TMI Blog2016 (6) TMI 787X X X X Extracts X X X X X X X X Extracts X X X X ..... see. If there is some difference in the functions under these international transactions, including that 'of AMP, between the assessee and the comparables, then, suitable adjustment should be made to bring both the transactions at par. If probable comparables are not performing similar functions as done by the assessee and no adjustment is possible for bringing the international transactions of the assessee in an aggregate manner at par with those undertaken by the com parables, then, segregation should be done and the international transaction of AMP spent, should be separately processed under the transfer pricing provisions for the purposes of determining its ALP separately. In such determination of ALP of AMP expenses in a segregated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vides marketing and technical support services to fugitive film Japan. During the course of the assessment proceedings the AO observed that the assessee has entered into certain international transaction for the year under consideration hence the case was referred to the transfer pricing officer under section 92 CA (3). 3.1. It was observed by the Ld. TPO that the assessee had incurred a cost in connection with the expenses relating. to advertisement, marketing and promotion of Fuji Film brand in India. It was submitted by the assessee that the main activity carried out by the assessee was marketing of intangible and selling of fugitive film products in Indian. The assessee contended before the authorities that it is not a brand owner, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a manufacturer and not a distributor, however, subsequent to the said decision the Hon ble Jurisdictional H.C. in the case of Whirlpool of India vs. DCOT in I.T.A. 228/2015 C.M.No. 5751/2015 order dated 22.12.2015 and in the case of Bausch Lomb Eyecare (India) Pvt. Ltd. vs. A.C.I.T. in I.T.A. No. 643 675/14 order dated 23.12.2015 examined this aspect and applied the same principle to distribution business as well. It was further submitted that DRP and the TPO failed to give any cogent reason for de-bundling the AMP function of the assessee as a separate transaction which is in violation of the principles laid down in the case of Sony Ericsson Mobile Communications India Pvt. Ltd reported at (2015) 55 Taxman.com.240(Del.) (Supra). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on ble Delhi High Court in the aforesaid judicial pronouncements, deem it appreciate to set aside the issue relating to the adjustment on account of AMP to the file of the TPO/AO to be decided afresh in accordance with the law after providing due and reasonable opportunity of being heard to the assessee. 8. The Hon'ble High Court has held, inter alia, that the international transaction of AMP expenses should be bundled or aggregated with other international transaction carried out by the assessee as a Distributor, who either simply acts an agent of manufacturer or purchases goods from the manufacturer for resale at his own account. However, in the case of a Manufacturer, the import of raw material has been held to be an independent t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aside by the Hon'ble High Court. The view taken by the Special Bench that the expenses concerned with the sales, such as, rebates and discounts etc., should be excluded from the ambit of AMP expenses, has been upheld. 5 . We can summarize the relevant position emanating from the judgment of the Hon'ble High Court, as under: - * AMP expense is an international transaction [Paras 52 53 of the judgment] ; The TPO has jurisdiction to determine the ALP of the international transaction of AMP expenses [Para 50 of the judgment]; Inter-connected international transactions can be aggregated and section 92(3) does not prohibit the set- off [Paras 80 81]; AMP is a separate function. An external comparable should perform s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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