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TMI Blog2014 (12) TMI 925X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the purview of the transfer pricing provisions, if it is otherwise an international transaction - thus it is palpable that all the three necessary ingredients as culled out from a bare reading of section 92B are fully satisfied - the transfer pricing adjustment in relation to advertisement, marketing and sales promotion expenses incurred by the assessee for creating or improving the marketing intangible for and on behalf of the foreign AE is permissible and earning a mark-up from the Associated Enterprise in respect of AMP expenses incurred for and on behalf of the AE is also allowable - in any event as the claims of the assessee have to be examined based on the facts of the case, the matter is remitted back to the TPO for fresh adjudi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10.86 3. Purchase of catalogues 0.07 4. Purchase returns 0.32 Corroborative Method Resale Price Method ( RPM ) Class II transactions 5. Reimbursement of expenses 0.55 6. Reimbursement of expenses received 0.14 Comparable Uncontrolled Price Method ( CUP ) Total 47.91 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sales 665,284,265 Total AMP/Sales 6.33% Further in order to arrive at bright line limit, the TPO considered some of the comparables selected by the appellant and rejected the others. The comparables selected by the appellant in the TP study have been dealt during the TP assessment proceedings as under. Table 4: Comparables selected by appellant and rejected by the TOP S.No. TP Study comparables Show cause notice (Page 200 and 201 of the paper book) APPELLANT S REPLY TO Show Cause Notice (page 133 and 134 of the paper book) Final TP order (page ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... % 0% 12. Duchem Laboratories Ltd. Rejected by TPO 0.00% Rejected by TPO 13. Ortin Laboratories Ltd. 0.32% 0.33% 0.33% 14. Satyatej Commercial Co.Ltd. 2.1% 0.01% 2.1% M e a n 1.0009% 3.91% 0.87% 3. The Dispute Resolution Panel-III, New Delhi in its order noted the decision of the Special Bench of the Tribunal in the case of L.G.Electronics India P.Ltd. vs. ACIT (2013) reported ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ices to its AEs by incurring the AMP expenses and by holding that a mark-up of 12.75% has to be earned by the appellant in respect of the alleged excessive AMP expenses, without any basis for the same whatsoever; case of a distributor namely BMW India Private Limited for AY 2008-09 which was submitted before the Ld. DRP during the hearing on November 28, 2013 wherein Hon ble ITAT had adjudged if a distributor is sufficiently compensated by the AE through the pricing of products, i.e. through higher margins, the same would have catered to extra AMP expenses spent by the distributor as compared to the comparables. Accordingly, no separate compensation in the form of reimbursement of excess AMP expenses was required from the AEs. 1.5 with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the above grounds of appeal are without prejudice to each other. 5. We have heard Dr.Rakesh Gupta, the Ld.Counsel for the assessee and Shri Peeyush Jain, the Ld.CIT, D.R. on behalf of the Revenue. 6. On a careful consideration of the facts and circumstances of the case, on perusal of material on record, orders of the authorities below, case laws cited, we hold as follows. 7. The sole issue that arises for our consideration is the transfer pricing adjustment on account of advertising, marketing and promotional expenses. The contention of the assessee are summarised as follows. The adjustment made by TPO/DRP is erroneous because: a) computation of the AMP expenses of the appellant : sales commission and discount allowed m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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