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2016 (4) TMI 1139 - ITAT DELHI

2016 (4) TMI 1139 - ITAT DELHI - TMI - Addition on account of AMP adjustment - Held that:- 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 Mobile Communication India Pvt. Ltd. [2015 (3) TMI 580 - DELHI HIGH COURT]. However, .....

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RT] and C.I.T. & Ors vs. Whirlpool of India Ltd. [2015 (12) TMI 1188 - DELHI HIGH COURT]. These decisions of the Hon’ble Jurisidctional 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 issue relating to the adj .....

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if any errors were detected. It appears that the AO did not follow the said directions given by the D.R.P. relating to warranty claim, therefore, this issue is set aside to the file of the AO to be decided afresh as directed by the DRP. - Stay Application No. 121/Del/2016 (In ITA No. 944/Del/2016) - Dated:- 8-4-2016 - Sh. N. K. Saini, AM And Sh. Beena A. Pillai, JM For the Appellant : Sh. Himanshu S. Shekhar, Adv. For the Respondent : Sh. Amrendra Kumar, CIT(DR) ORDER PER N.K. SAINI, A.M. The ap .....

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lant at ₹ 343,103,020/- as against the returned income of ₹ 129,003,431/-. 2. That the DRP/Ld. Transfer Pricing Officer (TPO) erred in making an adjustment of ₹ 217,399,859/- under section 92CA(3) of the Income Tax Act, 1961 ( the Act ) in respect of the advertising and marketing expenses (AMP expenses) incurred by the Appellant for its own business purposes. Transfer pricing grounds 3. That the Ld. TPO/AO/DRP erred in segregating AMP transaction after having accepted the arm s .....

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nsaction pertaining to AMP expenditure by applying the bright light test using AMP to Gross Profit as the bright line benchmark. 6. That the Ld. TPO/AO/DRP erred in not allowing a set off of surplus revenue/ profit exceeding the ALP margin earned from the distribution business against the total AMP expenditure to determine the value of international transaction relating to AMP expenditure. 7. That the Ld. TPO/AO/DRP erred in taking certain routine AMP expenses as brand promotion expenses for cre .....

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erred on facts and in law in not following the directions of DRP to correct the amount of claim of warranty expense made by the appellant with respect to the warranty provision while computing the taxable profits during the financial year. Common ground 11. Ld. AO has erred, in charging interest under sections 234B and 234C of the Act. 12. That on facts and in laws, the Ld. AO erred in holding that the Appellant has furnished inaccurate particulars of income in respect of each item of disallowa .....

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. The assessee was engaged in the business of trading of consumers durables etc. and also providing representative and marketing Sports Services to Toshiba Groups Company Worldwide. Since the assessee had entered into international transactions with associated enterprises (AE), the AO referred the case to the Transfer Pricing Officer (TPO) to determine the arm s length price of the international transaction. The TPO vide order dated 30.01.2015 u/s 92CA(3) of the Act recommended an enhancement of .....

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-imbursement received 5,65,79,507/- Adjustment 71,23,76,838/- 4. The A.O. made the addition of ₹ 71,23,76,838/- on T.P.Adjustment in draft assessment order. During the course of assessment proceedings, the AO also noticed that the assessee claimed a sum of ₹ 82,399/- on account of SAD written off. When confronted to explain the claim, the assessee submitted that the similar disallowance was made in the assessment year 2010-11 which was confirmed by the DRP. The AO therefore, made the .....

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15.12.2015 directed the TPO to exclude certain comparables from the final list of comparables. The AO gave the effect to the directions of the DRP and worked out the AMP adjustment at ₹ 21,73,99,859/- as against ₹ 71,23,76,838/- proposed in the order passed u/s 92CA(3) of the Act. Now the assessee is in appeal. 6. 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 .....

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demonstrate the existence of any mutual agreement or arrangement between the assessee and the A.E. It was stated that the 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 Ba .....

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0(Del.) (Supra). 7. In his rival submissions, the ld. DR although supported the order of the AO could not controvert the aforesaid contention of the Ld. Counsel for the assessee. 8. 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 .....

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distribution business also in the cases of Bausch & Lomb Eyecare (India) Pvt. Ltd. vs. A.C.I.T. (Supra) 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 Jurisidctional 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 .....

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