TaxTMI 
TaxTMI 
2018 (4) TMI 254
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...."1. Whether on the facts and circumstances of the case & in law, the Ld. CIT (A) erred in deleting the TP adjustment made for international transactions by grossly ignoring the fact that sales promotion & promotional expenditure is includable for determination of TP adjustment? 2. That the order of the Ld. CIT (A) is erroneous and is not tenable on facts and in law. 3. That the grounds of appeal are without prejudice to each other." 2. Briefly stated the facts necessary for adjudication of the controversy at hand are : The taxpayer is a wholly owned subsidiary of Mary Kay Inc. and is an exclusive distributor of Mary Kay products to Independent Beauty Consultants (IBC) in India. The taxpayer is working on a decentralized business mo....
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....ermined at 6.87% of the sales and as such, the excess AMP expenses incurred by the taxpayer is determined to be the amount spent towards creation of the marketing intangibles in favour of the AE and this amount is required to be reimbursed with AE along with mark-up and consequently, calculated the ALP of international transactions qua AMP services at Rs. 2,28,76,787/-. 6. The taxpayer carried the matter before the ld. CIT (A) who has deleted the addition on account of disallowance made by the AO by partly allowing the appeal. Feeling aggrieved, the Revenue has come up before the Tribunal by way of filing the present appeal. 7. We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents re....
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....section 37(1) of the Act. Therefore, I vacate the alternative finding given by the AO for disallowance and confirm that no addition is called for in the facts and circumstances of the present case towards section 37 of the Act. The appeal is accordingly ruled in favour of the appellant for this ground." 10. It is also not in dispute that the taxpayer is not into direct sale and the sale promotion expenses are in the nature of dealer's commission. When we examine impugned order passed by the ld. CIT (A) at page 51 it is recorded that the cost incurred by the taxpayer during the year under assessment in the financial statement under the head 'advertising and sales promotion', however the taxpayer mentioned that the expenses incurred are pu....
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....d to bring on record any material if there is any change of facts and circumstances in this case and change in the business model of the taxpayer during the year under assessment. So, following the decision rendered by the coordinate Bench of the Tribunal in taxpayer's own case, we are of the considered view that in view of the ratio of LG Electronics India Pvt. Ltd. (TS-11-ITAT-2013(DEL)-TP) rendered by the Special Bench of the Tribunal, expenses qua sales which do not lead to brand promotion cannot be brought within the ambit of AMP expenses for the purpose of determining the value of international transactions. So, in these circumstances, we find no illegality or perversity in the findings returned by the ld. CIT (A). 15. So far as qu....