2016 (4) TMI 1139 - AT - Income Tax

Addition on account of AMP adjustment - Held that:- In the present case it is an admitted fact that the T.P.O. proposed the adjustment by applying the “Bright Line Test”, on account of excessive AMP incurred by the assessee on behalf of the A.E. But subsequently the D.R.P. held that the application of “Bright Line Test” has been over ruled in the case of M/s. Sony Ericsson Mobile Communication India Pvt. Ltd. [2015 (3) TMI 580 - DELHI HIGH COURT]. However, the D.R.P. declined to apply the decision of Maruti Suzuki India Ltd. [2015 (12) TMI 634 - DELHI HIGH COURT] on the ground that it was rendered in the context of a manufacturer and not a distributor. Recently, the Hon’ble Delhi High Court, subsequent to the said decision of Maruti Suzuki India Ltd. (supra), examined this aspect and applied the same principle to the distribution business also in the cases of Bausch & Lomb Eyecare (India) Pvt. Ltd. vs. A.C.I.T. [2015 (12) TMI 1332 - DELHI HIGH COURT] and C.I.T. & Ors vs. Whirlpool of India Ltd. [2015 (12) TMI 1188 - DELHI HIGH COURT]. These decisions of the Hon’ble Jurisidctional Court which are applicable to the facts of the present case were not considered by the T.P.O. and the D.R.P. since these were not available to them. We, therefore, by considering the totality of the facts and the ratio laid down by the Hon’ble Delhi High Court in the aforesaid judicial pronouncements, deem it appreciate to set aside the issue relating to the adjustment on account of AMP to the file of the TPO/AO to be decided afresh in accordance with the law after providing due and reasonable opportunity of being heard to the assessee.

Claim of warranty expenses - Held that:- It is noticed that the objection of the assessee before the DRP was that the AO had not corrected the claim of warranty expenses made by the assessee with respect to the warranty provisions while computing the taxable process. The DRP directed the AO to verify and correct, if any errors were detected. It appears that the AO did not follow the said directions given by the D.R.P. relating to warranty claim, therefore, this issue is set aside to the file of the AO to be decided afresh as directed by the DRP.