TMI Blog2015 (10) TMI 312X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer to decide afresh the issue as to whether local transaction of the assessee involving advertisement, cash discount, service expenses and business promotion expenses with unrelated parties are international transaction under sec. 92B of the Income-tax Act, 1961 and if so as to whether transfer pricing provisions are applicable on them and made the adjustment, if any, accordingly in view of the above ratios laid down by the Hon’ble Jurisdictional High Court in the case of Sony Ericson Mobile Communication India Pvt. Ltd. (supra) after affording opportunity of being heard to the assessee. Decided in favour of assessee for the statistical purposes. - ITA No. 5184/Del/2011 - - - Dated:- 17-7-2015 - SHRI N.K. SAINI AND SHRI I.C. SUDHIR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icsson Mobile Communication India (P) Ltd. vs. CIT Ors. ITA No. 16/2004 order dated 16.04.2015 have categorically held that if the expenses are incurred for effecting sales in India, then, even if the expenses are high, there is no issue of AMP expenses. The Learned AR submitted further that the Hon'ble Delhi High Court has upheld the decision of Special Bench of the ITAT in the case of LG Electronics on the direct marketing expenses and has held that marketing and selling expenses like trade discount etc. are not AMP expenses. 4. The Learned AR submitted further that as per the ratio of the decision of Hon'ble Delhi High Court in the case of Sony Ericson Mobile Communication India Pvt. Ltd. (supra) laid down after discussi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee. The TPO in his order observed that incurring of high cost of these expenses creates and promotes brand Panasonic , which does not belong to the assessee and its legal ownership lies with the foreign A.E. He submitted that the TPO proceeded to examine the issue of creation of brand image and noted that assessee had incurred expenses of 18.98% during the year under consideration what he called : AMP expenditure . As against this, the TPO observed that the comparable companies which were selected to justify all the international transactions of entity level, had incurred an average of 4.77%. Thereafter, the TPO applied bright line test and observed that the assessee had a short recovery of ₹ 9,33,92,145 from the A.E. toward ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther that assessee s margins as compared with the undisputed comparable are better, no ALP adjustment was required to be done. 7. The learned Senior DR on the other hand tried to justify the orders of the authorities below on the issue. 8. Having gone through the above cited decisions, we find that the Hon ble jurisdictional High Court of Delhi in the case of Sony Ericsson Mobile Communication India (P) Ltd. after discussing the majority view of the Special Bench of the ITAT in the case of L.G. Electronics (supra), has been pleased to hold that marketing and selling expenses like trade discount etc. are not AMP expenses. The relevant para No. 176 of the said judgment is being reproduced hereunder: The aforesaid argument, when AM ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laid down in the above judgment, the expenses pertaining to cash discount, business promotion expenses, which represents the schemes etc. offered to the dealers/stockiest for effecting the sales and service expenses, which is being incurred towards after sales service through its service centre, cannot be categorized as AMP expenditure. Regarding the advertisement expenditure, the contention of the assessee remained that in the past, it has been held that to have been incurred for the immediate benefit of the assessee for affecting the sales in India, as such, advertisement are released in the regional newspapers/media in different Indian languages to attract the Indian customers for buying the products, which are being sold by assessee thr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onal analysis test and adjustments have been made, then the profit margin as declared when matches with the comparables would result in affirmation of the transfer price as the arms length price. Then to make a comparison of a horizontal item without segregation would be impermissible. 10. In view of the above contentions of the parties and the ratio laid down in the cited decisions, we set aside the matter to the file of the Assessing Officer to decide afresh the issue as to whether local transaction of the assessee involving advertisement, cash discount, service expenses and business promotion expenses with unrelated parties are international transaction under sec. 92B of the Income-tax Act, 1961 and if so as to whether transfer pri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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