2016 (5) TMI 1379 - AT - Income Tax

AMP expenditure - international transaction - absence of any agreement for payment of AMP expenses by the AE.s - proof of international transaction on the basis AMP expenditure - Held that:- Absence of an agreement between the assessee and the AE.s. for sharing AMP expenses, payment made by the assessee under the head AMP to the domestic parties, failure of the TPO prove that expenses were not for the business carried out by the assessee in India-and following the judgments of the Hon’ble Delhi High Court delivered in the case of Bausch and Lomb (India) Pvt. Ltd (supra), we are of the opinion that the transaction in question was not an international transaction and that the TPO had wrongly invoked the provisions of Chapter X of the Act for the said transaction.

Restoration of issue back to the file of the AO - Held that:- No availability of a particular decision of the higher forum cannot justify the restoration of issue/cases to the file of AO in each and every case. Unnecessary litigation has to be avoided and issues have to be settled for once and all. We are of the opinion that after the judgments of Maruti Suzuki and Bausch & Lomb (2015 (12) TMI 1332 - DELHI HIGH COURT ) there is no scope of any other interpretation about the AMP expenditure. In the case under consideration, the AO/TPO has not brought anything on record that there existed and agreement, formal or informal, between the assessee and the AE to share/reimburse the AMP expenditure incurred by the assessee in India. In absence of such an agreement the first and primary precondition of treating the transaction in question an international transaction remains un-fulfilled. Conducting FAR analysis or adopting an appropriate method is the second stage of transfer pricing adjustments. The first thing is to find out whether the disputed transaction in is international transaction or not. Without crossing the first threshold second cannot be approached. In the case under consideration, we are of the opinion that AMP expenditure is not an international transaction and therefore we are not inclined to restore back the issue to the file of the AO. - Decided in favour of the assessee.

Set of off unabsorbed depreciation - Time limit for carry forward - Held that:- The said issue has been considered in the case of M/s Arch Fine Chemicals Pvt. Ltd. V/s ACIT (2013 (10) TMI 425 - ITAT MUMBAI) to which one of us (JM) is also party wherein held Provisions of section 32(2) as amended by Finance (No.1) Act, 2001 would allow the unabsorbed depreciation allowance available in the assessment years 1997-98, 1999- 2000, 2000-01 and 2001-02 to be carried forward to the succeeding years and if any unabsorbed depreciation or part thereof could not set off till the assessment year 2002-03, then it would be carried forward till the time it is set off against the profits and gains of subsequent years without any limit whatsoever. Thus we hold that the assessee is entitled to claim set off of unabsorbed depreciation pertaining to assessment years 1997-98 to 1999-2000 against business income of the assessment years under consideration.- Decided in favour of assessee.