IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH MUMBAI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER Assessment Year: 2012-13 International Specialty Circle 15(1)(2), Products (India) Private Mumbai Limited

8-2-698, Flat No 301, M J Towers, Rd Number 12, Vs.

Syed Nagar, Banjara Hills, Hyderabad, Telangana, 500034 (PAN : AABCI8200Q)

(Appellant) (Respondent)

Present for:

Assessee : Shri P.V.S.S. Prasad, CA Revenue : Shri Virabhadra S. Mahajan, Sr. DR Date of Hearing : 05.08.2025 Date of Pronouncement : 26.08.2025 O R D E R PER GIRISH AGRAWAL, ACCOUNTANT MEMBER:

This appeal filed by the assessee is against the order of Ld. CIT(A)-

56, Mumbai, vide order no. ITBA/APL/S/250/2025- 26/1075621948(1), dated 15/04/2025 passed against the penalty order by National Faceless Assessment Centre, Delhi, u/s. 271(1)(c) of the Income-tax Act (hereinafter referred to as the “Act”), dated

29.01.2022 for Assessment Year 2012-13.

2. Grounds taken by the assessee are reproduced as under:

" The impugned order passed by the Commissioner of Income Tax (Appeals) (Ld. CIT) is bad in law and contrary to the facts and circumstances of the appellant's case.

2. The order passed by the Ld. CIT(A) is legally unsustainable as the conclusion drawn in his order does not relate with the facts of the appellant and thereby factually incorrect.

3. On the facts and the circumstances of the case, the Ld. CIT (A) erred in upholding the imposition of penalty by Ld. AO of INR 21,56,858/- u/s. 271 (1) (c) of the Income Тах Act, 1961 (Act) for concealment/furnishing of inappropriate particulars of income in respect of transfer pricing adjustment.

4. The Ld. CIT(A) has erred in law and on facts by erroneously treating the addition made on account of transfer pricing adjustment as concealment or furnishing of inaccurate particulars of income u/s. 271 (1) (c) of the Act, though appellant's case is squarely covered by exception carved out in Explanation 7 to

271(1)(C).

5. Any other ground that may be urged at the time of hearing with the prior approval of the Hon'ble Tribunal.

3. The only issue involved in the present appeal is in respect of imposition of penalty of Rs.21,56,858/- on account of transfer pricing adjustment, which according to the assessee is squarely covered by exception carved out in explanation 7 to section 271(1)(c) of the Act.

4. Brief facts of the case are that assessee is engaged in the business of trading, R & D and Corporate Support Services. In the trading division, it is engaged in distribution of specialty chemicals (including agrochemicals, biocides, food ingredients, beverages, performance enhancing products, advance materials and industrial products). Assessee filed its return of income on 28.09.2012, reporting total income at Rs. 2,91,15,520/-. Subsequently, case was selected for scrutiny assessment. A reference u/s 92CA(1) of the Act was made for determination of arm's length price (ALP) in respect of international transactions undertaken by the assessee. Ld. TPO made the following adjustments in the Transfer Pricing Order:

4.1. The comparables proposed by the assessee and ld. TPO for the R&D segment are given in the table below:

4.2. Ld. TPO rejected the TP study report stating that the filters applied by the assessee are not fit for R&D segment and made an adjustment of Rs. 72,32,382/- by conducting an independent analysis applying TNMM method.

4.3. Ld. Assessing Officer after considering the Transfer Pricing Order, passed the Draft Assessment Order. Assessee filed objections against the draft assessment order before the Ld. Dispute Resolution Panel (DRP). Ld. DRP reduced the proposed adjustment to Rs.143.59 Lakhs, details tabulated below:

4.4. Aggrieved by the directions of Hon'ble DRP, assessee filed an appeal before the Tribunal which passed an order on 06.06.2019, granting substantial relief. Giving effect to the order passed by the Tribunal, ld. TPO deleted the adjustment made in relation to provision of ITES services. Fur