TMI Blog2019 (3) TMI 2002X X X X Extracts X X X X X X X X Extracts X X X X ..... unt of provision of coordination and other support services - adjustment is the absence of segmental data and satisfactorily allocation of expenses in the segment - HELD THAT:- We have carefully perused the application under rule 29 and the audit certificate filed. In our considered view since now the audited segmental data are available the TPO must examine the same and decide the issue afresh after giving a reasonable opportunity of being heard to the assessee. We accordingly restored this issue to the files of the TPO with a direction to consider and examine the audited segmental data and decide the issue accordingly. The assessee is directed to furnish relevant data before the TPO. Ground No.4 is treated as allowed for statistical purpose. - ITA No.7569/DEL/2018 - - - Dated:- 7-3-2019 - SH. N. K. BILLAIYA, ACCOUNTANT MEMBER AND SH. SANDEEP GOSAIN,JUDICIAL MEMBER Appellant by : Ms. Rashmi Chopra, Advocate Respondent by : Sh. Sanjay I. Bara, CIT DR ORDER PER N. K. BILLAIYA, AM: This appeal by the assessee is preferred against the order dated 26.10.2018 framed u/s 143 (3) r.w.s. 144 C of the Act pertaining to A. Y. 2014-15. 2. The substantive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpenses, disease awareness campaigns etc.; 3.6. holding that the Appellant is adding value to the products sold in India by incurring AMP expenses without appreciating the fact that AMP expenses incurred by the Appellant are primarily for the purpose of selling the products and not towards brand building activity and is interlinked and inter-connected to the distribution business of the Appellant; 3.7. that the Ld. AO/Ld. TPO/ Hon ble DRP erred on facts and in law in not appreciating that the AMP expenses are incurred by the Appellant at its own volition and for its own benefit and any benefit accruing to the AE is incidental for which no compensation is warranted; 3.8. wrongly assuming that the Appellant is operating under the directions and for the purposes of /me AE; 3.9. applying Bright Line Test (BLT) for computing adjustment on account of expenditure on AMP without appreciating that in absence of specific provision under the Transfer Pricing regulations in India, an adjustment on account of the arm s length price of AMP expenses could not be made; 3.10. erred in applying BLT against the binding precedent as laid down by the Hon ble Delhi High Court in case of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon ble DRP has erred in not granting set-off of brought forward loss amounting to Rs. 84,705,565 of AY 2012-13. 7. The Ld. AO/Hon ble DRP has erred in not granting Minimum Alternative Tax ( MAT ) credit amounting to Rs. 18,081,414 while computing the tax liability of the Applicant. The Ld. AO failed to appreciate the fact that during AY 2013-14, the Appellant had paid taxes under the provisions of section 115JB of the Act and accordingly, Appellant is eligible for utilization of MAT credit against the tax liability for AY 2014-15 computed under the normal provisions of the Act. 8. The Ld. AO erred in disregarding the sound TP principles and judicial pronouncements in India in undertaking the TP Adjustments. 9. The Ld. AO has erred in levying interest under section 234A of the Act while calculating the amount of demand, without appreciating the fact that the Appellant has filed its return of income within the prescribed due date mentioned under section 139(1) of the Act. 10. The Ld. AO has while calculating the amount of demand due from the Appellant, computed the interest to be levied on the Appellant erroneously. 11. The Ld.AO/Hon ble DRP has erred in holding that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Nature of transaction Method Value of transaction 1 Purchase of trading goods RPM 1,82,06,11,600 2 Provision of coordination services CPM 448,37,860 3 Other support services CPM 2531,333,14 4 Recovery of expenses - 457,60,134 5 Reimbursement of expenses paid - 139,94,817 6 Subvention Income received Other Method 3,74,40,000 5. The factual matrix involved in the grievance of the assessee can be understood from the order giving effect to the direction of the DRP and the same read as under :- 4. Following the directions of Hon ble DRP, effect is being given in the manner given below :- a. Revised Computation of Co-ordination and support services :- Name of the company OP/ OC (%) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Working Capital Adjusted Margin Brawn Biotech Ltd. 2.38% 0.36% Emami Frank Ross Ltd. 5.43% 0.04% Infugen Pharma 2.84% 2.21% Oceanic Pharmachem 9.40% 5.38% Zuventus Healthcare Ltd. 5.63% 1.83% Average 5.14% 1.97% Regarding, the segmental margins of the assessee, the details submitted by the assessee does not have any audited backing. In light of this, TPO is not able to provide this relief to the assessee. Based on the above computed table, the following effect is provided in computation ojfAwp s Length Price:- Operating Revenue 5,442,979,466 Arm s Length Price at a margin of 1.97% 10,72,26,695 Arm s length Price 5,335,752,771 Price paid by the assessee 5,567,691,546 Diffe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on account of marketing and market development function carried out for the AE for which the assessee company was not adequately compensated is required to be carried out However, benchmarking carried out above is on protective basis. 6. A perusal of the above shows that the grievance of the assessee has boiled down to adjustment of Rs.27,12,84,352/- to the total income of the assessee on account of marketing and marketing development function carried out for the AE however this bench marketing is carried out on protective basis. 7. At the outset the counsel for the assessee stated that an identical issue on identical set of facts was considered by the Tribunal in ITA No.6565/Del/2017. It is the say of the counsel that since the facts for the year under consideration are identical to the facts considered in A. Y. 2013-14, the grievance raised by the assessee has been decided by the Tribunal in favour of the and against the revenue. 8. Per contra the DR stated that though bright line test (BLT ) has been discarded by the Hon ble Jurisdictional High Court in case of Sony Mobile Communications 374 ITR 118, therefore, the matter should be restored to the file of the TPO to de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In our humble understanding, therefore, the concept of 'protective assessment , as is known to the income tax law, has no application in the cases like the one before us. 7. In view of the above discussions, the addition of Rs 23,83,92,783 stands deleted. 8. So far as the question of set off of the brought forward business losses is incurred, learned representatives fairly agree that the matter is required to be remitted to the file of the Assessing Officer for fresh adjudication in the light of the result of the appellate proceedings in respect of the preceding assessment years in which the related disputed additions have been made. It is pointed out by the learned counsel that, in any event, the assessee has claimed set off of the loss of Rs 26,25,85,933 incurred in the assessment year 2012-13 which could not have been set off for the prior years, and the only year following the said assessment year is the year before us. It is also pointed out that the ALP adjustment, in respect of AMP expenses by applying the bright line test (BLT), which is now decided in favour of the assessee. While learned Departmental Representative did not really address on all these aspects, h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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