RSM India

Newsflash - ITAT Deletes Sec. 271G Transfer Pricing Penalty for diamond merchants

The Mumbai ITAT in the case of ACIT V/s M/S D. Navinchandra Exports Pvt Ltd dated 25th October 2017  has dismissed Revenue’s appeal and upheld CIT(A)’s deletion of penalty u/s 271G imposed on assessees (diamond manufacturers & traders) for not complying with the statutory obligation cast upon it to furnish requisite details (segmental reporting of the AE and non-AE transactions) for benchmarking the international transactions.

Additionally ITAT also upheld the CIT(A)’s observation that comparison by internal CUP method could only be made if two lots of diamonds were similar in size, colour, shape and clarity, failing which the prices were bound to vary from one diamond to another diamond. Accordingly deliberating on the peculiar facts involved in the business of diamond trading the insistence of the TPO that the assessee should have followed CUP method was misconceived and impractical. 

In this newsflash, above decision of the ITAT has been summarized.  

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