Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2012 (11) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2012 (11) TMI 175 - ITAT MUMBAIDeduction u/s. 37(1) of the Income tax Act - expenditure incurred on advertisement under the head Media-Technical – Held that:- Expenditure was incurred in respect of promoting ongoing products of the assessee and, therefore, the expenditure is for promotion of the products of the assessee which is revenue in nature - expenditure has been incurred by the assessee for production of 'ad-films', advertisement in electronic and print media, in respect of promotion of its 'on-going products' - expenditure has rightly been treated as revenue in nature by CIT(A), which was incurred by the assessee wholly and exclusively for the purpose of its business – deduction allowed Determination of arm’s length prices - resale price method (RPM) – alleged that appellant is consistently incurring losses in India and hence the pricing policy is not at arm's length – whether to determine ALP in respect of business activity relating to distribution segment of the assessee with the AE is to be considered by RPM or TNMM. – Held that:- Order of TPO in the preceding assessment years substantiate that RPM is the most appropriate method to determine ALP - RPM is one of the standard method and OECD guidelines also states that in case of distribution and marketing activities when the goods are purchased from AEs which are sold to unrelated parties, RPM is the most appropriate method - the assessee buys products from its AEs and sells to unrelated parties without any further processing. - assessee has also produced certificates from its AEs that margin earned by AEs on supplies to the assessee is 2% to 4% or even less. - TPO's contention that AEs have earned higher profit is not based on facts - margin of profit earned by AEs themselves is also reasonable and, therefore, it could not be said that there is shift of profits by the assessee to its AEs at overseas – addition deleted Addition – assessee is in receipt of services and benefit from its Associative Enterprises in lieu of the marketing fee payments – Revenue submitted that ld CIT(A) has considered additional documents which were produced before him without seeking Remand Report from the Assessing Officer. He submitted that TPO has categorically stated that the assessee could not furnish evidence to justify that the assessee has received any benefit from the cost sharing arrangement and, therefore, in ALP study determined the same at Nil – Held that:- Fresh documents were submitted by the assessee before ld CIT(A) which were considered while allowing the claim of the assessee and deleting the disallowance made by the AO - matter remanded to the file of the AO to examine whether the assessee has received any benefit under cost sharing arrangement for which assessee made the said payment - appeal filed by the department is partly allowed for statistical purposes.
|