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2018 (4) TMI 394 - ITAT DELHIAddition on account of transfer pricing adjustment in the international transaction of ‘Provision of marketing support services’ - comparability analysis - transaction between a head office in a foreign country and its branch office in India - principle of mutuality - Held that:- If transactions between the foreign head office and the Indian branch office are not at ALP, it is certainly going to affect the income of the non-resident assessee chargeable to tax in India, which definitely requires the determination of the ALP of such transactions. Thus, the view canvassed by the ld. AR that since the Indian branch office is a part of the Japanese enterprise and, hence there can be no applicability of transfer pricing provisions, is devoid of merits and the same is hereby repelled. India branch office admittedly constitutes the permanent establishment of the assessee in India in terms of Article 5 of the DTAA. Thus it is axiomatic that income of the Japanese assessee, as is relatable to the operations carried out in India through its Branch office, is chargeable to tax in India not only under the Act but also under the DTAA. There can be no embargo on the determination of ALP of the services of brand promotion, rendered by the Indian branch by incurring AMP expenses. This additional ground raised by the assessee also stands dismissed. AMP expenses - International transaction or not - Held that:- it would be in the fitness of things if the impugned order on this issue is set aside and the matter is restored to the file of TPO/AO for a fresh determination of the question as to whether there exists an international transaction of AMP expenses. If the existence of such an international transaction is not proved, the matter will end there and then, calling for no transfer pricing addition. If, on the other hand, the international transaction is found to be existing, then the TPO will determine the ALP of such an international transaction in the light of the relevant judgments after allowing a reasonable opportunity of being heard to the assessee. - matter remanded back.
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