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2013 (5) TMI 633 - AT - Income TaxTransfer pricing adjustment - apportionment of Global Cricket Council contribution in the ratio of 5.40:94.60 between LG Electronics India Pvt. Ltd. (LGEIL) and L.G. Electronics Korea (LGEK) - LGEIL is a 100% subsidiary of LGEK entered into an agreement to sponsor World Cup Cricket - Held that:- Agree with the CIT (A) that considering the sales of the entire LG group is not an appropriate basis to apportion the benefits emerging from sponsorship of the World Cup and other events to the entities of the LG Group. Considering the break-up of Global sales of the LG Group it is evident that out of LG group's global sales, only 38% pertains to cricket playing continents. The benefits of advertisement in the Cricket World Cup would accrue only to those entities of LG that have their presence in the cricket playing nations or those countries where cricket is having a substantial audience. Hence, we find that considering the sales of the entire LG group is not an appropriate basis to apportion the cost. Sale of LGEIL constitute 41.33% of total sales. LGEK and its subsidiaries incur all kinds of sponsorship expense. The expenses of such sponsorship also contribute significantly to the sales by these entities. Hence, agreeing with the CIT(A) that considering the sale data of 14 of the Cricket Playing nations LGEIL contribution is reasonable. TPO's action of apportionment of GCC contribution in the ratio of 5.40 : 94.60 between LGEIL and LGEK is not correct affirming the CIT(A)'s view that LGEIL has received commensurate befits of its 40% share contribution. Hence holding that the adjustments made by the AO /TPO on this account has rightly been deleted by the CIT(A). Provision for warranty expenses - Held that:- The issue involved in the appeal is covered by the decision of CIT vs. Vinitec Corporation Pvt. Ltd. (2005 (5) TMI 54 - DELHI High Court) - The assessee had made the provision of warranty liability having regard to the past factor of actual expenses incurred by the assessee towards warranty liability. In favour of assessee. Sales tax subsidy - capital subsidy v/s revenue in nature - Held that:- When the assessee is not permitted to collect the sales tax under the notification issued by the State Govt. the collection of sales tax as a part of dealers' price is nothing but constitutes a trading receipt. - against the assessee. Inclusion of profit of I&C Division while calculating the assessee's claim u/s. 80HHC - Held that:- There are decisions in favour of the assessee as well as against the assessee on this issue. In this view of the matter relying upon the decision of Vegetable Products (1973 (1) TMI 1 - SUPREME Court), that if two views are possible, one in favour of the assessee and one against the assessee, the view in favour of the assessee should be adopted. Hence, respectfully following the decision from the case laws of Madras Motors (2002 (3) TMI 10 - MADRAS High Court) and Rathore Brothers (2001 (10) TMI 72 - MADRAS High Court) this issue is decided in favour of the assessee.
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