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2012 (4) TMI 279 - AT - Income TaxArm's length price - Section 92CA - Order u/s 144C - Determination of international transaction u/s 92B - addition made on account of alleged difference in arm's length price of reimbursement of advertisement, marketing and brand promotion expenses (AMP expenses) - whether inference by TPO was permissible without reference from the AO? - held that:- In the absence of the reference being made by the Assessing Officer to the TPO, the suo moto action taken by the TPO in working out the arm's length price of a particular international transaction, not referred to him by the Assessing Officer, is not warranted under the provisions of section 92CA of the Act. - in respect of the AMP expenditure, the assumption of jurisdiction by the TPO in working out arm's length price in respect of the aforesaid AMP expenditure, is not justified and the order of the TPO in this regard is non-est. Capital or revenue expenditure - expenditure under the head "Promotional and Trade Marketing Expenses" - held that:- the test of enduring benefit is not conclusive to judge true nature of expenditure. One has to go further and ascertain as to whether particular expenditure results into an advantage of enduring nature in the capital field or revenue filed. In the instant case having regard to the nature and details of expenditure it is clear that the expenditure under the head "Promotional and Trade Marketing Expenses" is an expenditure which is incurred wholly and exclusively for the purposes of business and is in the revenue field. The same is allowable as a revenue expenditure. Capital or revenue expenditure - expenditure under the head "Product Development Expenses" - held that:- it is erroneous to conclude that the assessee acquired a new line of business by merely developing and introducing new products in the existing line of business. The new products clearly relate to the same line of business that the assessee has been hitherto carrying on. Therefore, on above consideration also the plea of the assessee that the expenditure in question is a revenue expenditure deserves to be upheld.
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