TMI Blog2014 (3) TMI 803X X X X Extracts X X X X X X X X Extracts X X X X ..... m the total AMP expenses – Relying upon LG Electronics India Pvt. Ltd. Vs ACIT [2013 (6) TMI 217 - ITAT DELHI] - the discount and incentive passed by the assessee to its dealers and distributors on effecting the sales was required to be excluded from the total AMP expenses for the purposes of determination of ALP in respect of AMP expenses – thus, the incentive amounting to ₹ 54.75 crore should be deducted from total AMP expenses of ₹ 58.66 crores and the remaining amount of ₹ 3.91 crores should be considered by the Assessing Officer for a fresh determination of its ALP – Decided partly in favour of Assessee. - ITA No. 4584/Del/2011 - - - Dated:- 6-3-2014 - Shri R. S. Syal And Shri A. T. Varkey,JJ. For the Petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpenses . The detail of such expenses has been set out on page 10 of the order passed by the Transfer Pricing Officer (TPO). The largest constituent of such Selling expenses is a sum of Rs. 54,75,44,112/- with the nomenclature of `Incentive . Without going into elaborate details, it is noticed that the TPO initially proposed adjustment of Rs. 52,33,73,988/- on account of AMP expenses. Pursuant to the Direction given by the Dispute Resolution Panel (DRP), the amount of such adjustment was reduced by the TPO to Rs. 33,52,43,720/-. It is this amount for which the Assessing Officer made addition in the final order passed u/s 144C(13). The assessee is aggrieved against this addition on account of transfer pricing adjustment. 4. We have hear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... LP is also misconceived which is hereby repelled in view of the decision in LG Electronics India Pvt. Ltd. (supra). Respectfully following the Special Bench decision, we set aside the impugned order and remit the matter to the file of A.O/TPO with a direction to redo the determination of TP adjustment, if any, on account of AMP expenses by considering the relevant factors as noted in such order. 6. The ld. AR submitted that the A.O/TPO erred in considering the amount of Incentive at Rs. 54.75 crore in the AMP expenses totaling Rs. 58.66 crores. It was argued that such amount should be excluded at the very threshold from the total AMP expenses for the purpose of consideration in the light of the Special Bench order in LG Electronics Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be reduced from the total AMP expenses as it was for providing incentive to the customers to remain attached with the assessee, which indirectly boosted the brand. 7. After considering the rival submissions and perusing the relevant material on record, we find that the Special Bench in LG Electronics India Pvt. Ltd. (supra) has held in para 18.3 of its order that AMP expenses refer only to advertisement, marketing and publicity. Appreciating the distinction between `expenses for the promotion of sales on one hand and `expenses in connection with the sales on the other, the Tribunal held that the first category of expenses lead to brand building but the second category which are sale-specific expenses should be reduced from the base of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passed by the assessee to its dealers and distributors on effecting the sales was required to be excluded from the total AMP expenses for the purposes of determination of ALP in respect of AMP expenses. The facts and circumstances of the instant case are more or less similar to those in the case of Whirlpool India Pvt. Ltd. (supra). In view of the foregoing discussion, we hold that incentive amounting to Rs. 54.75 crore should be deducted from total AMP expenses of Rs. 58.66 crores and the remaining amount of Rs. 3.91 crores should be considered by the Assessing Officer for a fresh determination of its ALP as per the guidelines laid down in LG Electronics India Pvt. Ltd. (supra). 9. In the result, the appeal of the assessee is partly all ..... X X X X Extracts X X X X X X X X Extracts X X X X
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