Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2015 (7) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2015 (7) TMI 81 - ITAT DELHITransfer pricing adjustment - selection of comparable - AMP expenses - Held that:- Before the PLI determined at entity level is to be taken as the determining factor of bench marking various international transactions along with the AMP expenditure, it is to be clearly demonstrated how the transactions of the advertisement expenditure is closely linked to the other transactions in the distribution segment. Ld. TPO in para 10.4 has observed that assessee company has not been able to demonstrate that there was any prior understanding, design or commercial logic or rational for aggregation of the transactions. He has observed that the assessee company has not been able to demonstrate that there was any logic or rationale for aggregation or that the transactions of the advertisement expenditure and the other transactions in the distribution activity are interdependent. Therefore, the contention of ld. counsel that since PLI at entity level is much more than that of the comparables, therefore, no separate bench marking of the functions is to be carried out, is devoid of any merit. However, at the same time we find that Hon’ble Delhi High Court in the case of Soni Erection has rejected the applicability of bright line test and as noted earlier, ld. TPO and ld. DRP have not pointed out the AMP functions being carried out by the assessee, vis a vis the comparables and applied the bright line test. Therefore, in view of the observations it would be proper to restore this issue to the file of Ld. TPO for bench marking the AMP functions, keeping in view the decision of Sony Ericson Mobile (2015 (3) TMI 580 - DELHI HIGH COURT). We may point out that assessee would be free to demonstrate its claim regarding aggregation of AMP functions with other international transactions, particularly in view of the observations of Hon’ble Delhi High Court in para 101 of the order. We may further clarify that while computing the components of AMP expenditure, direct selling and distribution have to be excluded in view of the decision in the case of Sony Ericson (supra). AS regards the objections of ld. counsel on selection of comparables, we are of the opinion that whole exercise has to be carried out de novo - Decided partly in favour of assessee for statistical purposes only.
|