Relief to Ericsson: Supreme Court upholds deletion of ₹64.43 Cr Penalty u/s 271G of Income Tax Act

The Supreme Court recently upheld the deletion of a ₹64.43 crore penalty imposed on Ericsson India Private Limited under Section 271G of the Income Tax Act. The penalty was originally levied due to alleged non-compliance with Transfer Pricing documentation requirements. The Income Tax Department had contended that Ericsson failed to furnish the necessary documents under Section 92D, leading to the penalty. However, both the Income Tax Appellate Tribunal (ITAT) and the Delhi High Court ruled in favor of Ericsson, stating that there was no substantial failure in complying with documentation requirements. The Supreme Court, by dismissing the appeal from the Income Tax Department, confirmed these rulings. This decision provides relief to multinational corporations that may face technical lapses in transfer pricing compliance, reaffirming that penalties cannot be imposed without substantial non-compliance.