TMI Blog2022 (1) TMI 1082X X X X Extracts X X X X X X X X Extracts X X X X ..... cision in the case of CIT vs. M/s SK Tekriwal .[ 2012 (12) TMI 873 - CALCUTTA HIGH COURT ] and also the decision of PV Rajagopal [ 1998 (4) TMI 127 - ANDHRA PRADESH HIGH COURT ] as held that section 201 has 2 limbs one is that where the employer does not deduct the tax and the 2nd is where after deducting the tax fails to remit it to the government and there cannot be assumption that if there is any shortfall due to any difference of opinion as to the taxability of any item the employer can be declared to be an assessee in default. In view of this settled position of law we allow the ground of appeal. Disallowance of provision of stamp duty - HELD THAT:- The assessee incurred the stamp duty expenditure in respect of the instrument for 3 years, learned Assessing Officer was of the opinion that for each year of the 3 years, assessee is entitled only for 1/3rd of such an expense and on that premise, disallowed 2/3rd of the stamp duty. Ld. CIT(A) recorded a finding that in order to secure expenditure to be deferred Revenue expenditure, such an expense must result in a benefit in Revenue field and inasmuch as by incurring the stamp duty, the assessee does not get any enduring ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of the disallowance of professional fees on account of short deduction of TDS, Ld. CIT(A) upheld the disallowance by holding that the assessee admitted that it is an assessee in default under section 201 of the Act. Ld. CIT(A), however, deleted the additions made by the learned Assessing Officer on account of advances written off and provision for stamp duty. Aggrieved by these findings both the assessee and the Revenue are in appeal. 4. Insofar as the AMP issue is concerned, submissions of the Ld. AR are that use of bright line method has been disregarded by the Hon ble jurisdictional High Court in the case of Sony Ericsson, 374 ITR 18, which was followed by the Tribunal in the case of the assessee for the assessment year 2011-12 in ITA No. 845/Del/2016 and was upheld by the Hon ble Delhi High Court in ITA No. 795 of 2019. He further submits that in ITA 795 of 2019 the Hon ble High Court upheld the deletion of the AMP adjustment. He further submitted that AMP adjustment cannot be upheld since the substantive adjustment computed as well by the Ld. TPO while giving effect to the orders of the Hon ble High Court and the Tribunal in the case of assessee for the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ised economic ownership as forming the basis of taxation. Ld. DR submits that the Ld. CIT(A) should have appreciated the distinction made by the Revenue between normal expenses incurred for selling a product and the expenses incurred for penetration of the market, brand promotion, creation and development of marketing intangibles, which remains the function of the foreign supplier/legal owner of the brand and not of the Indian entity. Lastly he submits that the trade discounts are not in the nature of selling expenses and hence are within the purview of AMP expenses inasmuch as trade discounts emanated from the overall strategy of the AE to penetrate the market or to promote its brand. 6. A perusal of the order of the Hon ble jurisdictional High Court in the case of assessee for the assessment year 2011-12 in ITA No. 795 of 2019 makes it clear that the issue is no longer res Integra. For the sake of completeness we deem it just and necessary to extract the relevant observations of the Hon ble High Court, while referring to the observations of the Tribunal in ITA No. 845/del/2016, hereunder,- 16. The issue relating to adjustment of AMP is covered by the decision of the Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an international transaction and directed to exclude the routine selling and distribution expenses and directed the TPO to use the cost plus method and further directed to apply the markup on excess AMP expenses as per sub-clause (ii) of Rule 108(I)(c). 25. However, we are of the considered view that following the decision rendered by Hon ble Delhi High Court in Maruti Suzuki India l.td. v. C1T (supra), the first step for the Revenue to benchmark the AMP expenses is to establish the existence of international transaction; if it is proved, then to proceed for benchmarking the transactions qua AMP expenses. Now, it is the settled principle of law that existence of international transaction qua AMP expenses requires to be established de hors the bright line test , particularly when the taxpayer has categorically denied the existence of international transaction and 81% of its turnover is from the sale of its manufacturing in India. Moreover, without prejudice, it is the case of the taxpayer that despite the directions issued by the ld. DRP, the TPO has wrongfully proceeded to consider selling and distribution expenses as part of the AMP expenses for the purposes of applying th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Apex Court. In those circumstances, he will also allow opportunity of being heard to the assessee. 18. Since the aforesaid issues stand covered by the earlier decisions of this Court, no question of law arises for our consideration. 7. It is not in dispute that the case of the assessee has been that the primary engagement of the assessee is in manufacturing operations and the AMP expenditure incurred by it is to the benefit of its operations in India. In the case of the assessee, Tribunal took into consideration the submissions made by the Ld. DR that the matter relating to the international transaction involving AMP expenses is pending before the Hon ble Apex Court and addition of the Hon ble Apex Court would be binding upon all the authorities and therefore, while returning a finding that the assessee is a full-fledged manufacturer and the entire AMP expenses were incurred by it to enhance its sale in India and not for promoting the brand of its AE and for creating intangibles for its AE, the alleged excessive AMP expenditure does not fall in the category of international transaction and therefore the adjustment made by the Revenue on account of incurrence of AMP expe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he employer does not deduct the tax and the 2nd is where after deducting the tax fails to remit it to the government and there cannot be assumption that if there is any shortfall due to any difference of opinion as to the taxability of any item the employer can be declared to be an assessee in default. In view of this settled position of law we allow the ground of appeal. 11. Now coming to the appeal of the Revenue, ground No. 1 relates to the disallowance of advances written off and the Ld. CIT(A) decided the issue in favour of the assessee while following the binding precedents of the Tribunal in assessee s own case for the assessment years 2004-05 and 2005-06 in ITA Nos. 2769 /Del/ 2012 and ITA No. 258 /Del/ 2013 respectively. Since the Ld. CIT(A) followed the binding precedents, and in the absence of any contrary decision by any higher forum, it cannot be said that the Ld. CIT(A) committed anything wrong. We therefore dismiss ground No. 1 of Revenue s appeal. 12. Ground No. 2 of Revenue s appeal related to the disallowance of provision of stamp duty. Inasmuch as the assessee incurred the stamp duty expenditure in respect of the instrument for 3 years, learned Assessing Of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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