2017 (2) TMI 120

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....s in respect of Assessment Years 2003-04, 2004-05 and 2005-06. Thus, the three appeals before us. 2. The Revenue urges the following reframed question of law for our consideration: "Whether on facts and in the circumstances of the case and in law, the Tribunal was right in accepting the international transaction being reimbursement of advertisement expenses incurred by the Associated Enterprise of the assessee in Dubai, Egypt and Malaysia at arm's length of the basis of the profits earned by the assessee on its entire exports of various products on application of Rule 10B(1)(e) " 3. The respondent assessee is engaged in the business of manufacture and export of cosmetic and toiletry products. During the subject assessment....

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....that on examination of facts that reimbursement of advertisement expenditure to the Associated Enterprises is a consequence of a business strategy as it results in better profits. On the question of determination of the ALP it held that the TPO has neither challenged the appropriate method for determining the ALP nor the comparables selected by the respondent assessee to determine it. In the above view, it held that addition was made on adhoc basis and the same is not permissible. Thus, the appeals were allowed and the addition deleted. 5. On further appeal by the Revenue, the Tribunal held that the TPO has not disputed the comparable selected nor the appropriate method of determining the ALP. It was not a case of the TPO that the ALP of....

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....t of Section 37 of the Act and / or genuineness of the expenditure. This exercise has to be done, if at all, by the Assessing Officer in exercise of his jurisdiction to determine the income of the assessee in accordance with the Act. In the present case, the Assessing Officer has not disallowed the expenditure but only adopted the TPO's determination of ALP of the advertisement expenses. Therefore, the issue for examination in this appeal is only the issue of ALP as determined by the TPO in respect of advertisement expenses. The jurisdiction of the TPO is specific and limited i.e. to determine the ALP of an International Transaction in terms of Chapter X of the Act read with Rule 10A to 10E of the Income Tax Rules. The determination of ....