TMI Blog2018 (4) TMI 254X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of making alternative disallowance of AMP expenses u/s 37 (1) of the Act by AO and deleted by the ld. CIT (A) is concerned, there is no dispute that the ld. CIT (A) has granted relief by following the decision of Whirlpool of India Limited (supra) rendered by the Hon’ble Delhi High Court because when the allowability of total amount of advertisement and marketing expenditure is concerned under Chapter X in order to make TP adjustment, this issue cannot be examined by making addition u/s 37 of the Act for the same amount. AO, after due verification, is directed to exclude selling expenses to recompute the ALP of the international transaction. - ITA No.4882/Del./2014 - - - Dated:- 28-3-2018 - SHRI R.S. SYAL, VICE PRESIDENT AND SHRI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... axpayer has entered into international transaction with its Associated Enterprises (AE) as under :- S. Description of the transactions Amount (in (a) Purchase of finished goods 32,501,399 (b) Purchase of products for business 1,288,481 (c) Reimbursement of expenses 1,997,176 4. The taxpayer in its economic analysis to benchmark its international transactions applied Transactional Net Margin Method (TNMM) with Operating Cost / Total Cost (OP/TC) as the Profit Level Indicator (PLI) to determine Arm s Length ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the revenue authorities below in the light of the facts and circumstances of the case. 8. Undisputedly, the AO has made adjustment on the sole ground that expenditure made by the taxpayer on AMP has not been wholly and exclusively incurred for the taxpayer s business rather has been incurred to create marketing intangibles in favour of the taxpayer. It is also not in dispute that the AO has recorded in the assessment order that in case, the adjustment is made on account of transfer pricing analysis on account of AMP expenses is not sustained in appeal then the alternative disallowance will stand under section 37(1) of the Income-tax Act, 1961 (for short the Act ) being not incurred wholly and exclusively for the purpose of the busi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... generating sales and providing incentive to the sales team for increasing sales and described the expenses as under :- ( a) awards for the independent sales force for achieving programme targets; ( b) sales force training programme to create awareness about the quality of the product; ( c) seminars, events and conferences for independent beauty consultants; ( d) market research etc. 11. The ld. DR challenging the impugned order relied upon the order passed by the AO. 12. The ld. AR for the taxpayer supporting the impugned order passed by the ld. CIT (A) contended that the issue in controversy has been squarely covered in its favour by the order passed by the coordinate Bench of the Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of making alternative disallowance of AMP expenses u/s 37 (1) of the Act by AO and deleted by the ld. CIT (A) is concerned, there is no dispute that the ld. CIT (A) has granted relief by following the decision of Whirlpool of India Limited (supra) rendered by the Hon ble Delhi High Court because when the allowability of total amount of advertisement and marketing expenditure is concerned under Chapter X in order to make TP adjustment, this issue cannot be examined by making addition u/s 37 of the Act for the same amount. 16. Ld. CIT (A) agreeing with the contentions raised by the taxpayer that all the expenses referred to in sub-para (a) to (d) of Para 10 of this order are allowable, however we are of the considered view that in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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