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2022 (10) TMI 1144 - AT - Income TaxTP adjustment - determination on arm’s length price of expenditure incurred by the assessee for advertisement, marketing and promotion (AMP) of the brand of Associated Enterprises (AEs) - TPO benchmark the transaction by applying Bright Line Test (BLT) method and proposed an adjustment - whether the AMP expenditure incurred by the assessee can be regarded as an international transaction? - HELD THAT:- Undisputedly, while deciding the issue, learned DRP has relied upon a decision of the ITAT, Special Bench in case of LG Electronics India Pvt. Ltd. [2013 (6) TMI 217 - ITAT DELHI] However, the ratio laid down in case of LG Electronics India Pvt. Ltd. (supra) has been disapproved by the Hon’ble Jurisdictional High Court, hence, no more a good law. Be that as it may, it is observed, identical issue came up for consideration before us in assessee’s own case for the assessment year 2008-09. While deciding the issue in[2019 (12) TMI 1483 - ITAT DELHI] the Coordinate Bench has held that the AMP expenses incurred by the assessee does not fall within the definition of international transaction. The Bench further disapproved the determination of ALP by applying BLT method. Ultimately, the adjustment made on account of AMP expenses was deleted. Identical view was expressed by the Tribunal while deciding the issue in assessment year 2010-11[2020 (8) TMI 130 - ITAT DELHI] - thus we delete the addition made by the Assessing Officer. These grounds are allowed. TP adjustment made to the arm’s length price of purchase of finished goods for distribution in India - Selection of MAM - HELD THAT:- Imported goods are not only utilized for resale but were also leased out to customers to be installed at their premises on rental basis. Therefore, in case, there are two streams of revenue being generated by the assessee in respect of imported goods, one resale and second leasing, the issue which requires to be considered is, whether in such a scenario RPM can be applied as the most appropriate method to determine the ALP. In case, RPM is applied, what adjustments are required to be made. On a careful perusal of the order passed by the TPO and learned DRP, it is observed that assessee’s claim regarding two streams of revenue earned in relation to goods imported from the AE for resale have not been considered. We have further observed from the materials placed before us, though, the assessee is following the same business model as regards the purchase of office equipments from the AE in other assessment years. However, the TPO has benchmarked the transaction by applying TNMM. This is the factual position we noted on going through the assessment orders passed by the TPO in assessment years 2008-09, 2010-11 and 2011-12. In case, the facts are identical in the impugned assessment year, the departmental authorities must justify their action of taking a different approach in the impugned assessment year. However, no proper reasoning has been recorded by the departmental authorities while making a departure from the view taken in the other assessment years. As in assessment year 2010-11, though, learned DRP has held that RPM is the most appropriate method to benchmark the transaction, however, they directed the TPO to take into the account the total expenses as well as the total revenue in the distribution segment while determining the ALP of the international transaction Assessee as submitted before us that if DRP’s direction in assessment year 2010-11 is followed in the impugned assessment year, there would be no adjustment. Since, the aforesaid aspects have not been considered by the departmental authorities and needs to be considered qua the facts available on record, in our view, it has to be examined at the level of AO/TPO. Accordingly, we are inclined to restore this issue to the Assessing Officer for fresh adjudication, keeping in view the discussions made hereinabove. Disallowance of depreciation on capital assets converted into stock in trade - HELD THAT:- We are convinced that the issue is squarely covered by the decisions of the Coordinate Bench in assessee’s own case in assessment year 2007-08[2015 (3) TMI 932 - ITAT DELHI] confirmed by HC [2016 (1) TMI 945 - DELHI HIGH COURT] - Thus we hold that assessee’s claim of depreciation is allowable. Short grant of TDS credit - HELD THAT:- Having heard the parties, we direct the Assessing Officer to verify the relevant facts and allow TDS credit in accordance with law.
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