TaxTMI 
TaxTMI 
2019 (3) TMI 7
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....aw, the Final Assessment order passed under section 143(3) read with section 144C of the Income Tax Act, 1961 ("the Act") by the Ld. AO is bad in law as the same does not consider complete and relevant facts, are not in accordance with provisions of law and principles of law as laid down by Hon'ble courts. TRANSFER PRICING GROUNDS 3. That the impugned order passed by Ld. AO/Transfer Pricing Officer (Ld. TPO) computing the total income at INR 1,59,60,90,0001- is blatantly erroneous since adjustment based on a protective assessment has been added by the Ld. AO in computing the total income of the Appellant. 4. That on the facts and circumstances of present case, the Hon'ble Dispute Resolution Panel ("Hon'ble DRP") has erred in holding that the Appellant has not contested the use of the Bright Line Test ("BLT") for undertaking the adjustment under the protective assessment. 5. That on the facts and circumstances of present case, the Ld. AO/Ld. TPO have erred in determining that the Hon'ble DRP directed them to conclude the assessment based on the BLT. 6. That without prejudice to the above, if BLT was to be applied then the ....
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.... margin on all costs incurred including AMP expenses. 13. That the Ld. AO/ Ld. TPO/ Hon'ble DRP erred in not appreciating that the AMP expenses were incurred by the Appellant as part of its distribution business and not for the purpose of providing sole benefit to its associated enterprise and thus could not be considered to be a transaction under section 92F(v) of the Act, since there was no understanding or arrangement or action in concert for provision of service. 14. Without prejudice to the other grounds, the Ld. TPO / has erred in facts and circumstances of the case and in law by ignoring the fact that even if a transaction by transaction approach is applied, the AMP function has been benchmarked under transactional net margin method (TNMM) analysis carried out by the TPO and found to be at arm's length. 15. Without prejudice to other grounds, the Ld. TPO/ Ld. AO/Hon'ble DRP erred in applying the BLT method to determine the excessive/nonroutine AMP expenses in complete disregard of the Transfer Pricing Regulations in India, commercial circumstances of the case and the principles and findings laid down by the Hon'ble Delhi High Court.....
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....e for AMP activities, the profit earned by the Appellant over and above the return earned by a distributor undertaking no or limited AMP activities should be considered as a remuneration for its AMP activities, in direct contravention to the principles laid down by the Hon'ble Delhi High Court. Miscellaneous contentions 23. Ld. AO has erred in initiating penalty proceedings under Section 271(1)(c) of the Act on account of an adjustment that was a result of a protective assessment. 24. Ld.AO has erred) in charging interest under Sections 234A and 234B of the Act." 2. Briefly stated the facts necessary for adjudication of the controversy at hand are : M/s. Sony Mobile Communication India Pvt.Ltd., the taxpayer is primarily engaged in the business of importing, buying and selling and distributing wide range of mobile phones in India and providing related post sale support services. The year under assessment is the fourth year of the operation of the company. The taxpayer trades Sony Ericsson Mobile handset in India and part of its activity undertakes the promotion, marketing and distribution of mobile handsets. During the year under assessment, the ta....
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....dered in earlier years, entities carrying negligible marketing and market development functions are removed and the final companies considered are as follows :- Comparables Selling & Distribution expenses Sales AMP/ Sales Beetel Teletech Ltd. 98.57 1472.4 6.69% Intex Technologies (India) Ltd. 19.3 782.47 2.47% Optiemuslnfracom Ltd. 64.86 1856.86 3.49% Priya Ltd. 0.68 192.47 0.35% Redington (India) Ltd. 26.19 9567.82 0.27% Savex Computers Pvt. Ltd. 105.89 2905.23 3.64% Vivek Ltd. 19.71 384.31 5.13% Average 3.15% 24.6 The amount which represents the bright -line and the amount that should have been compensated to the assessee company are computed hereunder:- Particulars Value (Rs.) Value of gross sales of assessee A 6928209949 Arithmetic mean of AMP /Sales of comparables B 3.15% Amount that represents price for routine AMP activities C = B/A 218238613 Total expenditure incurred by assessee on AMP D 1501955818 Arm's Length Price of the service/expenditure for creation of marketing intangible in Ind....