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2019 (5) TMI 91 - AT - Income TaxTransfer pricing adjustment - correction of reimbursement wrongly grossed - TPO while working out the operating cost has made an addition of reimbursement received on account of advertisement and warranty - comparable selection - HELD THAT:- When the original expenses were incurred they were also included by debiting those expenditure to those expenditure accounts. Once those expenditure have been debited whenever they were incurred and at the time of reimbursement they were credited to the same expenditure account, both should have been excluded. Therefore addition to the operating expenses of assessee amounts to double addition to the operating cost by the sum. Therefore it is apparent that the adjustment made by the learned transfer pricing officer by increasing the operating expenses by this amount is erroneous and incorrect. Therefore the learned TPO is directed to remove the addition made to the other operating expenses of the assessee. Comparable selection - acceptability of 2 comparable companies being Micromax informatics Ltd and Lava international Ltd - availability of brands registered in their name in current assessment year - HELD THAT:- We set aside the issue with respect to the selection of comparable companies with respect to these 2 companies back to the file of the learned transfer pricing officer to determine whether there is any brand registered in the name of this companies for assessment year 2013 – 14 or not and then to find out whether such brands have made any impact on their profitability. Such information may be obtained by the learned transfer pricing officer by exercising powers u/s 133 (6). On receipt of such information, it should be provided to the assessee to submit its contention, and then decide about whether such companies can be selected as a comparable companies are not. AMP expenditure - international transactions for marketing and development of marketing services based on Bright line test approach on protective basis - bright line test used for making an adjustment of excessive advertisement marketing promotion expenditure - HELD THAT:- With respect to the protective adjustment made by the learned transfer pricing officer by bright line test method it was submitted by the learned authorised representative that it is contrary to the decision of the honourable Delhi High Court in Sony Ericsson [2015 (3) TMI 580 - DELHI HIGH COURT] . We hold that bright line test cannot be used for making an adjustment of excessive advertisement marketing promotion expenditure. We direct the learned assessing officer/transfer pricing officer to not to make adjustment by addition of reimbursement received to the operating expenses of the assessee and also to examine the 2 comparable companies afresh discussed above.
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