The Mumbai Bench of the Income Tax Appellate Tribunal held that a difference in opinion in the selection and application of a transfer pricing method used in the course of determining the arm’s length price of an international transaction cannot attract a penalty under section 271(1)(c) of the Income-tax Act, 1961.

The Income Tax Department had levied a penalty after rejecting the Transactional Net Margin Method adopted by a taxpayer. The Income Tax Department applied the Comparable Uncontrolled Price Method, another method allowed under the transfer pricing rules, and had argued that the taxpayer was liable on the grounds of concealed income.

Related Links:
(a) Economic Times Articles