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2014 (8) TMI 836 - AT - Income TaxTransfer pricing - selection of comparable - Jurisdiction of TPO – Held that:- The assessee is a distributor whose remuneration model necessarily is different from a licensed manufacturer as has been held in BMW India Pvt. Ltd. - the transaction to be an international transaction - the applicability of the bright line as a methodology for calculating the AMP is also decided in Revenue’s favour - as far as calculation of “bright line” is concerned the TPO is directed to correctly calculate the “bright line” keeping in mind that a fresh search of comparables be done following the directions of the Special Bench - the TPO needs to carry out a fresh search for selecting the comparables after a proper FAR analysis making adjustments which are warranted on facts - the TPO is directed to correctly calculate the AMP expenses by excluding the selling expenses as they do not from part of AMP basket of expenses – the matter is remitted back to the TPO for application of mark-up by way of a speaking order in accordance with law – Decided partly in favour of assessee. Provision for warranty based on actuarial or scientific method or not - Advertisement charges to be treated as deferred revenue expenditure or not - Advance service charges – Held that:- The calculation is based on neither actuarial valuation nor any other scientific method - the material available on record and the peculiar facts and circumstances of the case and the orders of the Tribunal in the assessee’s own case, it is not clear as to on what basis the AO has held the expenditure to be deferred Revenue expense - The factum of incurring the expenditure has not been doubted by the Revenue - the AO is directed to allow the expense as a Revenue expenditure - For income to accrue, it is necessary that the assessee must have contributed to its accruing or arising by rendering services or otherwise, and a debt must have come into existence and he must have acquired a right to receive the payment - there is nothing to suggest that the assessee has fully contributed to its accruing by rendering services so as to entitle him to receive the entire amount – Decided in favour of Assessee.
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