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TMI Blog2018 (5) TMI 936X X X X Extracts X X X X X X X X Extracts X X X X ..... , 2015 under section 144C(5) of the Act issued by the learned Dispute Resolution Panel (DRP), the assessee preferred this appeal stating that there is no international transaction inviting the transfer pricing adjustment in the case of the assessee. 2. Facts stated in brief are that the assessee, Cengage Learning India Pvt. Ltd. is a wholly owned a subsidiary of Cengage Learning Holdings BV, the Netherlands, and is engaged in the distribution of books, electronic products and software published by the Cengage group entities and reprint of books and publications through a third party vendor, by obtaining rights from the associated enterprises and distributing the same in the Indian market. During the purchase and sale operations the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng sales and promotional kits 11,39,738 Marketing - Sponsorship 3,99,782 Turnover discount/early payment rebate 1,86,94,337 Free samples cost 56,58,517 Free samples cost - Freight, courier and packaging 20,56,795 Total AMP 3,00,37,841 Net sales 30,26,39,132 AMP/Sales ratio 9.93 per cent. 3.2 The learned Transfer Pricing Officer by order dated January 28, 2015 suggested a demand of Rs. 3,13,77,110 based on which the learned Assessing Officer passed draft assessment order dated February 25, 2015. 3.3 Aggrieved by the same, the assessee carried the matter before the learned Dispute Resolution Panel and the learned Dispute Resolution Panel by order dated August 25, 2015 accepted the contention of the assessee t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the arm's length price, the learned Transfer Pricing Officer used the bright line method to determine the non-routine expenditure to reach a conclusion that there is an international transaction. He further submitted that the expenditure incurred by the assessee in this matter include the expenditure of printing to price list, brochures etc. during various events book fees or exhibitions for creating awareness about the books and to push the sales in the market and no question of brand promotion arises out of the activities conducted by the assessee. The learned authorised representative further submitted that the expenditure incurred by the assessee is legitimate business expense incurred in the ordinary course of business operations ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctions and conditions renewing from time to time. He brought to our notice clause 13 of these agreements which expressly prohibits publicity for the proprietor which is the foreign associated enterprise. 4.4 Per contra it is the argument of the learned Departmental representative that in paragraph No. 4 of his order, the learned Transfer Pricing Officer referred to article 13 of the agreement and stated that the assessee does not have equal rights and its associated enterprise may terminate the agreement, in which event the assessee would be left with any benefits on account of incurring of this huge AMP expenses, and any independent party in that situation would demand reimbursement and will charge for the services provided by it for prom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to either the associated enterprise or its affiliates' in any way with the media with respect to the agreement or transactions contemplated thereunder unless the assessee has obtained the prior written consent of the associated enterprise in each case. Referring to this learned authorised representative submitted that the agreement clearly prohibits the assessee from using the brand as such brand promotion does not arise. 5.1 Further it is clear from the orders of the learned Transfer Pricing Officer that the Transfer Pricing Officer made the following calculation while applying the bright line to reach the amount for which the adjustment under section 92CA has to be made : 1. Marketing catalogues and brochures 2. Marketing s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ult in any brand delivery for anyone except for selling of the products. 5.4 A reading of these expenses justify the submissions of the learned authorised representative that the marketing sales and promotional kits relate to the distribution of price lists, book and brochures etc. to the customers; marketing-sponsorship relating to promotion/exhibitions etc., free sample cost relating to the distribution of free sample activities of books to prospective customers/colleges/book stores/authors etc.; and free samples cost-free courier and packaging relate to the freight carrier cost for distribution of free sample copies of books. The Revenue failed to give any interpretation to these expenses other than the one explained by the learned auth ..... X X X X Extracts X X X X X X X X Extracts X X X X
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