Bright line test cannot sustain transfer pricing adjustment for AMP expenses where prior decisions cover the issue.

The Delhi ITAT reiterated that delay in filing an appeal may be condoned where administrative transfer of charge and other stated circumstances furnish sufficient cause, and the 520-day delay was accepted on that basis. On transfer pricing, it held that an adjustment for advertising, marketing and promotion expenses could not be sustained by applying the bright line test, especially where the issue was already covered by earlier and later years and no distinguishing facts or change in law was shown. The relief granted by the first appellate authority was therefore left undisturbed.

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Issues: (i) Whether the delay of 520 days in filing the appeal deserved to be condoned; (ii) Whether transfer pricing adjustment could be sustained in respect of advertising, marketing and promotion expenses on application of the bright line test.

Issue (i): Whether the delay of 520 days in filing the appeal deserved to be condoned.

Analysis: The delay was explained as arising from administrative circumstances, including transfer of charge among officers. The length of delay was substantial, but the reasons furnished were accepted as sufficient for the purpose of condonation.

Conclusion: The delay was condoned.

Issue (ii): Whether transfer pricing adjustment could be sustained in respect of advertising, marketing and promotion expenses on application of the bright line test.

Analysis: The issue had already been considered in the assessee's own earlier and subsequent assessment years, and the consistent view, including reliance on the Delhi High Court decision in Sony Ericsson Mobile Communications India Pvt. Ltd. v. CIT, was that the bright line test could not be applied for making an adjustment in respect of AMP expenses. No factual distinction or subsequent change in law was shown to justify a different view.

Conclusion: The transfer pricing adjustment on AMP expenses was not sustainable and the relief granted by the first appellate authority called for no interference.

Final Conclusion: The appeal was dismissed and the order granting relief to the assessee was sustained.

Ratio Decidendi: A transfer pricing adjustment in respect of AMP expenses cannot be made by applying the bright line test where the issue stands covered by earlier binding or consistent decisions and no distinguishing facts or change in law is shown.

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