Tribunal decision: Transfer pricing adjustment set aside, warranty provision allowed, detailed analysis for further assessment

The Tribunal set aside the transfer pricing adjustment on account of AMP expenses and remitted the matter to the Assessing Officer/Transfer Pricing Officer to decide in line with the Special Bench decision. The Tribunal allowed the additional ground on the deductibility of provision for warranty, directing the Assessing Officer to evaluate the claim based on past experience to avoid double deduction, following a Supreme Court judgment. The appeal was allowed for statistical purposes, providing detailed analysis and directions for further assessment by the tax authorities in accordance with legal precedents.

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Issues involved:
1. Transfer pricing adjustment on account of AMP expenses.
2. Deductibility of provision for warranty.

Transfer pricing adjustment on account of AMP expenses:
The appeal was against the order passed by the Assessing Officer concerning the assessment year 2009-10, specifically challenging the transfer pricing adjustment on account of AMP expenses. The issue was found to be covered by a Special Bench order in a previous case. The Special Bench had clarified that AMP expenses only refer to advertisement, marketing, and publicity, excluding selling expenses specific to sales. The Tribunal set aside the impugned order and remitted the matter to the Assessing Officer/Transfer Pricing Officer to decide the transfer pricing adjustment on AMP expenses in line with the Special Bench decision.

Deductibility of provision for warranty:
The assessee raised an additional ground regarding the deductibility of a provision for warranty, citing a Supreme Court judgment. The Tribunal admitted this additional ground, emphasizing that the Tribunal has the jurisdiction to examine a question of law affecting the tax liability of the assessee, even if not raised before the CIT(A). The Tribunal considered the provision for warranty in the assessee's accounts, noting the opening and closing balances and the amount used during the year. Referring to the Supreme Court judgment, the Tribunal directed the Assessing Officer to evaluate the claim for deduction of the provision for warranties based on past experience and to ensure no double deduction occurs. The appeal was allowed for statistical purposes.

This judgment addressed the issues of transfer pricing adjustment on AMP expenses and the deductibility of a provision for warranty, providing detailed analysis and directions for further assessment by the tax authorities in accordance with relevant legal precedents.

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