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2017 (7) TMI 949 - AT - Income TaxTPA - TPO has determined the AMP expenses to be international transaction - Held that:- We are of the considered view that when the TPO has determined the AMP expenses to be international transaction, he had no occasion to follow the ratio of the judgments in Rayban Sun Optics India Ltd. vs. CIT [2016 (9) TMI 1293 - DELHI HIGH COURT], Pr. CIT vs. Toshiba India Pvt. Ltd. [2016 (8) TMI 1175 - DELHI HIGH COURT] and Pr. CIT vs. Bose Corporation (India) Pvt. Ltd. (2016 (8) TMI 1177 - DELHI HIGH COURT) rendered by Hon’ble jurisdictional High Court discussed in the preceding paras. Aforesaid decisions have consistently been followed by coordinate Benches of the Tribunal. In these circumstances, we are of the considered view that it would be in the interest of justice if the impugned order is set aside and the matter is restored to the file of TPO/AO for fresh determination of the question to determine, “as to whether AMP expenditure is international transaction”, in the light of the judgments rendered by Hon’ble Delhi High Court discussed in preceding paras. In case the existence of such an international transaction is not proved, there shall not be any transfer pricing addition. However, in case the international transaction is proved to be existed, then the TPO will determine such international transaction in the light of the judgment rendered by Hon’ble jurisdictional High Court after providing an opportunity of being heard to the assessee. Disallowing write off of demonstration equipment inventory - whether such inventory should have been valued at cost disregarding the fact that Net Realizable Value (NRV) or demonstration inventory is lower than the cost - Held that:- DRP predominantly decided the issue on the ground that taxpayer has failed to discharge the onus cast upon it to disprove that NRV actually remains sufficiently above the cost price of the equipment and hence as per the accounting policy of the company and the AS-2 of ICAI prescribing valuation of the closing stock, the taxpayer should have adopted cost value of the valuation of the closing stock of the demo equipment. DRP also held that it appears that the provision of demo equipment is based upon pure assumption, hence the same cannot be treated as real expenses and before the AO, taxpayer could not produce any documentary evidence like sale bill to prove that any of the demo equipments was sold at 42% of its normal sale price. The assessee company has also not submitted the particulars of scrap sale for last five years before DRP. Thus we deem it necessary to provide an opportunity of being heard to the assessee company to produce the documentary evidence
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