Feedback   New User   Login      
Tax Management India. Com TMI - Tax Management India. Com
Acts / Rules Notifications Circulars Tariff/ ITC HSN Forms Case Laws Manuals Short Notes Articles SMS News Highlights
        Home        
Extracts
Home List
← Previous Next →

M/s. Nikon India Pvt. Ltd. Versus DCIT, Circle -3 (1) , Gurgaon

2017 (11) TMI 386 - ITAT DELHI

TPA - whether AMP adjustment could be made in the case of the assessee on protective basis following the Bright Line Test (BLT)? - Held that:- We find that BLT has been discarded as a method for computing armís length price for international transactions of AMP by the Honíble Delhi High Court in the case of Sony Ericsson Mobile Communications India Private Limited Vs. CIT (2015 (3) TMI 580 - DELHI HIGH COURT) thus, no addition could be sustained applying the BLT even on protective basis. Since 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

: Sh. H.K. Choudhary, CIT(DR) ORDER PER O.P. KANT, A.M.: This appeal by the assessee is directed against order dated 28/09/2017 passed by the Deputy Commissioner of Income-tax, Circle-3, Gurgaon (hereinafter called as the Assessing Officer ) pursuant to the direction of the ld. Dispute Resolution Panel (DRP), raising following grounds: 1. That on the facts and circumstances of the case and in law, the AO has erred in assessing the total income of the Appellant under section 143(3) of the Act, fo .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

incurrence of such expenditure by the Appellant and the Dispute Resolution Panel ( DRP ) erred in upholding the same. 2.1 That on the facts and circumstances of the case and in law, the AO/DRP/TPO have erred in re-characterizing the Appellant as service provider rendering brand building services to its AE, without appreciating that it is a full risk bearing distributor incurring AMP expenditure in the course of its own business to promote its sales in India. 3. That on the facts and circumstance .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he facts and circumstances of the case and in law, the TPO erred in re-characterizing the unilateral AMP expenditure being payments made by Appellant to independent third parties as an international transaction under chapter X of the Act, particularly when section 92CA of the Act enables the TPO only to compute the arm s length price ( ALP ) of international transaction . Further, the DRP erred in not adjudicating the objections challenging the jurisdiction of the TPO in this regard. 4.1 That on .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

circumstances of the case and in law, the AO/DRP/TPO have erred in making an adjustment in respect of alleged international transaction of AMP expenditure, without appreciating that adjusted gross profit margin as well as operating margin of the Appellant was better than the comparables. 6. That on the facts and circumstances of the case and in law, the AO/DRP/TPO grossly erred in applying Bright Line Test ( BLT ) to propose transfer pricing adjustment amounting to INR 42,90,27,103, on protectiv .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ion . 7.1 Notwithstanding and without prejudice that no mark-up could have been levied, on the facts and circumstances of the case and in law, AO/DRP/TPO have erred in law and facts, by cherry picking the comparable companies for purpose of computing mark-up for the alleged international transaction and without providing an opportunity of being heard in this regard. 7.2 That on the facts and circumstances of the case and in law, the AO/DRP/TPO has erred in not granting set-off of excess profit f .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n law, the AO have erred in levying / charging interest under sections 234B of the Act. Each of the above grounds are independent and without prejudice to the other grounds of appeal preferred by the Appellant. The Appellant prays for leave to add, alter, vary, omit, substitute or amend the above grounds of appeal, at any time before, or at, the time of hearing of the appeal. 2. The briefly stated facts of the case are that, assessee is a whollyowned subsidiary of Nickon Corporations, Japan . It .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

oceedings, the ld. Assessing Officer noticed the international transactions carried out by the assessee with the Associated Enterprises (AE), and accordingly he referred the determination of arm s length price of the international transaction to the ld. Transfer Pricing Officer (TPO) in terms of section 92CA(1) of the Act. According to the TPO, the assessee incurred expenses on Advertising, Marketing and Promotions (AMP) of the brand of the Associated Enterprise (AE), and thus there existed on 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

ng Officer passed draft assessment order on 09/11/2016 under section 143(3) r.w.s. 144C of the Act. The assessee filed objections against the draft assessment order before the Ld. DRP. After taking into consideration the objections of the assessee, the Ld. DRP issued directions to reduce the AMP adjustment on substantive basis to nil against the addition proposed of ₹ 33,08,51,870/- by the Assessing Officer. The Ld. DRP, however, upheld the proposal of the Assessing Officer to make an adju .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ve issue is, whether AMP adjustment could be made in the case of the assessee on protective basis following the Bright Line Test (BLT). 4. Before us, the learned counsel submitted that identical addition made on protective basis applying Bright Line Test (BLT) in assessment year 2010-11 has been deleted by the Tribunal in the case of the assessee itself; accordingly, the addition in the year under consideration is not sustainable. 5. The Ld. CIT(DR), on the other hand, submitted that addition wa .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

7 deleted the addition with following observation: 15. TPO by applying the Bright Line Test (BLT) proposed adjustment of ₹ 22,30,18,964/- on protective basis. The ld. AR for the assessee by relying upon the decisions rendered by the coordinate Bench of the Tribunal in Tianjin Tianshi Biologicial Development Company Ltd. vs. DCIT - (2014) 52, ITA No4574/Del/2017 TAXMANN.COM 518 (Delhi-Trib, ITO vs. M/s. Fussy Financial Services Pvt. Ltd. in ITA No.4227/Del/2014 dated 05.06.2017, Perfetti Va .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

have been applied at the first stage. 16. The coordinate Bench of the Tribunal in case cited as Perfetti Van Melle India Pvt. Ltd. vs. DCIT in ITA No.1073/Del/2017 dated 24.05.2017 determined the issue as to applying the BLT for determining the ALP of AMP expenses and observed as under :- 13. We want to clarify that if a situation for determining the ALP of AMP expenses arises, then no transfer pricing adjustment should be made by applying the bright line test, as has been done on protective ba .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

idered non-routine AMP as separate transactions by making following observations :- III. Section 92C of the Income-tax Act, 1961 - Transfer pricing - Computation of arm's length price (Comparables and adjustments/Adjustments - AMP expenses) - Assessees were several Indian subsidiaries of Multi National Enterprises (MNEs) engaged in distribution and marketing of imported and branded products, manufactured and sold to them by foreign AEs - They had applied TNMM/RPM for computing ALP - TPO acce .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

Discussion Forum
what is new what is new
 


Share:            

|| Home || About us || Feedback || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members ||

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

Go to Mobile Version