The Income Tax Penalty against Trip Advisor levied under section 271(1)(c) of the Income Tax Act, 1961, was deleted by the Delhi Bench of the Income Tax Appellate Tribunal ( ITAT ), which was presided over by members Chandra Mohan Garg (Judicial Member) and Anil Chaturvedi (Accountant Member).
The appeal filed by the assessee, Trip Advisor Travel India Pvt. Ltd, engaged in providing marketing and other services to Trip Advisor Ltd directed against the order of the Commissioner of Income Tax (Appeals) [CIT(A)].
The assessee filed its return of income for A.Y 2011-12 declaring total income at Rs. 62,04,833.
The Assessing Officer (AO) has noted that during the year under consideration, assessee had entered into international transactions with its Associate Enterprises (AE’s) and the AO referred the case to the Transfer Pricing Officer (TPO) to determine the Arm’s Length Price (ALP) of international transactions.
A rectification of Rs. 26,10,163 was suggested by the TPO under section 92CA(3) of the Income Tax Act.
The AO assessed the assesses’ total income in accordance with the TPO’s directions and came to the conclusion that they owed Rs. 91,02,630 in the order issued under sections 143(3) and 144C(3) of the Income Tax Act. This was accomplished, among other things, by raising the income as a result of the transfer pricing adjustment noted by the TPO.
Aggrieved by the order of the AO the assessee carried the matter before the CIT(A) who directed the TPO to re-compute the transfer pricing adjustment after making changes suggested therein.
The adjustment of Rs. 26,10,163 on account of Transfer Pricing was changed to Rs. 49,45,059 in compliance with the instructions of CIT(A). A penalty of Rs. 16,42,625 was levied on the aforementioned transfer price adjustment by an AO passed under section 271(1)(c) of the Income Tax Act.
The bench observed the issue in the present ground is with respect to levy of penalty under section 271(1)(c) of Income Tax Act on that transfer pricing adjustment that were initially suggested by TPO but were subsequently enhanced by CIT(A).
The bench highlighted the contention of the assessee that if the directions of the Tribunal for inclusion/exclusion of comparables are carried out by the AO then there would remain no basis for making any Transfer Pricing adjustments and also stated that the revenue didn’t contravene the contention.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
