TMI Blog2017 (2) TMI 120X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 37 of the Act and / or genuineness of the expenditure. This exercise has to be done, if at all, by the Assessing Officer in exercise of his jurisdiction to determine the income of the assessee in accordance with the Act. In the present case, the Assessing Officer has not disallowed the expenditure but only adopted the TPO's determination of ALP of the advertisement expenses. Therefore, the issue for examination in this appeal is only the issue of ALP as determined by the TPO in respect of advertisement expenses. The jurisdiction of the TPO is specific and limited i.e. to determine the ALP of an International Transaction in terms of Chapter X of the Act read with Rule 10A to 10E of the Income Tax Rules. The determination of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee on its entire exports of various products on application of Rule 10B(1)(e) 3. The respondent assessee is engaged in the business of manufacture and export of cosmetic and toiletry products. During the subject assessment year, the respondent assessee had reimbursed 20% of the advertisement expenses incurred by its Associated Enterprises in respect of the new products. This expenditure was reimbursed as a part of its business strategy to develop its brands. The respondent assessee applied the Transaction Net Margin Method (TNMM) to determine the Arms Length Price in respect of the advertisement expenditure. For the aforesaid purposes, as the above advertisement expenses were an integral part of export activity, the resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowed and the addition deleted. 5. On further appeal by the Revenue, the Tribunal held that the TPO has not disputed the comparable selected nor the appropriate method of determining the ALP. It was not a case of the TPO that the ALP of the advertisement expenses is nil on application of some other comparables or invoking some other method to determine the ALP. In the aforesaid circumstances, the appeal of the Revenue was dismissed. 6. Mr. Suresh Kumar, learned Counsel for the Revenue urges that the transaction between the respondent assessee and its Associated Enterprises were on principal to principal basis. In that view, no party would reimburse the expenditure incurred by the other party. Hence, in fact no expenditure was allow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of advertisement expenses. The jurisdiction of the TPO is specific and limited i.e. to determine the ALP of an International Transaction in terms of Chapter X of the Act read with Rule 10A to 10E of the Income Tax Rules. The determination of the ALP by the respondent assessee of its advertisement expenses has not been disputed on the parameters set out in Chapter X of the Act and the relevant Rules. In fact, as found both by the CIT(A) as well as the Tribunal that neither the method selected as the most appropriate method to determine the ALP is challenged nor the comparables taken by the respondent assessee is challenged by the TPO. Therefore, the adhoc determination of ALP by the TPO dehors Section 92C of the Act cannot be sustained. 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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