2014 (6) TMI 469

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....he appellant. 3. i. On the facts and circumstances of the case, the learned AO has erred, both on facts and in law in making an addition of Rs. 22,23,28,349/- as difference in arm's length price determined by Transfer Pricing Officer (TPO) & the appellant. ii. On the facts and circumstances of the case, the learned AO has erred, both on facts and in law in computing an income of Rs. 22,23,28,349/- on account of difference between the arm's length price of reimbursement of advertisement and publicity expenses and the actual reimbursement of said expense received from the AE. iii. On the facts and circumstances of the case, the learned AO has erred, both on facts and in law in rejecting the contention of the appellant that the expenditure was incurred in India towards sale promotion of the products manufactured by Yamaha Motor India Private Limited in India and no benefit in any manner has been accrued to the AE. iv. That the above addition has been made ignoring the detailed transfer pricing study made by the appellant for determining the arm's length price. 4. i. On the facts and circumstances of the case, the learned AO has erred, both on facts and in law in disallo....

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....ator only, consequently the expenditure incurred on promotion of this Gladiator model, which was exclusive for India cannot be considered to be for promotion of brand of Yamaha, Japan. The TPO accordingly reduce Rs.21,58,05,755/- being 21.68% of the total expenditure of Rs.99,54,13,999/-. The net expenditure incurred by the assessee on AMP at Rs.77,96,08,244/- was computed by the TPO. 2.5. The TPO thereafter worked out the bright line percentage at 2.89 by taking two comparables as under:- i) Majestic Auto Ltd. 4.58 ii) Scooters India Ltd. 1.20 Total 5.78 Average 2.89 2.6. By applying this percentage of 2.89 on the total revenue of the assess of Rs.635,94,71,600, the eligible expenditure was held be Rs.18,37,88,712/- 2.7. Learned TPO, thus held that expenditure incurred for developing intangible was Rs. 59,58,19,532/-. To this he added a markup of 13.04% on the basis of the comparables of few advertising companies mentioned at page 8 of its order. By adding this markup of Rs.7,76,94,867/- being 13.04%, the total expenditure for development of intangible recoverable from Yamaha, Japan was worked out at Rs.67,85,14,399/-. Since the assessee has recovered a sum of Rs.45....

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....ers discount and incentive is not part of the AMP while applying bright line test. This has also been held by ITAT in the case of Whirlpool of India Ltd. vs. DCIT, ITA NO.426/Del/2013, dt. 13.1.2014; in para 6 it is observed that - "6. Adverting to the facts of the extant case, we find from pages 250 and 251 of the paper book, being the written submissions dated 14.9.2011 filed before the TPO, that the assessee categorically stated that the sum of Rs. 143.36 crore was in the nature of pricing adjustment passed on to its dealers and distributors as 'extra trade discount'. It was further explained that: 'pricing adjustment in a way is a reduction in the sales price as the same have been passed on to the dealers and distributors on effecting the sales'. The TPO did not dispute the nature of `pricing adjustment' as being discount and incentive given to dealers. This fact is vivid from page 22 of his order wherein he recorded that: `The discount and incentives that the assessee is passing on to the dealers...............'. It shows that the TPO duly accepted the nature of the amount as discount and incentives to the assessee's dealers and distributors. He ....

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....n of the employees. This issue is pleaded to be covered by the judgment of the ITAT in assessee's own case for the assessment year 2001-12 by ITA No. 3073/Del/2004 dated 10-10-2006 which is placed on PB page 685. 3.6. The remaining corporate issue regarding addition of Rs.22,618/- by restricting depreciation on the Projector a computer peripheral item to 15% as against 60% allowable. It is pleaded that this issue also stands covered in favor of assessee by a catena of judgments by ITAT and Hon'ble Delhi High Court in the cases of : (i) BSES Rajdhani Powers Ltd. (Del) ITA No. 1266/2010, dated 31.3.2010 (ii) CIT Vs. Sony India Pvt. Ltd., ITA No. 1178/2011 (iii) CIT v. Datacraft India Ltd. [2010] 133 TTJ 377 (iv) Expeditors International (India) (P.) Ltd. v. Addl. CIT [2008] 13 DTR (Del.)(Trib.) 435 (v) Haworth (India) (P.) Ltd. v. DCIT [2011] 11 taxmann.com 76 (Delhi) (vi) Carlton Overseas (P.) Ltd. v. DCIT [2011] 14 taxmann.com 97(Delhi) (vii) ACIT v. Chrys Capital Investment Advisors India Pvt. Ltd 45 SOT 71 (Delhi) (URO). 4. Ld. CIT(DR) relied on the orders of lower authorities. 5. We have heard the rival contentions and perused the material available....