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2015 (4) TMI 797 - AT - Income TaxTransfer pricing adjustment - Arm's length price adjustment on account of reimbursement of expenses - Expenses incurred for the brand building of Associated Enterprises - Held that:- It is clear that the assessee itself has claimed as an agent for its AE for providing advertising support services and distribution of the ten sports channel. There is no quarrel on the point that any expenditure even on the advertisement of the assessee’s own business activity and assessee’s own brand name is an allowable expenditure and would not fall in the category of the expenditure for the promotion of brand of AE. However, in this case the expenditure has been incurred for organizing cricket match at UAE which has been sponsored by the AE and its Ten Sports channel. Therefore, prima facie it appears that the expenditure has been incurred for brand promotion of the AE of the assessee. An identical issue has been considered and decided by the Special Bench of this Tribunal in the case of of L.G. Electronics India (P) Ltd. [2013 (6) TMI 217 - ITAT DELHI] Thus it is clear that the amounts spent on an international transaction is required to be taken out for processing under TP provisions to find out its taxability in the hands of the Indian assessee. The amount incurred towards its own business expenses shall be considered for taxability as per regular provisions of the Act including section 37 of the Income Tax Act. In view of the fact that when a transaction falls in the ambit of International Transaction even if part of the expenditure is relevant to the expenses for the purpose of the assessee’s own business activity the remaining of the expenses has to be tested under the provisions of section 92 for its taxability in the hands of the assessee. In the case in hand, the assessee has not filed the relevant agreements so as to give a findingn on the nature of relationship between the assessee and its AE as well as the respective cotractual obligations and rights of the parties. Further the authorities below have also not examined and discussed the agreements entered into between the assessee and AE. Accodingly in the facts and circumstances of the case and in the interest of justice, we set aside this issue to the record of TPO/AO to reconsider and decide the samer after verification of all the facts and in the light of decision of Special Bench in the case of L.G. Electronics India (P) Ltd. [2013 (6) TMI 217 - ITAT DELHI]. - Decided in favour of assessee.
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