTAIN INF ORMATION AND DOCUMENT IN RESPECT OF INTERNATIONAL TRANSACTION.W ITHOUT PREJUDICE TO THE PROVISIONS OF SECTION 271 IF ANY PERSON FAI LS TO KEEP AND MAINTAIN ANY SUCH INFORMATION AND DOCUMENT AS REQUI RED BY SUB- 2 SECTION (1) OR SUB-SECTION (2) OF SECTION 92D THE ASSESSING OFFICER OR COMMISSIONER (APPEALS) MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY A SUM EQUAL TO TWO PER CENT. OF THE VAL UE OF EACH INTERNATIONAL TRANSACTION ENTERED INTO BY SUCH PERS ON. THE PROVISIONS OF SEC.271AA WERE INTRODUCED BY THE FINANCE ACT 2001 W.E.F. 1-4-2002. SEC.92D PROVIDES AS FOLLOWS: SEC.92D: MAINTENANCE KEEPING OF INFORMATION AND DOCUMENT BY PERSONS ENTERING INTO AN INTERNATIONAL TRANSACTION. (1) EVERY PERSON WHO HAS ENTERED INTO AN INTERNATIO NAL TRANSACTION SHALL KEEP AND MAINTAIN SUCH INFORMATION AND DOCUME NT IN RESPECT THEREOF AS MAY BE PRESCRIBED. (2) WITHOUT PREJUDICE TO THE PROVISIONS CONTAINED I N SUB-SECTION (1) THE BOARD MAY PRESCRIBE THE PERIOD FOR WHICH THE IN FORMATION AND DOCUMENT SHALL BE KEPT AND MAINTAINED UNDER THAT SU B-SECTION RULE 10D OF THE INCOME TAX RULES 1962 PRESCRIBES T HE INFORMATION AND DOCUMENTS REQUIRED TO BE MAINTAINED BY EVERY PERSON WHO HAS ENTERED INTO AN INTERNATIONAL TRANSACTION. THE SAME READS AS FO LLOWS: 10D. INFORMATION AND DOCUMENTS TO BE KEPT AND MAIN TAINED UNDER SECTION 92D.(1) EVERY PERSON WHO HAS ENTERED INTO AN INTERNATIONAL TRANSACTION SHALL KEEP AND MAINTAIN THE FOLLOWING I NFORMATION AND DOCUMENTS NAMELY : (A) A DESCRIPTION OF THE OWNERSHIP STRUCTURE OF THE ASSESSEE ENTERPRISE WITH DETAILS OF SHARES OR OTHER OWNERSHIP INTEREST HELD THEREIN BY OTHER ENTERPRISES ; (B) A PROFILE OF THE MULTINATIONAL GROUP OF WHICH T HE ASSESSEE ENTERPRISE IS A PART ALONG WITH THE NAME ADDRESS LEGAL STATU S AND COUNTRY OF TAX RESIDENCE OF EACH OF THE ENTERPRISES COMPRISED IN T HE GROUP WITH WHOM INTERNATIONAL TRANSACTIONS HAVE BEEN ENTERED INTO B Y THE ASSESSEE AND OWNERSHIP LINKAGES AMONG THEM ; (C) A BROAD DESCRIPTION OF THE BUSINESS OF THE ASSE SSEE AND THE INDUSTRY IN WHICH THE ASSESSEE OPERATES AND OF THE BUSINESS OF THE ASSOCIATED ENTERPRISES WITH WHOM THE ASSESSEE HAS TRANSACTED ; (D) THE NATURE AND TERMS (INCLUDING PRICES) OF INTE RNATIONAL TRANSACTIONS ENTERED INTO WITH EACH ASSOCIATED ENTE RPRISE DETAILS OF PROPERTY TRANSFERRED OR SERVICES PROVIDED AND THE Q UANTUM AND THE VALUE OF EACH SUCH TRANSACTION OR CLASS OF SUCH TRA NSACTION ; (E) A DESCRIPTION OF THE FUNCTIONS PERFORMED RISKS ASSUMED AND ASSETS EMPLOYED OR TO BE EMPLOYED BY THE ASSESSEE AND BY T HE ASSOCIATED ENTERPRISES INVOLVED IN THE INTERNATIONAL TRANSACTI ON ; 3 (F) A RECORD OF THE ECONOMIC AND MARKET ANALYSES F ORECASTS BUDGETS OR ANY OTHER FINANCIAL ESTIMATES PREPARED BY THE ASSES SEE FOR THE BUSINESS AS A WHOLE AND FOR EACH DIVISION OR PRODUC T SEPARATELY WHICH MAY HAVE A BEARING ON THE INTERNATIONAL TRANSACTION S ENTERED INTO BY THE ASSESSEE ; (G) A RECORD OF UNCONTROLLED TRANSACTIONS TAKEN INT O ACCOUNT FOR ANALYSING THEIR COMPARABILITY WITH THE INTERNATIONA L TRANSACTIONS ENTERED INTO INCLUDING A RECORD OF THE NATURE TER MS AND CONDITIONS RELATING TO ANY UNCONTROLLED TRANSACTION WITH THIRD PARTIES WHICH MAY BE OF RELEVANCE TO THE PRICING OF THE INTERNATIONAL TRANSACTIONS ; (H) A RECORD OF THE ANALYSIS PERFORMED TO EVALUATE COMPARABILITY OF UNCONTROLLED TRANSACTIONS WITH THE RELEVANT INTERNA TIONAL TRANSACTION ; (I) A DESCRIPTION OF THE METHODS CONSIDERED FOR DET ERMINING THE ARMS LENGTH PRICE IN RELATION TO EACH INTERNATIONAL TRAN SACTION OR CLASS OF TRANSACTION THE METHOD SELECTED AS THE MOST APPROP RIATE METHOD ALONG WITH EXPLANATIONS AS TO WHY SUCH METHOD WAS S O SELECTED AND HOW SUCH METHOD WAS APPLIED IN EACH CASE ; (J) A RECORD OF THE ACTUAL WORKING CARRIED OUT FOR DETERMINING THE ARMS LENGTH PRICE INCLUDING DETAILS OF THE COMPARABLE D ATA AND FINANCIAL INFORMATION USED IN APPLYING THE MOST APPROPRIATE M ETHOD AND ADJUSTMENTS IF ANY WHICH WERE MADE TO ACCOUNT FOR DIFFERENCES BETWEEN THE INTERNATIONAL TRANSACTION AND THE COMPA RABLE UNCONTROLLED TRANSACTIONS OR BETWEEN THE ENTERPRIS ES ENTERING INTO SUCH TRANSACTIONS ; (K) THE ASSUMPTIONS POLICIES AND PRICE NEGOTIATION S IF ANY WHICH HAVE CRITICALLY AFFECTED THE DETERMINATION OF THE ARMS LENGTH PRICE ; (L) DETAILS OF THE ADJUSTMENTS IF ANY MADE TO TRA NSFER PRICES TO ALIGN THEM WITH ARMS LENGTH PRICES DETERMINED UNDER THES E RULES AND CONSEQUENT ADJUSTMENT MADE TO THE TOTAL INCOME FOR TAX PURPOSES ; (M) ANY OTHER INFORMATION DATA OR DOCUMENT INCLUD ING INFORMATION OR DATA RELATING TO THE ASSOCIATED ENTERPRISE WHICH M AY BE RELEVANT FOR DETERMINATION OF THE ARMS LENGTH PRICE. (2) NOTHING CONTAINED IN SUB-RULE (1) SHALL APPLY I N A CASE WHERE THE AGGREGATE VALUE AS RECORDED IN THE BOOKS OF ACCOUN T OF INTERNATIONAL TRANSACTIONS ENTERED INTO BY THE ASSESSEE DOES NOT EXCEED ONE CRORE RUPEES : PROVIDED THAT THE ASSESSEE SHALL BE REQUIRED TO SUB STANTIATE ON THE BASIS OF MATERIAL AVAILABLE WITH HIM THAT INCO ME ARISING FROM INTERNATIONAL TRANSACTIONS ENTERED INTO BY HIM HAS BEEN COMPUTED IN ACCORDANCE WITH SECTION 92. (3) THE INFORMATION SPECIFIED IN SUB-RULE (1) SHALL BE SUPPORTED BY AUTHENTIC DOCUMENTS WHICH MAY INCLUDE THE FOLLOWIN G : (A) OFFICIAL PUBLICATIONS REPORTS STUDIES AND DAT A BASES FROM THE GOVERNMENT OF THE COUNTRY OF RESIDENCE OF THE ASSOC IATED ENTERPRISE OR OF ANY OTHER COUNTRY ; 4 (B) REPORTS OF MARKET RESEARCH STUDIES CARRIED OUT AND TECHNICAL PUBLICATIONS BROUGHT OUT BY INSTITUTIONS OF NATIONA L OR INTERNATIONAL REPUTE ; (C) PRICE PUBLICATIONS INCLUDING STOCK EXCHANGE AND COMMODITY MARKET QUOTATIONS ; (D) PUBLISHED ACCOUNTS AND FINANCIAL STATEMENTS REL ATING TO THE BUSINESS AFFAIRS OF THE ASSOCIATED ENTERPRISES ; (E) AGREEMENTS AND CONTRACTS ENTERED INTO WITH ASSO CIATED ENTERPRISES OR WITH UNRELATED ENTERPRISES IN RESPECT OF TRANSAC TIONS SIMILAR TO THE INTERNATIONAL TRANSACTIONS ; (F) LETTERS AND OTHER CORRESPONDENCE DOCUMENTING AN Y TERMS NEGOTIATED BETWEEN THE ASSESSEE AND THE ASSOCIATED ENTERPRISE ; (G) DOCUMENTS NORMALLY ISSUED IN CONNECTION WITH VA RIOUS TRANSACTIONS UNDER THE ACCOUNTING PRACTICES FOLLOWED. (4) THE INFORMATION AND DOCUMENTS SPECIFIED UNDER S UB-RULES (1) AND (2) SHOULD AS FAR AS POSSIBLE BE CONTEMPORANEOUS AND SHOULD EXIST LATEST BY THE SPECIFIED DATE REFERRED TO IN CLAUSE (IV) OF SECTION 92F : PROVIDED THAT WHERE AN INTERNATIONAL TRANSACTION CO NTINUES TO HAVE EFFECT OVER MORE THAN ONE PREVIOUS YEAR FRESH DOCUMENTATION NEED NOT BE MAINTAINED SEPARATELY IN RESPECT OF EAC H PREVIOUS YEAR UNLESS THERE IS ANY SIGNIFICANT CHANGE IN THE NATUR E OR TERMS OF THE INTERNATIONAL TRANSACTION IN THE ASSUMPTIONS MADE OR IN ANY OTHER FACTOR WHICH COULD INFLUENCE THE TRANSFER PRICE AN D IN THE CASE OF SUCH SIGNIFICANT CHANGE FRESH DOCUMENTATION AS MAY BE N ECESSARY UNDER SUB-RULES (1) AND (2) SHALL BE MAINTAINED BRINGING OUT THE IMPACT OF THE CHANGE ON THE PRICING OF THE INTERNATIONAL TRAN SACTION. (5) THE INFORMATION AND DOCUMENTS SPECIFIED IN SUB- RULES (1) AND (2) SHALL BE KEPT AND MAINTAINED FOR A PERIOD OF EIGHT YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. RULE 10-D OF THE IT RULES 1962 WERE INTRODUCED BY INCOME TAX (21ST AMEND.) RULES 2001 WEF. 21-8-2001. 3. THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINES S OF MANUFACTURING AND DISTRIBUTING NON-PHARMACEUTICAL HEALTHCARE PROD UCTS. THEY INCLUDE ALL KINDS OF SURGICAL DRESSINGS BANDAGES WOUND CLOSUR ES/DRESSINGS VARIETIES OF SURGICAL INSTRUMENTS CASTING MATERIALS SUPPORT S REHABILITATION EQUIPMENT ALL KINDS OF ORTHOPEDIC IMPLEMENTS PLAT ES SCREWS NAILS AND ALL TYPES OF MATERIAL AND EQUIPMENT FOR ARTHROSCOPIC AN D MINIMALLY INVASIVE SURGERY. THE ASSESSEE DURING THE PREVIOUS YEAR REL EVANT TO AY 03-04 HAD 5 ENTERED INTO INTERNATIONAL TRANSACTIONS WITH ITS AS SOCIATE ENTERPRISES(AE) AND THEREFORE IN TERMS OF SEC.92 OF THE ACT INCOME FROM SUCH TRANSACTIONS HAS TO BE COMPUTED HAVING REGARD TO THE ARMS LENG TH PRICE. THE ASSESSEE DID NOT FILE REPORT OF AN ACCOUNTANT IN FORM NO.3CE B AS REQUIRED BY SEC.92E OF THE ACT IN RESPECT OF THE INTERNATIONAL TRANSACT ION ENTERED INTO BY IT WITH ITS AE. THE ASSESSEE HAD PAID PENALTY FOR SUCH DEF AULT U/S.271BA OF THE ACT. IN THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE FILED A TRANSFER PRICING REPORT IN RESPECT OF INTERNATIONAL TRANSACT IONS WITH ITS AE ON 3.1.2006. THEREAFTER THE AO CALLED UPON THE ASSESS EE TO FURNISH INFORMATION AND DOCUMENTS RELATING TO THE INTERNATIONAL TRANSAC TION WITH AE. THE FOLLOWING WERE THE RELEVANT RECORD OF PROCEEDINGS B EFORE AO: DATE DETAILS OF PROCEEDINGS. 03/01/2006 MR.HEMAN ASHER CA ATTENDED AND PRODUCED THE TRANSF ER PRICING STUDY REPORT WHICH EXAMINED AND FOLLOWING ISSUES EMERGED. 1) NO CHART OF TRANSACTION GIVEN WITH ASSOCIATE ENTERP RISE. 2) HOW THE ARMS LENGTH PRICE OF TRANSACTION IS NOT MENTIONED. 3) AS PER SALES AND PURCHASE DETAILS TOTAL TRANSACTION S IS RS.6 78 86 119/- BUT NO REPORT U/S. 92E IN FORM NO.3CEB IS FILED. 4) FILE THE TRANSACTION METHOD APPLIED WITH ASSOCIATE CONCERN. THE CASE IS FIXED FOR 10/01/2006 AT 11.00 AM 10/1/2006 MR. ASHER CA AND MR. MEHUL ATTENDED AND FILED THE DETAILS. THEY ARE ASKED TO FILE. I) THE COMPLETE CHART OF IMPORT AND EXPORT. II) FILE THE SUPPORTING TO SHOW THAT THE MARGIN AS SHOWN BY ARE CORRECT. III) PRODUCE THE RELEVANT IMPORT AND EXPORT INVOICE. THE CASE IS FIXED FOR 16/01/2006 AT 11.30 AM 16/01/2006 MR. VIJAY ESHAWARAN CA AND MR. MEHUL CA ATTENDED AND FILED THE DETAILS IN PART. FURTHER ASKED TO FILE THE BALANCE DETAILS. CASE IS FIXED FOR 20/01/2006 AT 10.00 AM 20/01/2006 MR. ERIC MEHTA CA AND MR. VIJAY EASHWARAN CA ATTE NDED AND FILED THE DETAILS OF INTERNATIONAL TRANSACTION AND ASKED TO 6 PRODUCE THE VOUCHERS SHOWING THE PRODUCT AND SALE P RICE. CASE IS FIXED FOR 27/01/2006 AT 11.00 AM 30/01/2006 ORDER U/S. 143(3) PASSED 4. IN THE ORDER OF ASSESSMENT THE AO ACCEPTED THE INTERNATIONAL TRANSACTION WITH AE AS AT ARMS LENGTH PRICE AND NO ADJUSTMENT WHATSOEVER WAS MADE. THE RELEVANT OBSERVATIONS OF THE AO IN T HE ORDER OF ASSESSMENT IS AS FOLLOWS: 11. NON MAINTENANCE OF INFORMATION AND DOCUMENT IN RESP ECT OF INTERNATIONAL TRANSACTIONS . DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT IS OBSERVED THAT ASSESSE HAS TOTAL INTERNATIONAL TRANSACTION AT RS.6 78 86 119/- BUT THE ASSESSE COMPANY IS NOT MAINTAIN INFORMATION AND DOCUMENTS IN RESPECT OF THESE TRANSACTIONS AS REQUIRED BY SUB-CL AUSE(1) AND SUB- CLAUSE(2) OF SEC.92D OF IT ACT 1961. SINCE THE AS SESSE FAILED TO MAINTAIN THE BOOKS OF ACCOUNTS FOR INTERNATIONAL TR ANSACTIONS PENALTY U/S.271AA IS INITIATED SEPARATELY. 5. IN RESPONSE TO THE SHOW CAUSE NOTICE BEFORE IMPO SING PENALTY U/S.271AA OF THE ACT THE ASSESSEE SUBMITTED THAT I T HAD MAINTAINED ALL SUCH INFORMATION AND DOCUMENTATION AS PRESCRIBED BY RULE-10D OF THE RULES AND HAD PRODUCED THE SAME BEFORE THE AO FROM TIME T O TIME AS AND WHEN REQUIRED BY THE LEARNED ASSESSING OFFICER. IT WAS SUBMITTED THAT THESE INFORMATION AND DOCUMENTS ARE ONLY REQUIRED TO BE M AINTAINED BY THE ASSESSEE AND THERE IS NO STATUTORY REQUIREMENT THAT THEY SHOULD BE FILED ALONG WITH THE RETURN OF INCOME. THE AO HOWEVER HE LD THAT THE ASSESSEE FAILED TO MAINTAIN INFORMATION AND DOCUMENTS AS PRE SCRIBED BY RULE 10D OF THE RULES AND IMPOSED PENALTY U/S.271AA OF THE ACT. 6. BEFORE CIT(A) THE ASSESSEE POINTED OUT THAT IT HAD FILED A TRANSFER PRICING STUDY REPORT BEFORE THE AO WHICH CONTAINED ALL THE DETAILS AS ARE REQUIRED BY RULE 10D OF THE RULES. IT WAS ALSO POI NTED OUT THAT THE ASSESSEE IN ITS SUBMISSION DATED JANUARY 10 2006 FILED THE FOLLOWING DETAILS IN 7 RESPECT OF THE INTERNATIONAL TRANSACTIONS ENTERED I NTO BY IT DURING THE FINANCIAL YEAR ENDED MARCH 31 2003: - KEY INTERNATIONAL TRANSACTIONS ENTERED INTO BY TH E ASSESSEE WITH ASSOCIATED ENTERPRISES; AND - DETAILS OF THE METHODS USED BY THE ASSESSEE TO DE TERMINE THE ARMS LENGTH NATURE OF THE INTERNATIONAL TRANSACTIONS FURTHER THE FACT THAT THE ASSESSEE HAD DULY MAINTA INED THE PRESCRIBED DOCUMENTATION AS PER RULE I0D OF THE RULES WAS CLE ARLY STATED BY THE ASSESSEE IN CLAUSE 3 OF THE SUBMISSION DATED JANUAR Y 10 2006. THE FACT THAT THESE DETAILS WERE TAKEN ON RECORD BY THE LEAR NED ASSESSING OFFICER WITHOUT DISPUTING THEIR CORRECTNESS WAS ALSO HIGHLI GHTED. IT WAS FURTHER BROUGHT TO THE NOTICE OF THE CIT(A) BY SUBMISSION D ATED JANUARY 16 2006 THE ASSESSEE PROVIDED CALCULATIONS OF THE MARGINS E ARNED BY THE ASSESSEE FROM ITS INTERNATIONAL TRANSACTIONS. IT WAS FURTHE R SUBMITTED THAT BY SUBMISSION DATED JANUARY 20 2006 DETAILS OF ALL E XPORTS AND IMPORTS MADE BY THE ASSESSEE DURING THE FINANCIAL YEAR ENDED MAR CH 31 2003 WERE PROVIDED. THE INVOICES IN RESPECT OF IMPORTS AND E XPORTS MADE BY THE ASSESSEE DURING THE FINANCIAL YEAR ENDED MARCH 31 2003 WERE ALSO PROVIDED. BASED ON THE ABOVE THE ASSESSEE SUBMITT ED THAT IT HAD DULY MAINTAINED ALL THE INFORMATION AND DOCUMENTATION PR ESCRIBED IN RULE 10D OF THE RULES. IT WAS REITERATED THAT DOCUMENTATION HAV E BEEN PRODUCED BEFORE THE LEARNED ASSESSING OFFICER FROM TIME TO TIME AS AND WHEN REQUESTED. IT WAS HIGHLIGHTED THAT THERE WAS NO EVIDENCE TO PROVE THAT APPROPRIATE DOCUMENTATION HAS NOT BEEN MAINTAINED BY THE ASSESS EE. 7. THE CIT(A) WAS OF THE VIEW THAT THE RELEVANT PRO VISIONS OF LAW CASTS AN OBLIGATION ON AN ASSESSEE WHO HAS ENTERED INTO INTE RNATIONAL TRANSACTION WITH AN AE SHALL KEEP AND MAINTAIN INFORMATION AN D DOCUMENTS. THUS THESE DOCUMENTS NEED ONLY TO BE PRODUCED AS AND WHE N DEMANDED BY THE AO. HE HELD THAT THE ASSESSEE HAS PRODUCED BEFORE THE AO ALL INFORMATION AND DOCUMENTS DEMANDED BY THE AO. HE ALSO FOUND TH AT THE AO HAS 8 ACCEPTED THAT THE PRICE ADOPTED IN RESPECT OF THE I NTERNATIONAL TRANSACTION WITH THE AE WAS AT ARMS LENGTH AND NO ADDITION WAS MADE. HE HELD THAT THERE IS NO MATERIAL ON RECORD BROUGHT OUT EITHER I N THE ORDER OF ASSESSMENT OR IN THE ORDER IMPOSING PENALTY AS TO WHAT INFORMA TION OR DOCUMENTS THE ASSESSEE DID NOT MAINTAIN. THE CIT(A)WAS THEREFORE OF THE VIEW THAT THE PENALTY IMPOSED BY THE AO WAS WITHOUT ANY BASIS AND CANCELLED IMPOSITION OF PENALTY. AGGRIEVED BY THE ORDER OF THE CIT(A) THE REVENUE HAS FILED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 8. BEFORE US THE LEARNED D.R. RELIED ON THE ORDER O F THE AO. THE LEARNED COUNSEL FOR THE ASSESSEE RELIED ON THE ORDER OF THE CIT(A). 9. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND AR E OF THE VIEW THAT THE ORDER OF THE CIT(A) DOES NOT CALL FOR ANY INTERFERE NCE. AS RIGHTLY HELD BY THE CIT(A) THE REQUIREMENT OF LAW IS THAT THE ASSESSEE HAS TO KEEP AND MAINTAIN INFORMATION AND DOCUMENTS IN RESPECT OF I NTERNATIONAL TRANSACTION ENTERED INTO WITH AE. RULE 10D(4) OF THE RULES ENV ISAGES THAT THE INFORMATION AND DOCUMENTS SPECIFIED UNDER SUB-RULES (1) AND (2) SHOULD AS FAR AS POSSIBLE BE CONTEMPORANEOUS AND SHOULD EXIS T LATEST BY THE SPECIFIED DATE REFERRED TO IN CLAUSE (IV) OF SECTION 92F WHI CH IS DUE DATE FOR FILING RETURN OF INCOME U/S.139(1) OF THE ACT. THE ASSESS MENT ORDER AND THE ORDER IMPOSING PENALTY U/S.271AA OF THE ACT DOES NOT SP ECIFY WHAT WAS THE FAILURE ON THE PART OF THE ASSESSEE UNDER SEC.92D R EAD WITH RULE 10D OF THE RULES. THE ASSESSEE HAS IN THE COURSE OF ASSESSMEN T PROCEEDINGS FURNISHED ALL DETAILS REQUIRED BY THE AO AND THE INTERNATIONA L TRANSACTION WITH THE AE HAS BEEN ACCEPTED TO BE ONE CONFIRMING TO THE ARMS LENGTH PRICE. NO ADDITION WHATSOEVER WAS MADE BY THE AO IN THE ORDER OF ASSESSMENT IN RESPECT OF THE INTERNATIONAL TRANSACTION WITH AE. THUS THE AO HAS FOUND NO DIFFICULTY IN EXAMINING THE CORRECTNESS OF THE PRIC E ADOPTED BY THE ASSESSEE IN RESPECT OF INTERNATIONAL TRANSACTION WITH THE AE . IN OTHER WORDS THE AO WAS NOT HANDICAPPED IN EXAMINING THE PRICE OF THE I NTERNATIONAL TRANSACTION 9 BETWEEN THE ASSESSEE WITH ITS AE HAVING REGARD TO A RMS LENGTH PRICE. IN SUCH CIRCUMSTANCES WE ARE OF THE VIEW THAT THERE I S NO JUSTIFICATION FOR IMPOSITION OF PENALTY. FOR THE REASONS GIVEN ABOVE WE CONFIRM THE ORDER OF THE CIT(A) AND DISMISS THE APPEAL BY THE REVENUE. 10. IN THE RESULT THE APPEAL BY THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 9 TH DAY OF NOV. 2011. SD/- SD/- (R.S.SYAL ) (N.V.VASUDEVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DATED. 9 TH NOV .2011 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3 . THE CIT CITY CONCERNED 4. THE CIT(A)- CONCERNED 5. THE D.RL BENCH. (TRUE COPY) BY ORDER ASST. REGISTRAR I TAT MUMBAI BENCHES MUMBAI. VM. 10 DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 8/11/11 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 8/11/11 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7. FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER