Tribunal allows appeal on AMP expenses, denies deduction for custom duty interest. Grounds dismissed.

The appeal was partly allowed as the Tribunal directed the deletion of the protective addition related to AMP expenses but upheld the disallowance of the additional claim of deduction for interest paid on custom duty. Other grounds were dismissed as infructuous or not pressed.

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Issues Involved:
1. Legality of the assessment order.
2. Referral of assessment proceedings to the Transfer Pricing Officer (TPO).
3. Addition to income on account of Advertisement, Marketing, and Promotion (AMP) expenses.
4. Rejection of benchmarking analysis and intensity-based comparability adjustment.
5. Non-allowance of additional claim of deduction on account of interest paid on custom duty.
6. Charging of interest under sections 234B and 234C of the Income-tax Act.

Detailed Analysis:

1. Legality of the Assessment Order:
The appellant argued that the assessment order dated 26.09.2017 was illegal and bad in law. However, the Tribunal found these grounds to be general in nature and dismissed them as infructuous.

2. Referral to the Transfer Pricing Officer (TPO):
The appellant contended that the Assessing Officer (AO) erred in referring the assessment proceedings to the TPO without independent application of mind, proper reasons, or affording an opportunity of being heard. These grounds were not pressed during the hearing and were dismissed as infructuous.

3. Addition on Account of AMP Expenses:
The AO/TPO made an addition of Rs. 51,09,87,000 on a protective basis for the alleged difference in arm’s length price of AMP expenses. The appellant argued that AMP expenses did not constitute an international transaction and should not be benchmarked using the Bright Line Test (BLT). The Tribunal noted that the Delhi High Court had rejected the BLT method in the Sony Ericsson case and directed the deletion of the protective addition. Thus, the Tribunal allowed the appellant's relevant grounds and directed the AO/TPO to delete the protective addition.

4. Rejection of Benchmarking Analysis:
The appellant's grounds related to the rejection of benchmarking analysis and intensity-based comparability adjustment were not pressed during the hearing and were dismissed as infructuous.

5. Non-Allowance of Additional Claim of Deduction:
The appellant claimed a deduction of Rs. 5,23,44,182 for interest paid on custom duty, which was not allowed by the AO/DRP on the grounds that it did not pertain to the relevant assessment year. The Tribunal upheld this view, citing Section 43B of the Act, which mandates that such sums are allowable in the year they are actually paid. The Tribunal also referenced its decision in the appellant's case for the assessment year 2012-13, where a similar claim was disallowed. Thus, these grounds were dismissed.

6. Charging of Interest under Sections 234B and 234C:
The appellant's ground regarding the charging of interest under sections 234B and 234C was not specifically addressed in the Tribunal's order.

Conclusion:
The appeal was partly allowed. The Tribunal directed the deletion of the protective addition related to AMP expenses but upheld the disallowance of the additional claim of deduction for interest paid on custom duty. Other grounds were dismissed as infructuous or not pressed. The decision was pronounced in the open court on 30th Nov., 2017.

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