TaxTMI 
TaxTMI 
2018 (6) TMI 1563
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....romotion expenses (AMP expenses) by applying Bright Line Test. (iii) In Ground No.3, the assessee has challenged the intensity based comparability adjustment on substantive basis, however the ALP has been determined as Nil, therefore, the same has not been pressed before us. (iv) In Ground no.4 to 4.3, the assessee has challenged the disallowance of deduction on account of provision for warranty amounting to Rs. 9,80,20,092/-. (v) In Grounds no.5 to 5.1, the assessee has challenged the disallowance of deduction on account of interest paid on delay in deposit of TDS amounting to Rs. 1,49,607/- under the provision of Section 40(a)(ii) of the Act. (vi) In Ground no.6, the assessee has challenged the charging interest under sections 234B and 234C of the Act. 2. The brief facts of the case are that the assessee is a wholly owned subsidiary of Toshiba Corporation, Japan which is a Japanese Technology company, specialized in advanced electronics, engaged in manufacturing and marketing information and communication systems, electronic components, heavy electrical apparatus, consumer products, medical diagnostic imaging equipment, etc. The assessee is ....
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....grieved by the said order of the Tribunal, assessee had filed an appeal before Hon'ble High Court, wherein the Hon'ble High Court vide order dated 22nd April, 2015 remanded the matter back to the ITAT to compute the AMP adjustment in the light of the order passed by Hon'ble High Court in the case of Sony Ericsson Mobile Communications India Pvt. Ltd., reported in 371 ITR 118. The Tribunal again vide order dated 30.10.2015 further remanded the matter back to the Assessing Officer/TPO to decide the issue afresh in accordance with law. In the set aside proceedings, the TPO vide order dated 31st March, 2017 and subsequently by the draft assessment order, assessee's income was proposed at Rs. 22,91,01,906/- after making the following additions:- Particulars Amount (INR) Total income as determined by the Assessee 16,08,68,450 Add: Disallowance of ALP u/s. 92CA 6,80,38,610 Add: Disallowance u/s. 40(a)(ii) 1,49,607 Add: Disallowance u/s. 37 33,775 Add: Disallowance u/s. 43B 11,464 4. The main issue with regard to the ALP adjustment was on account of AMP expenses of Rs. 6,80,38,610/- which was made on substantive basis. After th....
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....ictional High Court in the case of Sony Erricson (supra) and catena of other judgments of the Hon'ble Delhi High Court, wherein it has been consistently held that BLT method cannot be applied for making adjustment in the AMP expenses. He further pointed out that this issue now stands decided in favour of the assessee in assessee's own case for the Assessment Year 2013-14 and in support he filed a copy of judgment in ITA No.6531/Del/2017 order dated 13.11.2017, wherein the Tribunal has deleted the said protective issue. 7. On the other hand, learned DR relied upon the order of the learned DRP. 8. After considering the relevant findings given in the impugned order as well as order of the Tribunal, we find that on substantive basis no addition has been made after the direction of the DRP as the same has been determined at 'Nil'. The only issue is protective addition of Rs. 4,26,35,832/- which has been made on protective basis after applying BLT. Now, it is well settled proposition under the jurisdiction of Hon'ble Delhi High Court that Bright Line Test Method cannot be applied for making any kind of adjustment under AMP expenses. This precise issue has come up for consid....
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.... the facts in brief are that assessee has created a provision for warranty amounting to Rs. 9,80,20,092/- based on actuarial estimation of liability. However, at the time of filing of return of income, the assessee disallowed the provision for warranty debited to the P&L account and claim allowance only for the amount of actual utilization of the provision. Accordingly, net amount of Rs. 7,26,60,664/- was added while computing the taxable income. The assessee placed strong reliance upon the judgment of Hon'ble Supreme Court in the case of Rotork Controls India Pvt. Ltd. vs. CIT, reported in 314 ITR 62 (SC) and other decisions. The Assessing Officer noted that the assessee has voluntarily and suo motu disallowed amount of Rs. 9,80,20,092/- on account of provision for warranty at the time of filing of income tax return and the claim was not made through revised return but through return representation during the proceedings before the Tribunal. He held that such a fresh claim cannot be considered by the Assessing Officer other than by way of revised return and in support, strongly relied upon the decision of Goetze India Ltd. vs. CIT, reported in (2006) 248 ITR 323 (SC). However,....
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....d that a provision is a liability which can be measured only by using a substantial degree of estimation. A provision is recognized when: (a) an enterprise has a present obligation as a result of a past event; (b) it is probable that an outflow of resources will be required to settle the obligation; and (c) a reliable estimate can be made of the amount of the obligation. If these conditions are not met, no provision can be recognized. Liability is defined as a present obligation arising from past events, the settlement of which is expected to result in an outflow from the enterprise of resources embodying economic benefits. A past event that leads to a present obligation is called as an obligating event. The obligating event is an event that creates an obligation which results in an outflow of resources. It is only those obligations arising from past events existing independently of the future conduct of the business of the enterprise that is recognized as provision. For a liability to qualify for recognition there must be not only present obligation but also the probability of an outflow of resources to settle that obligation. Where there are a number of obligations, (e.g. product....