Contact us   Feedback   Annual Subscription   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2016 (6) TMI 787 - ITAT DELHI

2016 (6) TMI 787 - ITAT DELHI - TMI - Transfer pricing adjustment - difference in the arm's length price of the international transaction of incurring of advertisement, marketing and promotion (AMP) expenses relating to creation of marketing intangibles - Held that:- TNMM has been applied as the most appropriate method, which method has not been disturbed by the TPO, then, the international transactions of AMP and Distribution activities should be clubbed. It further held that for determining th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

see 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 manner, proper set off on account of excess purchase price adjus .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

MBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER For The Appellant : Sh. Nageshwar Rao, Adv. For The Respondent : Sh. Amendra Kumar, CIT DR ORDER PER BENCH: The present appeals have been filed by the assessee against the order dated 31.12.2015 passed by the Ld. A.O. for assessment year 2009-10, 2010-11 and 2011-12 . For the sake of convenience, all the three assessment years are being disposed off by way of this order as the issues involved in them are common. 2. The main issue is on account of trans .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ment 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 marke .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

We have heard the rival submissions and perused the relevant material on record qua the addition on account of transfer pricing adjustment of AMP expenses. 5. During the course of hearing the ld. Counsel for the assessee at the very outset submitted that the issue under consideration deserves to be set aside to the TPO/AO as the issue now has been settled by the Hon ble Jurisdictional High Court in the case of Sony Ericsson Mobile Communications Pvt. Ltd. vs. CIT reported at 374 ITR 118 and in .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

DRP declined to apply the decisions of M/s Maruti Suzuki India Ltd. vs. C.I.T. (Supra) on the ground that it was given in the context of 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ontrovert the aforesaid contention of the Ld. Counsel for the assessee. 7. We have considered the submissions of both the parties and perused the material available on the record. In the present case it is an admitted fact that the T.P.O. proposed the adjustment by applying the Bright Line Test , on account of excessive AMP incurred by the assessee on behalf of the A.E. But subsequently the D.R.P. held that the application of Bright Line Test has been over ruled in the case of M/s. Sony Ericsson .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

and C.I.T. & Ors vs. Whirlpool of India Ltd. (supra) vide order dated 23.12.2015 and 22.12.2015 respectively. These decisions of the Hon ble Jurisdictional Court which are applicable to the facts of the present case were not considered by the T.P.O. and the D.R.P. since these were not available to them. We, therefore, by considering the totality of the facts and the ratio laid down by the Hon ble Delhi High Court in the aforesaid judicial pronouncements, deem it appreciate to set aside the i .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ufacturer 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 transaction of marketing and distribution. In the case of a Distributor, the Hon'ble High Court held that where TNMM has been applied as the most appropriate method, which method has not been disturbed by the TPO, then, the international transactions of AMP and Distribution activities should be clubbed. It further held that for determining the ALP of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nd 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. 9. In such determination of ALP of AMP expenses in a segregated manner, proper set off on account of excess purchase price adjustment sh .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ernational 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 similar AMP functions. [Paras 165 &166] ; • Bright line test cannot be applied to work out .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version