TaxTMI 
TaxTMI 
2022 (10) TMI 989
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.... (i) of explanation to section 92B of the Income Tax Act, 1961?" 3. The facts relevant for determining the aforesaid question of law are that the Assessee filed its return of income (ITR) for AY 2010-11. 4. The Assessee's case was selected for scrutiny assessment and a notice was issued under Section 143(2) of the Act, which was complied with. The Assessing Officer ('AO') observed that in the year under consideration, the Assessee had entered into international transactions with its Associated Enterprises (AEs) and in order to determine the Arm's Length Price ('ALP') of the said international transactions, the AO made a reference to the Transfer Pricing Officer ('TPO'). During the transfer pricing, the TPO observed that the Assessee has incurred more than normal sales and marketing expenses to build 'Amadeus' brand in India, which is legally owned by the AE i.e. M/s Amadeus IT Group SA ('Amadeus Spain'). The TPO concluded that such higher than normal market expenses i.e. AMP constitute an international transaction between the Assessee and its AE. The TPO computed the adjustment by applying the Bright Line method. 5. The AO issued a draft order dated 29th ....
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....e and the AE, was not doubted by this Court and the appeals filed by the Revenue in the said two years were dismissed holding that no referable question of law arose for its decision. 10. He states that the ITAT for the assessment year under consideration i.e. AY 2010-11 has concluded there has been no change of facts and circumstances when compared with AY 2009-10 and he, therefore, contends that following the rule of consistency the ITAT rightly held that the transaction should be treated similarly in the assessment year under consideration. 11. The learned counsel for the Assessee has relied upon the judgment of this Court in the case of Bausch & Lomb Eyecare Pvt. Ltd. vs. Additional Commissioner of Income Tax, [2016] 381 ITR 227, to contend that expenses incurred by the Assessee under the head 'AMP' cannot be termed as an international transaction, in the absence of any provision for the same in the agreement in this regard with Associated Enterprise. He has also placed reliance on the judgment of this Court in the case of Maruti Suzuki vs. CIT, [2016] 381 ITR 117 to contend that there is no machinery provision for determining the Arm's Length Price of AMP expenditure....
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....ing expenses the ratio of AMP/Sales of the appellant is mere 2.29%. Ld AR is also right in relying upon the decision of Hon'ble Jurisdictional High Court in case of Sony Mobile Communications (supra) for submitting that events which would transpire on termination of distribution might require a TP adjustment at that stage but the same will be immaterial to presume existence of an agreement, arrangement or understanding in the year under consideration. In this regard Hon'ble High Court at para 153 of its reported judgment has been pleased to be hold as under: "153. Economic ownership of a brand is an intangible asset, just as legal ownership. Undifferentiated, economic ownership brand valuation is not done from moment to moment but would be mandated and required if the assessed is deprived, denied or transfers economic ownership. This can happen upon termination of the distribution-cum-marketing agreement or when economic ownership gets transferred to a third party. Transfer Pricing valuation, therefore, would be mandated at that time. The international transaction could then be made a subject matter of transfer pricing and subjected to tax." 8.3 As held above appellant ....
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....e WOIL are at the instance or on behalf of Whirlpool USA. There is merit in the contention of the Assessee that the initial onus is on the Revenue to demonstrate through some tangible material that the two parties acted in concert and further that there was an agreement to enter into an international transaction concerning AMP expenses. 46. As already mentioned, merely because there is an incidental benefit to Whirlpool USA, it cannot be said that the AMP expenses incurred by WOIL was for promoting the brand of Whirlpool USA. As mentioned in Sassoon J David (supra) "the fact that somebody other than the Assessee is also benefited by the expenditure should not come in the way of an expenditure being allowed by way of a deduction under Section 10(2)(xv) of the Act (Indian Income Tax Act, 1922) if it satisfies otherwise the tests laid down by the law" 8.4 Considering the material facts like absence of an agreement, arrangement or understanding between the appellant and its AE for sharing AMP expenses or for incurring AMP expenses for sole benefit of the AE, payments made by the appellant under the head AMP to the domestic parties cannot be termed as an "international transaction" ....
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..... As already mentioned, merely because there is an incidental benefit to the foreign AE, it cannot be said that the AMP expenses incurred by the Indian entity was for promoting the brand of the foreign AE. As mentioned in Sassoon J Davit & Co. (P.) Ltd. v. CIT [1979] 118 ITR 261 "the fact that somebody other than the Assessee is also benefitted by the expenditure should not come in the way of an expenditure being allowed by way of a deduction under Section 10 (2) (xv) of the Act (Indian Income-tax Act, 1922) if it satisfies otherwise the tests laid down by the law". ..." 18. We may also note the judgment of this Court in Maruti Suzuki (Supra), where this Court has held that there is no machinery provision in Chapter X which enables an AO to determine what should be a fair compensation an Indian entity would be entitled to if it is found that there is an international transaction with respect to AMP between the Assessee and the AE. 19. It is an admitted position that the facts and circumstances in the present appeal for AY 2010-11 are similar to the facts and circumstances in AY 2009-10 and AY 2011-12. Undoubtedly, the principles of res judicata and estoppel are not applicable ta....