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2019 (8) TMI 184 - ITAT DELHITPA - Reimbursement of third party marketing expenses - HELD THAT:- Under clause 3.1 of the Marketing Services Agreement, during the term, the assessee shall provide such marketing services to TA-UK as agreed by the parties from time to time and the assessee retains the right to perform itself, or retain third parties to perform, any of the marketing services. It clearly shows that performance of the marketing services is the responsibility of the assessee and whether the assessee does it on their own or through some third parties is not the concern of the TA-UK and it is the convenience of the assessee. This clause makes it amply clear that TA-UK does deal with the third parties through the assessee but the assessee as per their needs and performance of the contractual obligations under the agreement may retain the third parties to perform such functions. As rightly observed by the CIT(A) inasmuch as the assessee has only eight employees at their disposal, discharge of this obligation to perform the marketing services, the assessee has to engage the third parties, not on behalf of the AE but as their own agents to fulfill their own obligations. We, therefore, are of the considered opinion that the assessee is working as an independent marketing agency and the payments made to the third parties for discharging the obligations of the assessee as envisaged in, are the cost of the assessee alone. We reject the contention of the assessee that the assessee is only a conduit and deal with the third parties agencies on behalf of the AE. With this view of this matter, we uphold the findings of the Ld.CIT(A) and dismiss Ground No.4. Comparable selection - inclusion or exclusion of Goldmine Advertising Ltd. and MRUC - HELD THAT:- Functions performed by the assessee include the activities to promote and market TripAdvisor group’s Indian website, tripadvisor.in under the direction and management of Trip-UK, identifying new Indian advertisers for the group websites, maintaining relationships with existing advertisers, and marketing and promoting the TripAdvisor websites in India, and are determining the market conditions in India and informing Trip-UK of the local terms and pricing levels. Coming to the comparability of Goldmine Advertising Ltd. on a careful consideration of the functions performed by the assessee and also Goldmine Advertising Ltd, we are of the considered opinion that the lowest common factor of functions of these two entities is market support service, and in that perspective there is functional similarity between these two entities and the rejection of this comparable is not tenable. We, therefore, direct the inclusion of this company in the list of comparables for benchmarking the international transactions of provision of marketingsupport services. Media Research Users Council (MRUC), the inclusion of which the assessee is resisting - undoubtedly MRUC is a not for profit body. On a careful consideration of the functions performed and other attendant factors, we are of the considered opinion that a company registered as a not-for-profit body, lacking profit motive is not a comparable to the assessee and even the area of operation of MRUC is different from the assessee. We, therefore, find this MRUC not a comparable and have to be excluded. We, therefore, direct theAssessing Officer to exclude this company from the list of comparables to benchmark the international transaction.
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