TMI Blog2022 (12) TMI 1257X X X X Extracts X X X X X X X X Extracts X X X X ..... ender Pal, CIT (DR) ORDER PER YOGESH KUMAR U.S., JM This is an appeal filed by the Assessee for the Assessment Year 2016-17 against the final assessment order dated 03/04/2021 passed under Section 143(3) r/w Section 144C of Income tax Act, 1961, passed by DCIT, New Delhi. 2. The grounds of appeal are as under:- 1. Based on the facts and circumstances of the case, Casio India Company Private Limited (hereinafter referred to as the Appellant ) respectfully craves leave to prefer an appeal under section 253(1 )(d) of the Income-tax Act, 1961 (hereinafter referred to as Act ), against the order dated 30 April 2021 (hereinafter referred to as impugned order) passed by the Additional/Joint/Deputy/Assistant Commissioner of Income Tax/Income Tax Officer, National e- Assessment Centre (hereinafter referred to as the learned AO ) under section 143(3) read with section 144C of the Act in pursuance of the directions dated 28 October 2020 issued by the Hon ble Dispute Resolution Panel (hereinafter referred to as Hon ble DRP ). 1. Impugned final assessment order dated 30.04.2021 is invalid and void ab initio since the same is not in accordance with the procedure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Protective adjustment using Bright Line approach 10. erred in applying Bright Line Test ( BLT ) for computing adjustment on protective basis on account of AMP, disregarding the principles laid by the Hon ble Delhi High Court in the case of Sony Ericsson Mobile Communications India Pvt. Ltd and subsequently followed in case of Maruti Suzuki India Ltd., which rejected the application of BLT. 11. erred in not following the judicial discipline of following the directions of Hon ble ITAT in Appellant s own case for AY 2014-15 rejecting the application of BLT. 12. erred in not providing set-off against appellant s distribution margins while using the de-bundled approach to benchmark AMP expenditure, as directed by the Hon ble High Court in the case of Sony Ericsson Mobile Communications India Pvt. Ltd. 13. erred in quantifying AMP expenses by considering certain selling and distribution expenses while performing arm s length analysis without giving cogent reasons for the purpose of benchmarking alleged AMP expenditure, disregarding the principles and findings laid down by the Hon ble High Court in the case of Appellant. 14. erred in rejection of comparable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee filed its return for Assessment Year 2016-17 declaring income of Rs. 18,22,87,670/- and subsequently revised the return of income by declaring income at Rs. 18,02,99,090/- on 01-12-2017. Notices u/s 143(2) of the Act and the questionnaire along with a notice u/s 142(1) of the Act were issued. In response to the notices, replies were submitted by the assessee. The case of the assessee was selected through CASS. A reference was made to the TPO to determine the Arm s Length Price (ALP) u/s 92CA(3) of the Act in respect of international transaction entered into by the assessee. An order u/ 92CA (3) of the Act has been passed on 31/10/2019 by the TPO. A draft assessment order came to be passed u/s 144C of the Act on 21/12/2019 by incorporating the adjustment made by the TPO, wherein an amount of Rs. 7,77,54,318/- on substantive basis and Rs. 14,41,74,836/- on protective basis as proposed by TPO was to be added back to the total income. However, demand for protective adjustment has not been enforced awaiting the judgment of Hon'ble Supreme Court over the concerned issue. An appeal has been filed by the assessee before the DRP and vide order dated 28/10/2020 heard the matter an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orders passed by the revenue authorities below in the light of the facts and circumstances of the case. 14. Now, it is brought to our notice by the ld. AR for the taxpayer that protective adjustment using bright line approach on account of AMP expenses by the Revenue has been held to be not sustainable by the coordinate Bench of the Tribunal in taxpayer's own case in ITA No.8060/Del/2018 for AY 2014-15 vide order dated 24.01.2019. 15. Undisputedly, this is a case of AMP adjustment in case of pure distributor. It is also not in dispute that in case of the taxpayer, AMP adjustment has been a legacy issue and the ld. DRP decided the same on the basis of earlier year order by taking defence that Revenue has already filed the Special Leave Petition before the Hon'ble Supreme Court. It is also not in dispute that the ld. DRP mentioned in para 3 of its order that during AY 2014-15, the matter as to whether routine AMP spent is an international transaction is pending before the Hon'ble Supreme Court for final decision and thereby upheld AMP adjustment made by the AO. 16. We have perused the aforesaid order dated 24.02.2019 passed by the coordinate Bench of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring of AMP expenses as international transaction more particularly when basis for treating the AMP expenses as international transaction i.e. BLT is not a legally sustainable method. 21. Undisputedly, there is no change in the FAR of the taxpayer company since AY 2010-11 and the taxpayer is performing same functions. In AY 2010-11, the coordinate Bench of the Tribunal vide order dated 22.04.2019 passed in ITA No.1764/Del/2015, available at page 484 of the paper book, held that the Revenue has failed to prove that AMP expenditure by the taxpayer is a separate international transaction by returning following findings :- 29. The entire finding and approach of the TPO and DRP has been purely based on hypothesis and one of the agreement entered in the earlier year for a limited period of six months and this has been stated to be a material so as to determine that there was an international transaction qua AMP expenditure in this year. Such a presumption based on said agreement cannot be inferred in this year at all as, firstly, it was for a very limited period in one of the earlier year as stated above; and secondly, each year has to be seen independently and if no such ma ..... X X X X Extracts X X X X X X X X Extracts X X X X
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