TaxTMI 
TaxTMI 
2018 (5) TMI 936
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....read with the directions dated August 25, 2015 under section 144C(5) of the Act issued by the learned Dispute Resolution Panel (DRP), the assessee preferred this appeal stating that there is no international transaction inviting the transfer pricing adjustment in the case of the assessee. 2. Facts stated in brief are that the assessee, Cengage Learning India Pvt. Ltd. is a wholly owned a subsidiary of Cengage Learning Holdings BV, the Netherlands, and is engaged in the distribution of books, electronic products and software published by the Cengage group entities and reprint of books and publications through a third party vendor, by obtaining rights from the associated enterprises and distributing the same in the Indian market. During th....
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....incurred the AMP expenditure on the following counts : Name of expenditure Amount (Rs.) Marketing catalogues and brochures 20,88,672 Marketing sales and promotional kits 11,39,738 Marketing - Sponsorship 3,99,782 Turnover discount/early payment rebate 1,86,94,337 Free samples cost 56,58,517 Free samples cost - Freight, courier and packaging 20,56,795 Total AMP 3,00,37,841 Net sales 30,26,39,132 AMP/Sales ratio 9.93 per cent. 3.2 The learned Transfer Pricing Officer by order dated January 28, 2015 suggested a demand of Rs. 3,13,77,110 based on which the learned Assessing Officer passed draft assessment order dated ....
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....igh Court in the case of Sony Ericsson Mobile Communications India Pvt. Ltd. v. CIT [2015] 374 ITR 118 (Delhi) ; [2015] 55 taxmann.com 240 (Delhi). Instead of first finding of whether there is an international transaction or not in the facts of the case and then proceed to determine the adjustment to reach the arm's length price, the learned Transfer Pricing Officer used the bright line method to determine the non-routine expenditure to reach a conclusion that there is an international transaction. He further submitted that the expenditure incurred by the assessee in this matter include the expenditure of printing to price list, brochures etc. during various events book fees or exhibitions for creating awareness about the books and to p....
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....Cengage Learning Incorporation, U. S.; Cengage Incorporation, U. K.; and Cengage Learning Asia Pte Ltd., the Netherlands and submitted that the assessee has been entering into similar agreements with all these associated enterprises with similar agreements with all these associated enterprises with similar directions and conditions renewing from time to time. He brought to our notice clause 13 of these agreements which expressly prohibits publicity for the proprietor which is the foreign associated enterprise. 4.4 Per contra it is the argument of the learned Departmental representative that in paragraph No. 4 of his order, the learned Transfer Pricing Officer referred to article 13 of the agreement and stated that the assessee does not h....
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....hat clause 13 of these agreements expressly prohibits the assessee from publicly using the name or trade marks, service marks, trade names and/or logos of these entities in any publicity, promotion, news release, website posting, announcement, client list, marketing materials or other disclosure or otherwise refer to either the associated enterprise or its affiliates' in any way with the media with respect to the agreement or transactions contemplated thereunder unless the assessee has obtained the prior written consent of the associated enterprise in each case. Referring to this learned authorised representative submitted that the agreement clearly prohibits the assessee from using the brand as such brand promotion does not arise. 5....
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...."free samples cost" this expense is in respect of distribution of free sample copies of books to the prospective customers/colleges/book stores/authors etc.; and lastly, expenses of Rs. 20,56,795 under the head free sample cost-freight relates to freight/courier cost for distribution of free sample copies of books. Basing on these, the learned authorised representative's argument is that none of these activities result in any brand delivery for anyone except for selling of the products. 5.4 A reading of these expenses justify the submissions of the learned authorised representative that the marketing sales and promotional kits relate to the distribution of price lists, book and brochures etc. to the customers; marketing-sponsorship r....