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2020 (2) TMI 887 - AT - Income TaxTransfer pricing adjustment made in respect of advertisement, marketing and promotion (AMP) expenditure - international transaction or not? - HELD THAT:- AMP expenditure was incurred for penetrating the market and increasing the sales. In any case of the matter, no material has been brought on record by the Transfer Pricing Officer to demonstrate that there is an agreement/arrangement with the AEs for incurring AMP expenditure to promote the brand of the AEs. Further, the entire AMP expenditure has been in curred in India and paid to third parties in India. Thus, keeping in perspective the aforesaid factual position, we have to hold that the AMP expenditure incurred by the assessee cannot come within the purview of international transaction. Further, it is evident, the Transfer Pricing Officer has treated the AMP expenditure as part of international transaction following the Special Bench decision of the Tribunal in LG Electronics India Pvt. Ltd. (2013 (6) TMI 217 - ITAT DELHI) and has also applied BLT method for computing arm's length price. It is relevant to observe, the aforesaid Special Bench decision of the Tribunal in LG Electronics India Pvt. Ltd. (2013 (6) TMI 217 - ITAT DELHI) has been disapproved by the Hon’ble Delhi High Court in Maruti Suzuki India Ltd. (2015 (12) TMI 634 - DELHI HIGH COURT). The Hon’ble High Court has held that the BLT method is invalid as it is not prescribed in the statute. Various Benches of the Tribunal following the decision of the Hon’ble Delhi High Court in Maruti Suzuki India Ltd. (supra), have consistently held that AMP expenditure incurred by the assessee in India cannot come within the purview of international transaction. Adjustment proposed by the Transfer Pricing Officer while determining the arm's length price of the price paid towards import of goods from the AEs - HELD THAT:- While computing its margin with regard to the international transaction relating to import of goods from the AEs, the assessee has claimed economic adjustment towards the AMP expenditure incurred by it. It is the claim of the assessee that compared to the comparables whose marketing expenditure worked out to 0.87% of operating income, assessee’s marketing expenditure worked out to 21% of the operating income. Thus, it is the claim of the assessee that necessary adjustment has to be given on account of marketing expenditure while computing the margin. It is observed, while considering similar claim made by the assessee in assessment year 20007–08, the Transfer Pricing Officer has allowed 50% of the adjustment claimed. In fact, in Assessment Year 2012–13, though, learned Commissioner (Appeals) had granted similar relief on account of economic adjustment, however, the revenue has not contested the relief granted by the first appellate authority. Considering the above, we uphold the decision of learned Commissioner (Appeals) on the issue. Grounds raised are dismissed.
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