Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2014 (1) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2014 (1) TMI 1529 - AT - Income TaxPricing adjustment from total Advertisement, Marketing and Promotion (AMP) expenses - Held that:- Relying on the decision in LG Electronics India Pvt. Vs. ACIT [2013 (6) TMI 217 - ITAT DELHI] - The expense in connection with the sales which do not lead to brand promotion cannot be brought within ambit of 'Advertisement, Marketing and Promotion expenses' for determining the cost/value of international transactions' - The expenses which are in the nature of discount are outside the purview of total composition of AMP expenses for the purposes of determination of their ALP - Decided in favour of assessee. Component of AMP expenses - Held that:- The amount was in the nature of reimbursement of salary paid to sales staff of dealers/distributors, but no material has been shown to substantiate this contention - The correct nature of this amount is not clear - The issue has been restored for fresh adjudication for ascertaining the correct nature of this amount. Disallowance as per section 37(1) - Held that:- The overall AMP expenses are required to be processed as per the mandate of the LG Electronics [2013 (6) TMI 217 - ITAT DELHI] to find out the amount spent towards brand building for the foreign AE and then making addition by way of TP adjustment with appropriate mark-up - The total AMP expenses are segregated into two classes, one benefiting the assessee's business and two, benefiting the foreign AE by way of promotion of the brand. Once the total amount of AMP expenses is processed through the provisions of Chapter X of the Act with the aim of making TP adjustment towards AMP expenses incurred for the foreign AE, or in other words such expenses as are not incurred for the assessee's business, there can be no scope for again reverting to section 37(1) qua such amount to make addition by considering the same expenditure as having not been incurred `wholly and exclusively' for the purposes of assessee's business. - The AO was not justified in observing alternatively that a sum of ₹ 180 crore and odd is not allowable as per section 37(1) of the Act - The issue has been restored for fresh adjudication.
|