2014 (3) TMI 803
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....unt of transfer pricing adjustment towards AMP expenses. 3. Briefly stated the facts of the case are that the assessee is engaged in the business of providing data processing and related services to its Associated Enterprises (AEs). It is responsible for providing software access to the `Subscribers' of the Amadeus products and computer database within the Indian subcontinent. Its territory includes India, Bangladesh and Nepal. The main activity of the assessee is to provide connectivity to host system by creation/modification/up-gradation of computer programmes online. The assessee has a data processing centre which provides services to its A.Es. through Subscribers (mostly travel agents). The assessee reported international transactions ....
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....n of brand legally owned by the foreign entity. It also held that such 'Transaction' falls within the ambit of 'International transaction'. While upholding the application of 'Cost plus method' as the most appropriate method for determining the ALP of AMP expenses, the Special Bench held that the component of `Cost' under this method should be determined by applying the `Bright Line Test'. Certain parameters have been laid down by the Special Bench in para 17.4 of its order and the AO/TPO was directed to consider the cumulative impact of such factors before deciding the question of transfer pricing adjustment on account of AMP expenses. 5. The contentions raised by the ld. AR in the present appeal that there is no 'transaction' on account ....
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....ings effected through such subscribers and, in turn, the assessee was obliged to pass over a part of the gross amount received from its A.E to such subscribers. A copy of the sample agreement with M/s Gaurav Travels Pvt. Ltd., one of the subscribers, was placed on record. It was shown that vide clause 4 of this Agreement, the assessee agreed to pay to the subscriber a Loyalty Incentive on the segments booked by him. It was explained that the entire amount of `Incentive' totaling Rs. 54.74 crore represented such amounts paid to various subscribers throughout the country who booked the tickets etc. through the network of the Amadeus Group. It was argued that since this expenditure of incentive was in the nature of 'selling expense' and not 's....
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....e has also been discussed by the DRP in para 4.2.2 and 4.2.3 of its order by observing that it was towards incentive to travel agents. In the light of the above facts, the position which emerges is that the assessee paid a sum of Rs. 54.75 crore to the subscribers who actually got made bookings for their customers through the network of Amadeus group. But for the payment of such incentive, the subscribers had no interest in dealing with the assessee. As the revenue generated from bookings done by the subscribers is the major source of the assessee's income from its A.E, such `Incentive' to the subscribers cannot be viewed as anything other than `Selling expense' which is liable to excluded from the total AMP expenses as per the decision giv....