2022 (11) TMI 626

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....6, for the Assessment Year ('AY') 2011-12 in ITA No. 408/2021. 2. Brief facts leading to the filing of the present appeal are that the Respondent, Assessee, filed its Return of Income ('ROI') on 30th November, 2011, for AY 2011-12. The Assessee's return was processed under Section 143(1) of the Income Tax Act, 1961, (the 'Act') and its case was selected for scrutiny assessment. The Assessing Officer ('AO') observed that the Assessee Company had entered into international transactions with its Associated Enterprises ('AEs') and consequently, made a reference to the Transfer Pricing Officer ('TPO') for determining the Arms's Length Price ('ALP') of the international transactions under Section 92CA(3) of the Act. 3. The TPO in its order date....

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....ot called for in the facts of this case. However, the DRP on a separate reasoning disallowed AMP expenditure for an amount of Rs. 6,64,24,161/- under Section 37(1) of the Act, holding that the Assessee had undertaken promotional activities in violation of bar on advertising and promotion of liquor in India, as per the provisions of the Cable Television Network Rule, 1994 and code of Advertising Standards Council of India ('ASCI'). The DRP held that as per the Explanation 1 to Section 37(1) of the Act, there is bar on allowability of expenses that is on account of any activity that is an 'offence' or which is prohibited, by law and issued a direction in this regard to the AO. Pursuant, to the aforesaid DRP directions, the AO passed its final....

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....4. Lastly, the ITAT placed reliance and followed the decision of its coordinate Bench for AYs 2012-13 and 2013-14 in Assessee's own case, wherein it was held that the expenditure incurred by the Assessee was to enhance its sales and profits and therefore, it cannot be treated as capital in nature. ITAT held that the said expenses are revenue in nature having been incurred for commercial expediency. Consequently, the ITAT deleted the disallowance of AMP expenses of Rs. 6,64,24,161/-, made in light of Explanation 1 to Section 37(1) of the Act. Qua discard of the BLT method by DRP and consequent rejection of the comparables 6.5. The ITAT dismissed the cross appeal filed by Revenue challenging the order of the DRP discarding the BLT applied b....