CADBURY SCHWEPPES OVERSEAS LTD,MUMBAI vs. ASST DIT (IT) 1(2), MUMBAI

This appeal u/s 253 is directed by the assessee against the order of CIT (A)-15 Mumbai dated 28.11.2013for Assessment Year 2008-09.Though the assesse has raised as many as six grounds of appeal

We have heard the ld AR for the assessee and the ld Departmental Representative (DR) for the Revenue and perused the material available on record. The ld AR for the assessee would argue that the assessee was not served with the notice of penalty. The assessee’s address of Bhulabahai Desai Road was available on the record as the all correspondence from the office of the TPO was made on the same address. The AO sent the notice of penalty at old address. The assessee came to know about the order only when it was served at the address of assessee at Bhulabahai Desai Road and immediately filed appeal before the ld CIT(A). The ld CIT(A) failed to appreciate the fact and the submission made before him that there was no failure on the part of assessee in maintaining the record as required under Rule 10D. It was argued that the TPO has accepted the ALP in respect of the international transaction of assessee with its AE and no further addition was proposed. The TPO vide his notice u/s 9CA(2) dated 13.1.2010 asked the assessee to submit various information. The assessee submitted its reply and contended that the transaction is replica transaction as of Cadbury India limited and the data submitted is the same as required in case of assessee. The ld TPO took the cognizance of the facts and the documents in case of Cadbury India limited and accepted the ALP of assessee without any variation. On the contrary the ld TPO stated in his order that the assessee had furnished the details in support of the income. It was finally argued that if the documents and the information were not furnished by assessee to the ld TPO, then, how the ld TPO accepted the ALP. On the other hand, ld DR for Revenue relied upon the order of AO and argued that the assessee not participated before the AO during the penalty proceedings despite AY 2008-09 notice. As the assessee failed to furnish the information as require under Rule 10D the AO levied the penalty as provided in the statue.

We have considered the rival contentions of both the parties and perused the order of the authorities below. There is no dispute that Ld TPO has not made any adjustment in respect of the international transaction of assessee with its AE .this fact itself shows that the Ld PTO and no further addition was proposed. We have seen the order of TPO u/s 92CA(3) dated 28/10/2011 which does not mention that there was any failure on the part of assessee to maintain documents as required under Rule 10D. Though, the order contain the reference that assessee failed to submit the document and Transfer Pricing Report. In part-5 of its report ld. TPO referred that “in view of the fact that these replica transactions of Cadbury India Ltd., where ALP is determined of these very transaction. As such the ALP determined by assessee is not being disturbed”. Further, we have seen that assessee filed Form 3CEB, Royalty Agreements entered into with AE and (copy of which are available at page no.19 to 53 of PB). These documents were furnished by assessee along with assessee’s letter dated 16.11.2011 which was duly acknowledged. Further, the assessee furnished the agreement of assessee with its AE with regard to provisions for brand license and technical assistance and no-how vide assessee’s application dated 23.12.2011. The report under Form No. 3CEB is available at page no. 6 to 12 of PB which was furnished to DDIT with letter dated 30.09.2008 for relevant AY. The report is duly certified by C.A. that all the documents in respect of International Transaction have been maintained by assessee. The order in case of assessee u/s 92CA(3) was passed on 28.10.2011 and in case of Cadbury India Ltd. was passed on 30.10.2011. As per our considered opinion, the order u/s 92CA(3) was made by TPO after due consideration of the documents, information furnished by the assessee. The Co-ordinate Bench of this Tribunal in ACIT vs. Smith & Nephew Healthcare Pvt. Ltd. (2016) 16 taxmann.com 5 (Mumbai) on almost similar facts held as under: “the Assessee has to "keep and maintain" information and documents in respect of international transaction entered into with AE. Rule 10D(4) of the Rules envisages that the information and documents specified under sub-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, which is due date for 3 AY 2008-09 filing return of income u/s.139(1) of the Act. The Assessment order and the order imposing penalty u/s.271AA of the Act, does not specify what was the failure on the part of the Assessee under Sec.92D read with Rule 10D of the Rules. The Assessee has in the course of assessment proceedings furnished all details required by the AO and the international transaction with the AE has been accepted to be one confirming to the Arm's 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 price 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 international transaction between the Assessee with its AE having regard to Arm's Length Price. In such circumstances, we are of the view that there is no justification for imposition of penalty.” Further, the Hon’ble Delhi High Court in CIT vs. Leroy Somer & Controls India (P.) Ltd. (2013) 37 taxmann.com 407 (Delhi) held as under: “There cannot be any end or limit to the documentation or information relating to data bases or third parties. When there is general and substantive compliance of the provisions of Rule 10D, it is sufficient. The Legislature was conscious of this fact and, therefore, had specifically stipulated in Section 92D(3) that the Assessing Officer or Commissioner (Appeals) may require a person to furnish any information or document in respect thereof and on failure of the said person to furnish the documentation within the specified time, penalty under Section 271G can be imposed. Thus, for imposing penalty the Revenue must first mention the document and information, which was required to be furnished but was not furnished by the assessee within the specified time. The documentation or information should be one specified in Rule 10D, which has been formulated in terms of Section 92D(1) of the Act. Looking from any quarter and angle, the appeal of the Revenue is misconceived, totally lacking in merits and is, therefore, dismissed.”

In view of the above legal preposition, we are of the opinion that assessee made the sufficient compliance for maintaining the record as required u/s 92D r.w. Rule 10D. We also find from the order of ld. TPO that there was no recommendation for initiating any penalty proceeding u/s 271AA of the Act nor any finding that assessee failed to maintain the record prescribed under Rule 8D. With these observations, the appeal of the assessee is allowed. No order as to cost.