2014 (6) TMI 565

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....Ltd and Focus Energy Ltd. The assessment in this case has been completed at an income of 101,80,30,280/- by making transfer pricing adjustment of Rs.68,70,75,253/- on account of Arms Length Price Adjustments. 3. The Transfer Pricing Officer applied bright line test of comparison of the ratio of AMP expenditure to sale of the appellant with that of comparable companies and held that any expenditure in excess of bright line is for promotion of the brand/trade name which is owned by the Associate Enterprise and that needs to be suitably compensated by the AE. The Transfer Pricing Officer after adding mark up of 15.46% computed an adjustment of Rs.70,52,68,339/- on account of brand building activity undertaken by the appellant for the Associat....

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....atio laid down by Special Bench in LG's case and followed in the case of the appellant for A. Y 2008-09, after excluding the selling expenses aggregating to Rs.12,62,81,906/- the remaining expenses of Rs.53,34,21,497/- constituting 8.75% of the total sales only is required to be considered for the purpose of bench marking analysis as undertaken by the TPO. 5. Furthermore, the TPO/DRP have reached findings contrary to the decision of Special Bench of the Tribunal in LG's case wherein para 17.6 while allowing criteria for selection of comparable companies. It was held that the correct way to make a meaningful comparison is to choose comparable a domestic case not using any foreign brand. It, therefore, follows that if the comparable case is ....

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....01% of the comparable companies as against 8.75% of the AMP expenditure incurred by the assessee as a percentage of sales at 8.75% only. No adjustment thus was warranted on account of AMP. The addition of Rs.68,70,75,253/- is, therefore, liable to be deleted. 8. On the other hand, the Ld. DR contends that the assessee had opportunity to take pleas at the time of hearing of its objection before DRP. The DRP, however, has taken into account the Special Bench decision in the case of L. G and it is only after considering the entire gamut of the matter, proceeded to reduce the adjustment to Rs.68,70,75,253/-. No further relief is, therefore, required to be given. 9. Heard parties with reference to material on record. The DRP does not appear to....