TaxTMI 
TaxTMI 
2020 (6) TMI 53
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....rcumstances of the case and in law, the AO has erred in assessing the total income of the Appellant under section 143(3) of the Act, for the subject assessment year at INR 123,92,03,240 as against the returned income of INR 5,42,98,030. 2. That on the facts and circumstances of the case and in law, the initial order dated December 18, 2018, and the consequential orders passed in pursuance thereto are bad in law and void ab-initio as the same have been passed in violation of the statutory provisions of section 144C of the Act. 2.1. That on the facts and circumstances of the case and in law, the AO by issuing notice of demand under section 156 and penalty notice under section 274 read with section 271 (1 )(c) of the Act, along with the order dated December 18, 2018 (titled as 'Draft Assessment Order') has in a way passed a final assessment order as against the draft assessment order contemplated under section 144C(1) of the Act in the case of an eligible assessee. 3. That on the facts and circumstances of the case and in law, the orders passed by the AO / TPO were bad in law as the pre-requisite for applying Chapter - X, ie, existence of international trans....
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....iture from the quantum of alleged excessive AMP expenditure while benchmarking the alleged international transaction using substantive and / or protective methods, disregarding the decision of the Hon'ble Tribunal in Appellant's own case for the subject assessment year. 7. That on the facts and circumstances of the case and in law, the AO / DRP / TPO have erred in enhancing the Transfer Pricing adjustment to INR 118,49,05,211 in the remand proceedings as against adjustment of INR 51,89,69,687 made in first round, without appreciating that the Assessee could not be in a worse-off position in remand proceedings. 8. That on the facts and circumstances of the case and in law, the AO / DRP / TPO erred in applying Bright Line Test ('BLT') and Cost Plus Method ('CPM') for making transfer pricing adjustment of INR 118,49,05,211 under both the methods on protective basis. The lower authorities have further grossly erred in not adhering to the binding order of the Hon'ble Tribunal in Appellant's own case, wherein the Hon'ble Tribunal expressly directed to compute the adjustment on an aggregate basis in the first round of proceedings. 9. That on the facts an....
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....tional transaction of AMP expenditure. 15. That on the facts and circumstances of the case and in law, the AO have erred in levying / charging interest under sections 234B and 234C of the Act. Each of the above grounds are independent and without prejudice to the other grounds of appeal preferred by the Appellant." ITA No. 8753/DEL/2019 "Appeal under section 253(1) of the Income Tax Act, 1961 (the "Act") against the order dated October 18, 2019 (received on October 23, 2019) passed under section 143(3) read with section 144C of the Act by the Deputy Commissioner of Income Tax, Circle 3(1), Gurgaon (the "AO") for the aforesaid assessment year ("AY") 1. That on the facts and circumstances of the case and in law, the AO has erred in assessing the total income of the Appellant under section 143(3) of the Act, for the subject assessment year at INR 163,25,39,320 as against the returned income of INR 64,39,34.320/-. 2. That on the facts and circumstances of the case and in law, the initial order dated December 18, 2018, and the consequential orders passed in pursuance thereto are bad in law and void ab-initio as the same have been passed in vi....
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....case and in law, DRP has erred in not directing AO / TPO to exclude the sales and distribution expenditure from the quantum of alleged excessive AMP expenditure while benchmarking the alleged international transaction using substantive and / or protective methods, disregarding the decision of the Hon'ble Tribunal in Appellant's own case and various decisions of the High Court. 6. That on the facts and circumstances of the case and in law, the AO / DRP / TPO grossly erred in applying Bright Line Test ('BLT') for making transfer pricing adjustment amounting to INR 98,86,05,077, on protective basis, without appreciating that BLT has been expressly rejected by the Hon'ble Tribunal in Appellant's own case for earlier AYs. 6.1. Notwithstanding and without prejudice to the ground that BLT is not a statutory method, AO / TPO have erred in arbitrarily selecting the improper company namely, Bharat IT Services Limited for the purposes of BLT without appreciating that the same is functionally not comparable. Further, DRP erred in summarily upholding the order of AO / TPO. 6.2. Notwithstanding and without prejudice to the ground that BLT is not a statutory method, AO ....
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....quantifying arm's length price of the alleged international transaction of AMP expenditure. 11. That on the facts and circumstances of the case and in law, the DRP erred in not directing the AO to allow deduction under section 43B(a) of the Act for custom duty amounting INR 52,31,95,566, paid under protest during the subject assessment year for goods purchased and cleared during the subject year. 12. That on the facts and circumstances of the case and in law, the AO have erred in levying / charging interest under sections 234B and 234C of the Act. Each of the above grounds are independent and without prejudice to the other grounds of appeal preferred by the Appellant. The Appellant prays for leave to add, alter, vary, omit, substitute or amend the above grounds of appeal, at any time before, or at, the time of hearing of the appeal. 3. Both the appeals are having identical grounds in respect of challenging the Assessment Order on the ground that the same is bad in law and void-abinitio. Therefore, we are firstly taking up facts for A.Y. 2012-13. During the relevant assessment year Nikon India Private Limited, i.e., the assessee company was ....
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....016 confirmed the additions made by the TPO with following modifications: i) Disallowed the benefit of sales related expenditure while computing cost plus adjustment; ii) Directed TPO to compute adjustment using Intensity approach; and iii) Directed the TPO to use a mark-up of 17.32% instead of 20.18% as proposed by the TPO, for the purpose of computing AMP intensity adjustment. The TPO without following the directions of the DRP, confirmed the addition made in the Transfer Pricing order dated 28.01.2016. Thereafter, the Assessing Officer passed the final assessment order dated 17.01.2017 confirming the additions made by the TPO and assessed the income of the assessee at Rs. 57,32,67,720/- as against the returned income of Rs. 5,42,98,030/-, thereby making a TP adjustment of Rs. 51,89,69,687/-. 4. Aggrieved by the order of the Assessing Officer, the assessee filed an appeal before the Tribunal. The Tribunal vide order dated 31.03.2017 remanded the matter back to the files of the TPO with following directions: * The Tribunal restored the legal question on 'determination whether alleged excessive AMP expenditure incurred is an international t....
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....sis in accordance with the directions of the Tribunal, i.e., using aggregated approach following the AMP intensity method. The TPO passed an order dated 04.10.2019, giving effect to the directions of the DRP under Section 144C(5) of the Act as under: * As regards adjustment on protective basis using BLT, the TPO considered a mark-up of 17.32% as against 20.18% as directed by DRP, thereby reduced the adjustment from Rs. 121,37,90,558/- to Rs. 118,49,05,211/-, without allowing deduction of sales related expenses. * Further, adjustment on substantive basis using Intensity approach was made by TPO at Rs. 1,59,39,195/-. Pursuant to the above, the Assessing Officer passed the final assessment order dated 18.10.2019, wherein, the Assessing Officer did not make any addition on substantive basis, but straight away made an addition on protective basis. The Assessing Officer assessed the income as under:- Particulars Amount (in INR) Returned income 5,42,98,030 Additions: TP adjustment on account of AMP expenditure (on protective basis) 1,18,49,05,211 Assessed Income 1,23,92,03,241 Rounded off 1,23,92,03,240 6. Being aggrieved by the ass....
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....he case of Pr. CIT vs. Lionbridge Technologies P. Ltd.: [2019] 260 Taxman 273 (Bombay) The Ld. AR relied upon the following decisions wherein passing of the draft assessment order in the second round of proceedings has been held to be mandatory and if the same has not been done, the assessment framed is liable to be quashed: • Nokia India (P.) Ltd. vs ADIT: WP(C) NO. 3629 OF 2017 (Delhi), and affirmed by Hon'ble Supreme Court ('SC') in ACIT vs Nokia India (P) Ltd. [2018] 259 Taxman 91 (SC) • Zuari Cement Ltd. v. ACIT: WP(C) No.5557/2012 (AP), dated 21-2-2013 and affirmed by the Hon'ble SC in No. 16694/2013, vide order dated 27th September 27, 2013 • International Air Transport Association vs DCIT: [2016] 290 CTR 46 (Bombay) • PCIT vs Andrew Telecommunications (P.) Ltd: ITA No. 144 of 2017 (Bombay) • Turner International India (P.) Ltd. v. Dy. CIT [2017] 398 ITR 177 (Delhi) • CIT v. C-Sam (India) (P.) Ltd: [2017] 398 ITR 182 (Gujarat) • ACIT vs Vijay Television (P) Ltd.: [2018] 407 ITR 642 (Madras) In view of the above, the Ld. AR submits that the order dated 18.12.2018, passed by the Asses....