TaxTMI 
TaxTMI 
2019 (7) TMI 1765
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....ssment Year 2011-12. 2. Since the assessee, facts and issues involved in all these appeals are similar, we deem it just and convenient to dispose of all these appeals by way of this common order. 3. Briefly stated facts are that the assessee is a company incorporated in the year 1996 under the provisions of the Companies Act, 1956 and was originally registered as an export oriented unit to undertake manufacturing activities such as coating of raw beads, polishing, stinking, knotting etc on the beads provided by its associated enterprise, but from the year 2000 onwards the assessee also started undertaking importandresale of Crystal and Crystal related products in India to third parties. 4. For the years 2007-08 to 2009-10 and 2011-12 they have filed their return of income, and in view of the international transaction undertaken by the assessee, reference under section 92CA(1) of the Act was made for determination of the arm's-length price of the international transaction to the Ld. Transfer Pricing Officer ("Ld. TPO"). 5. In respect of Assessment Years 2007-08 to 2009-10, the assessee applied the CUP method as the most appropriate method (MAM). Ld. TPO rejected the TP d....
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....) Private Ltd vs. CIT [(2015) 374 ITR 118]. 8. In respect of Assessment Years2007-08 to 2009-10 and 2011-12, assessee is challenging the order of the Ld. CIT(A) in applying the same parameters of the Bright Line Test (BLT) stating that it has not a statutory mandate under the Act, whereas the Revenue is challenging the action of the Ld. CIT(A) in directing the use of RPM as the most appropriate method for benchmarking the transaction related to purchase/import of Crystal and Crystal components even when RPM does not capture the marketing intangibles created in the hands of the assessee. Revenue further contends that in respect of the Assessment Year 2011-12, Ld. DRP should have appreciated the fact that the Bright Line Test (BLT) is a mere step of the most appropriate method for benchmarking the AMP services, carried out to estimate and bifurcate expenditure pertaining to the assessee for its own routine distribution function and the expenditure incurred on AMP services provided to the AE in a situation where the assessee has not reported the international transaction pertaining to marketing functions. 9. Insofar as the most appropriate method is concerned, Ld. AR submitted t....
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....istency hold that the RPM is the most appropriate method for determining the ALP of the international transaction for the Assessment Year 2011-12 also.As already stated above, in respect of the Assessment Years 2007-08 to 2009-10, Ld. CIT(A) held that RPM is the most appropriate method for benchmarking the activities of the assessee in the import of Crystal and Crystal components. 12. Next argument of the Ld. AR is that for all the years Bright Line Test (BLT) is sought to be applied and the same is rejected by the Hon'ble jurisdictional High Court in the case of Sony Ericsson (supra), whereas the intensity test is also rejected by Chandigarh Bench of Tribunal in the case of Widex India Private Limited vs ACIT, ITA No. 269/CHD/2017 by order dated 23.5.2019 holding that it was only a meagre remains of Bright Line Test (BLT) approach which has been rejected by the Hon'ble High Court in the case of Sony Ericsson (supra). 13. Ld. AR submitted that Ld. CIT(A), for the Assessment Years 2007- 08 to 2009-10 held that RPM is the most appropriate method for benchmarking the international transaction of import of Crystal and Crystal components and once RPM is applied for distribution ac....
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....and the comparable would include reference to AMP expenses. In case of a mismatch, adjustment could be made when the result would be reliable and accurate. Otherwise, RP Method should not be adopted. If on comparable analysis, including AMP expenses, gross profit margins match or are within the specified range, no transfer pricing adjustment is required. In such cases, the gross profit margin would include the margin or compensation for the AMP expenses incurred. Routine or non-routine AMP expenses would not materially and substantially affect the gross profit margins when the tested party and the comparable undertake similar AMP functions." 15. Further, this aspect was considered by a coordinate Bench of this Tribunal in assessee's own case for the Assessment Year 2004-05 in ITA No. 5621/Del/2014, by order dated 10/02/2017 in the light of Sony Ericsson (supra) and remanded the matter to the learned Assessing Officer/Ld. TPO with the following directions:- "7. In view of the foregoing discussion, we set aside the impugned order on this score and direct the AO/TPO to determine the ALP of the transaction of Import of Crystal goods and Crystal components, firstly, by apply....
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....nfirmed the addition. 20. It is the argument before us by Ld. AR thatthe nature of services provided through software and EDP charges were for providing operational IT-services and for Individual Business Application Development Services; that these services were provided under an agreement named as "Inter Company IT-Services Agreement" entered into between the appellant and D. Swarovski & Co. Ld. AR of the assessee submitted that from a perusal of the nature of services as mentioned above, it can be inferred that the said services/support from D. Swarovski & Co. is required to perform the basic business operations through a well organized and maintained IT-support system as they essentially pertain to providing access to appellant company of certain IT platforms meant for all group companies of Swarovski, providing support to ensure the continuance of security and other functions meant for basic health-check of company's IT systems; and carrying out the auxiliary functions such as documentation and others towards the above works. He also referred various invoices raised in consideration to the provision of the said services, received from D. Swarovski & Co., by the assessee....
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....llowing services were rendered under the agreements:- - Internet browsing services including surf-control- configuration and maintenance; - Providing VPN access including security authentication; - Remote AS400 (application software which provides remoteaccess to laptop etc. including support and maintenance for system hardware and software; - Support for on-going operations; - Document Management / Collaboration; - Monitoring of central resources; - Data management including back-up; - Antivirus management; and - Security checks. 24. A reading of the above services clearly shows that the services are basic business operations of the company through the organised and maintained IT support systems. Further the sample copies of the invoices show that these services are charged on the basis of uses at a predefined hourly usage rates and these expenses are incurred for the services in the nature of operational IT services such as browsing charges, usage of Swarovski distribution system software for facilitating the activities such as customer invoicing, inventory management etc services of laptops and P....