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2022 (5) TMI 725 - AT - Income TaxTP Adjustment - existence of international transaction of AMP Expenses - HELD THAT:- Admittedly assessee has been engaged in the distribution of goods produced by the AE, further the assessee is also not the exclusive distributor of the goods being sold in India and apart from the assessee, independent third party customer based in India can directly place the order for buying the goods from AE. The assessee is neither manufacturer of the goods nor the exclusive distributor and the assessee has also reported huge expenses on account of AMP and reporting loss in India being distributor. Tribunal in the case of Vodafone India Services Ltd. [2018 (1) TMI 1302 - ITAT AHMEDABAD] relying on the Supreme Court judgment in the case of CIT Vs. Jubilee Mills Ltd. [1962 (9) TMI 47 - SUPREME COURT] and Raghuvanshi Mills Ltd. Vs. CIT [1960 (12) TMI 7 - SUPREME COURT] declared that the test is not whether the AE and the assessee have actually acted in concert, but whether circumstances are that human experience tells us that it can be safely be taken that they must be acting together. By applying the ratio laid down in the above judicial pronouncements, on verifying the material on record, we have no hesitation to hold that, the assessee and AE have acted ‘in concert’ between the assessee and the AE’s for carrying out the AMP expenses. We hold that the revenue has also substantially proved the onus of existence of international transaction between assessee and its AE’s as defined u/s 92B of the Act. Ergo, we are of the opinion that, the TPO/DRP/AO are right in holding the existence of international transaction in the AMP undertaken by the Assessee. Accordingly we dismiss the assessee’s Grounds of Appeal No. 4 to 10. Whether the Method of Profit Split Method (PSM) adopted by the AO in determination Arm Length Price (ALP) of the Advertisement Marketing and Promotion (AMP) expenses is the proper or not? - The international transaction of AMP functions exists in the case of the assessee and restore the issue to the TPO for following the direction of the Hon’ble Delhi High Court in the case of Sony Ericsson [2015 (3) TMI 580 - DELHI HIGH COURT] for benchmarking under TNMM in aggregated manner along with the purchase of goods from the AE’s or in the segregated manner, after taking into account appropriate comparables or applying of Resale price method or Cost Plus Method or Profit Split Method keeping in view the findings of the Hon’ble Delhi High Court. Needles to say that, the Assessee shall be given opportunity of being heard. Further Assessee is directed to provide all the relevant documents including the financials of its AE’s if required, failing to which the Authorities can act in accordance with law by invoking the relevant provisions. Accordingly, we allow the Ground No.11 to 26 for statistical purposes.
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