TMI Blog2017 (12) TMI 125X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. - ITA No. 6531/Del/2017 - - - Dated:- 30-11-2017 - SH. AMIT SHUKLA, JUDICIAL MEMBER AND SH. O.P. KANT, ACCOUNTANT MEMBER For The Appellant : Sh. Upvan Gupta, Adv. For The Respondent : Sh. Sanjay Kumar Yadav, Sr.DR ORDER PER O.P. KANT, A.M.: This appeal by the assessee is directed against order dated 26/09/2017 passed by the Ld. Assistant Commissioner of Income Tax, Circle-25(2), New Delhi (hereinafter referred to as the Assessing Officer ) in terms of section 143(3) read with section 144C(13) of the Income-tax Act, 1961 (in short the Act ) for assessment year 2013-14. 2. The impugned order has been passed pursuant to the direction dated 16/08/2070 of the Ld. Dispute Resolution Panel (DRP) in terms of section 144C(5) of the Act. In appeal, the assessee has raised following grounds: 1. That on the facts and circumstances of the case, the impugned assessment completed vide order dated 26.09.2017 under section 143(3) read with section 144C of the Income-tax Act, 1961 ( the Act ) , is illegal and bad in law. 1.1 That the assessing officer erred on facts and in law in completing the impugned assessment at an income of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... incurred on asset owned by it. 2.4 That the assessing officer/ TPO erred on facts and in law in making the aforesaid addition without appreciating that the AMP expenses were incurred by the appellant wholly and exclusively for the purposes of its business and not on behalf of or for the benefit of AE; any benefit to the AE being only incidental. 2.5 That the assessing officer/ TPO erred on facts and in law in making the aforesaid addition to the income of the appellant by applying the Bright Line Test mechanism ( BLT ) to determine the arm s length price of the AMP expenses. 2.6 That the assessing officer/ TPO erred on facts and in law in applying BLT to determine the arm s length price of the AMP expenses, without appreciate that the said method is not mandated/ prescribed under the transfer pricing regulations of India and has been rejected by the jurisdictional Delhi High Court in the case of Sony Ericsson Mobile Communications Limited: 374 ITR 118. 2.7 Without prejudice, the assessing officer erred on facts and in law in not reducing sales promotion expenses amounting to ₹ 37,02,65,809 from cumulative AMP expenses while computing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt in the case of DCM Benetton India Ltd. vs. CIT: 173 Taxman 283. 5. That the assessing officer erred on facts and in law in charging interest under sections 234B and 234C of the Act. The appellant craves leave to add, amend or vary the above grounds of appeal on or before the date of hearing. 3. The briefly stated facts of the case are that the assessee i.e. Toshiba India is a wholly-owned subsidiary of Toshiba Corporation Japan. The Toshiba India is engaged in trading of Consumer durables, IT products etc. and providing representative and marketing support services to Toshiba Group Companies . It also provided warranty services in India. For the year under consideration, the assessee filed return of income on 30/11/2013, declaring total income of ₹ 26,45,57,240/-. The case was selected for scrutiny and notice under section 143(2) of the Act was issued and complied with. The Assessing Officer noticed that the assessee had entered into international transaction with its associated enterprises, thus, with the previous approval of Ld. Principal Commissioner of Income-tax, he referred matter of determination of arm s length price of the international transactio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. The Ld. TPO computed the adjustment under AMP according to the manner proposed by the Hon ble Delhi High Court in the case of Sony Ericsson (supra) on substantive basis at ₹ 19,80,30,988/- and also proposed addition on protective basis following the BLT method amounting to ₹ 131,21,90,000/-. 3.2 Against the adjusted proposed by the ld. TPO, the assessee before the Ld. DR, the assessee filed objections before the Ld. DRP. The Ld. DRP directed to verify the segmental account and other arithmetical errors/factual mistakes to allow certain expenses out of AMP. In view of the directions of the Ld. DRP, adjustment was revised. A table revising the adjustment both on substantive as well as protective basis by the Assessing Officer in the impugned final assessment order is reproduced as under: On Substantive Basis S. No. Nature of International Transaction Adjustment as per the order of the Transfer Pricing Officer Adjustment after the directions issued by the Hon ble DRP 1. AMP-Distribution 19,80,30,988 Nil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y been rejected by the Hon ble Delhi High Court in the case of Sony Ericsson (supra), and thus adjustment even protective basis cannot be sustained. The decision of the Hon ble Jurisdictional High Court is a binding precedent and the lower authorities cannot disregard it merely because the Revenue has challenged it before the Hon ble Supreme Court. Thus, respectfully following the above decision of the Tribunal, we direct the Ld. AO/TPO to delete the protective addition of ₹ 51,09,87,000/-. Accordingly, we allow the relevant grounds of the appeal of the assessee. 7. Since we have already allowed the ground of the assessee in respect of protective addition of AMP, the ground Nos. 2 .7 and 2.8 of the appeal are rendered infructuous and accordingly, we are not adjudicating upon those grounds. Thus, the ground Nos. 2.7 2.8 of the appeal are dismissed. 8. In ground Nos. 4 to 4.4, the assessee has raised issue of not allowing additional claim of deduction amounting to ₹ 5,23,44,182/- pursuant to the order of the Settlement Commission. 8.1 The assessee made claim of deduction in question before the Assessing Officer, however, he (the A.O.) declined as the same w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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