2018 (12) TMI 111 - AT - Income Tax

TP Adjustment on account of Advertisement, Marketing and Promotion Expenses - BLT method adopted by the TPO incurring the AMP expenses - Held that:- When the BLT method adopted by the TPO incurring the AMP expenses by following the ratio of LG Electronics India Pvt. Ltd. [2013 (6) TMI 217 - ITAT DELHI] decided by Special Bench of the Tribunal, has been held to be not legally sustainable by the Hon’ble Delhi High Court in series of judgments, the entire exercise of determining AMP expenses as international transaction by the TPO is without any basis, hence not sustainable.

We are of the considered opinion that the ALP of an international transaction involving AMP expenses, the adjustment made by the TPO/DRP/AO is not sustainable in the eyes of law. At the same time, we cannot ignore the submission of the learned DR that the matter is pending before Hon'ble Apex Court and the decision of Hon'ble Apex Court would be binding upon all the authorities. In view of the above, we set aside the orders of authorities below and restore the matter to the file of the Assessing Officer. We hold that as per the facts of the case and the legal position as of now and discussed above in this order, the adjustment made by the TPO/DRP/AO in respect of AMP expenses is not sustainable - Appeal filed by the assessee is allowed pro tanto.