TaxTMI 
TaxTMI 
2022 (1) TMI 1082
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....ncome after setting of loss of Rs. 7,22,02,563/-. Recording that the assessee has international transaction with the Associated Enterprises ("AEs"), learned Assessing Officer referred the determination of the Arms Length Price ("ALP") to the Ld. Transfer Pricing Officer (Ld. TPO). Ld. TPO suggested an adjustment of Rs. 19,82,44,016/-. By incorporating the transfer pricing adjustment, learned Assessing Officer also made certain additions on account of, inter alia, advances written off, fine and penalty, provision for stamp duty, disallowance of professional fee on account of short deduction of TDS etc. 3. Aggrieved by such an action of the learned Assessing Officer, assessee preferred appeal before the Ld. CIT(A). Insofar as the AMP expenditure is concerned, Ld. CIT(A) directed the Ld. TPO to bring the adjustment in tune with the BEPS example without using the concept of bright line observing that this approach would take care of the mark-up in a reasonable manner in line with the BEPS proposals, as the assessee was unable to provide a viable and irrational alternative course to test the AMP function to ascertain compliance to the provisions of chapter X. In respect of the disallow....
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....ng that wherever such set off is intended at any other place, the Act has provided explicit stipulation for the same. According to the Revenue different transactions cannot be bundled up and the Arms Length Price ("ALP") to be determined as of packaged transaction particularly when the assessee failed to lead the primary information in this regard as provided under rule 10 D of the Income Tax Rules, 1962 ("the Rules") to substantiate that such transactions are closely linked as mandated in rule 10A (d) of the Rules. It is further argued that the Bright Line Test (BLT) is mandated in law and hence permissible and the fact that the BLT was not used as a method to determine the price but only as an economic tool to arrive at the cost of services rendered to the foreign enterprise by the Indian entity has to be considered and the Ld. TPO has the mandate to determine such cost as primary step in ALP determination as provided under the rules. Further according to the Revenue the Ld. CIT(A) was incorrect in giving a finding that the economic ownership of an intangible can be accepted, if pleaded, disregarding the fact that Indian tax laws have not so far recognised economic ownership as f....
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....h & Lomb Eye Care (India) Pvt. Ltd. viz Additional CIT (2016) 3S11TR 227 (Del.) and Honda Siel Power Products Ltd. v. Dy. CIT (2016) 237 Taxman 304 held that it is for the Revenue to firstly discharge the onus to prove the existence of an international transaction between the taxpayer and its AE and only thereafter ALP of international transactions involving AMP can he computed. 23. It is further contended by the ld. AR for the taxpayer that quantitative adjustment made by the TPO on account of AMP expenses is not permissible within the framework of Chapter-X as has been held by the Hon 'ble Delhi High Court in Maruti Suzuki India Ltd. v. CIT -ITA No.110/2014 & 710/2015). Hon 'ble High Court has categorically held that none of the substantive or procedural provisions of Chapter-X permits adjustment on account of AMP expenses. 24. The taxpayer has contested before ld. DRP that incurring of AMP expenses are not international transactions and BET method has no statutory basis to infer the existence of international transactions qua AMP expenses, however, the ld. DRP has proceeded to hold inter alia that incurring of AMP expenses is an international transaction and directed to excl....
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....t been stayed by any higher forum, the same cannot be kept pending. 28. After considering the legal position as discussed in the preceding paragraphs, we are of the considered opinion that the AI.P of an international transaction involving AMP expenses, the adjustment made by the TPO/DRP/AO is not sustainable in the eyes of law. At the same time, we cannot ignore the submission made by the learned DR that the matter is pending before Hon 'ble Apex Court and the decision of Hon 'ble Apex Court would be binding upon all the authorities. In view of the above, we set aside the orders of authorities below and restore the matter to the file of the Assessing Officer. We hold that as per the facts of the case and the legal position as of now and discussed above in this order, the adjustment made by the TPO/DRP/AO in respect of AMP expenses is not sustainable. However, if the above decisions of Hon 'ble Jurisdictional High Court which is under consideration before the Hon 'ble Apex Court is modified or reversed by the Hon 'ble Apex Court, then the Assessing Officer would pass the order afresh considering the decision of Hon 'ble Apex Court. In those circumstances, he will also allow oppor....
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.... not deducted, the expense has to be disallowed; whereas according to the Ld. CIT(A) since the assessee admitted to be an assessee in default under section 201 of the Act, such disallowance has to be upheld. When we go through the impugned order, it makes the things clear that the assessee pleaded before the Ld. CIT(A) that although the TDS was deducted, there was a short deduction of TDS by Rs. 464/-and the disallowance under section 40(a)(ia) of the Act deals only with the non-deduction of TDS altogether but not short deduction. Assessee also placed reliance on the decision of the Kolkata Tribunal in the case of CIT vs. SK Tekriwal (2011) 15 taxman.com 289 (Kolkata-Trib) and also CIT vs. Chandabhoy and Jassobhoy (2012) 49 SOT 448. 10. This issue is no longer res Integra and squarely covered by the decision of the Hon'ble Calcutta High Court in ITA No. 183 of 2012 in the case of CIT vs. M/s SK Tekriwal and also the decision of the Hon'ble Andhra Pradesh High Court in the case of PV Rajagopal vs. UOI (1998) 99 taxman 475 wherein the Hon'ble High Court held that section 201 has 2 limbs - one is that where the employer does not deduct the tax and the 2nd is where after deducting the....