TMI Blog2016 (9) TMI 1397X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Transfer Pricing Officer ('TPO') on account of alleged excessive Advertising, Marketing and Promotion expenses ( AMP expenses ) incurred by the appellant, and c) Addition of ₹ 7,22,87,247/- made by the TPO in respect of services availed by the Appellant from its associated enterprises. Transfer Pricing Adjustment on account of AMP expenditure 2. Impugned order, to the extent it confirms adjustment under Transfer Pricing Regulations with reference to imaginary and non-existent international transactions, is bad in law as it is not in accordance with provisions of law. 3. On the facts and in circumstances of the case and in law, ld. AO/DRP/TPO have erred in holding that the Advertisement, Marketing and Promotion ( AMP ) expenditure incurred by the Appellant in India, being payments made to third parties, can be characterized as an 'international transaction' as per the provisions of the Act. 4. On the facts and in circumstances of the case and in law, even if the word 'transaction' is given its widest connotation, the TPO/AO/DRP has failed to show the existence of an 'understanding' or an 'arrangement' or 'acti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appreciating that the Appellant had used Transactional Net Margin Method ( TNMM ) to benchmark its international transactions, and thus, no separate arm's length analysis was required in respect of the alleged international transaction relating to AMP. 14. That on the facts and circumstances of the case and in law, the learned AO/DRP/TPO have erred, in benchmarking presumed international transaction of the Appellant relating to AMP, without considering that the Appellant has been fully compensated for its marketing efforts as evident from the arm's length margin earned by it. Without prejudice, the further direction to verify and modify' the adjustment is also contrary to express provisions of law. 15. That on the facts and circumstances of the case and in law, learned AO/TPO were not justified in considering discounts, selling and promotion expenses, and other such expenditure while calculating the AMP expenditure of the Appellant. Without prejudice, the conclusions reached are contrary to the very same decisions which are relied upon by the tax authorities. 16. That on the facts and circumstances of the case and in law, learned AO/TPO/DRP have erred in incorr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Appellant and proceeding to determine the arm's length price himself. 25. That in making the aforesaid addition, the TPO/AO/DRP have erred in alleging that the Appellant failed to establish the actual rendition or services without appreciating the detailed documentation and evidences submitted by the Appellant to demonstrate the receipt of services. 26. That in making the aforesaid addition, the TPO/AO/DRP have erred in holding that the services rendered by the AEs could have been availed locally by the Appellant without appreciating that the decision from whom to avail services is a commercial decision, which cannot be questioned by the Revenue and, therefore, no addition could have been made on the aforesaid ground. 27. That in making the aforesaid addition, the TPO/AO/DRP have erred in alleging that the Appellant failed to establish the necessity and/or benefit arising to the Appellant from services rendered by its AEs without appreciating that the benefit accruing out of said services and the necessity for availing services are both, commercial decisions, which cannot be questioned by the Revenue and, therefore, no addition could have been made on any of the afo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in law, the learned AO has erred, in charging interest under Sections 234B and 234C of the Act. The above grounds are independent and without prejudice to each other. The Appellant craves to leave to add, withdraw, alter, modify, amend or vary the above grounds of appeal before or at the time of hearing. 3. Ground No. 1 is general in nature and Ground No. 34 is pre-maturely raised, so these grounds do not require any adjudication on our part. 4. Vide Ground Nos. 2 to 21, the grievance of the assessee relates to the transfer pricing adjustment on account of AMP expenses and vide Ground Nos. 22 to 33, the assessee is aggrieved by the transfer pricing adjustment on account of intra group services. 5. Facts of the case related to these issues in brief are that the assessee filed the return of income declaring an income of ₹ 27,65,35,314/- under normal provisions of the Act and at book profit of ₹ 23,36,90,859/- under special provisions u/s 115JB of the Act on 13.10.2010. The assessee is wholly owned subsidiary of Bausch Lomb South Asia Inc., USA and engaged in the business of manufacturing lense care solutions, trading of contact senses and protein removal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the other international transactions undertaken by the taxpayer during the F.Y. 2010-11. The taxpayer was afforded reasonable opportunity of being heard, as mentioned on page 1 of this order. It has already been decided in Para 46 that the AMP expenditure is an international transaction within the meaning of Section 92B(1) of the Act read with clause (v) of Section 92F of the Act. Being an international transaction it was required to be reported in Form No. 3CEB under Section 92E of the Act. The taxpayer was also required to furnish complete details of these international transactions as prescribed under Rule 10D of the IT Rules, 1962. 6. Subsequently, the AO asked the assessee to show-cause as to why the aforesaid amount as recommended by the TPO should not be added to the total income of the assessee. The assessee made the submissions vide reply dated 20.02.2015. However, the AO did not find merit in the said submission and proposed the addition of ₹ 14,90,23,634/- vide draft assessment order dated 24.02.2015. Against the draft assessment order, the assessee filed objections before the Dispute Resolution Panel (DRP) who passed the order u/s 144C(5) of the Act dated 06 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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