TaxTMI 
TaxTMI 
TaxTMI 
2019 (3) TMI 2002
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....e in the impugned order. Alleged excessive Advertising. Marketing and Promotion (AMP) expenses 2. The facts and circumstance of the case and in law, the Ld. AO/Ld. TPO/ Hon'ble DRP has grossly erred both in facts & law, in enhancing the income of the Appellant by Rs. 271,284,352/- on account of non receipt of the income for "allegedly excessive" AMP expenses incurred by the Appellant and in doing so have grossly erred in: 3.1. assuming jurisdiction in respect of the AMP expenditure when such expenditure did not satisfy the requisites of being an international transaction under Section 92B read with Section 92F(v) of the Act; 3.2. not appreciating that expenditure incurred by the Appellant w as on account of sales activity and, could not be regarded as a 'transaction' in absence of any understanding/ arrangement between the Appellant and the associated enterprise (AE) for the promotion of brand and therefore cannot be termed as an 'international transaction' between the Appellant and the AE; 3.3. not holding that the existence of international transaction in respect of AMP has to be seen through the prism of conduct of the parties' and the ownership of IPR(s) and their us....
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.... principles laid down by the Hon'ble Delhi High Court in case of Sony Mobile Communications (supra) 3.15. without prejudice, Ld. AO/ Ld. TPO/ Hon'ble DRP has erred on facts and in law in giving an erroneous finding of using companies selected by Ld. TPO, which are, neither functionally comparable, nor into similar business activities to benchmark the AMP expenses of the Appellant Adjustment on account of provision of coordination and other support services 4. That on the facts and circumstance of the case and in law', the Ld. AO/Ld. TPO/ Hon'ble DRP has erred in proposing TP adjustment on account of co-ordination & other support sendees provided by the Assessee and in doing so have grossly erred in: 4.1. ignoring the principle of consistency in tax proceedings. 4.2. computing the entity level operating margin of the Assessee instead of co-ordination and other support service segment by disregarding the segmental analysis and not appropriately excluding non-operating income/ expenses and including operating income/ expenses. 4.3 calculating incorrect margin of comparables, despite of corrected margins submitted during the course of TP assessment; 4.4. considering ....
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....nst the order dated October 26, 2018 passed by the Joint Commissioner of Income Tax, Special Range -6, New Delhi under section 143 (3) read with section 144C of the Income Tax Act, 1961, the appellant has interalia raised grounds of appeal against an addition of INR 25,450,280 on account of provision of coordination and support services. 2. In this regard, Appellant humbly submits that Learned Transfer Pricing Officer (Ld. TPO) has computed the entity level operating margin instead of support service segment by disregarding the segmental analysis documented by Appellant in transfer pricing documentation and stating that reliable segmental information is not available. 3. In this regard, we submit herewith the certificate from the independent auditor authenticating the margin earned from the each segment of business including provision of coordination and other support services. In the light of the aforesaid submission, Hon'ble Bench may, with a view to advance the cause of justice, be pleased to admit these documents to the proceedings under consideration and pass specific order to that effect in this prayer. 4. The MSD Pharmaceuticals Private Limited ("MSD India" or the "As....
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.... Cost 5,567,691,546 Arm's Length Price at a margin of 6.11% 5,907,877,500 Transfer Price received by the taxpayer 5,442,979,466 Shortfall of Transfer price from ALP 46,48,98,033 International transaction related to support services 297,971,174 % of transaction 5.47% Proportionate Adjustment 2,54,50,280 b. Purchase of Trading Goods from the AE:- Following the directions of Hon'ble DRP, the final set of comparable with WCA updated margins are as follows:- Name of comparable company Intensity adjusted OP/OC (%) Working Capital Adjusted Margin Brawn Biotech Ltd. 2.38% 0.36% Emami Frank Ross Ltd. 5.43% 0.04% Infugen Pharma 2.84% 2.21% Oceanic Pharmachem 9.40% 5.38% Zuventus Healthcare Ltd. 5.63% 1.83% Average 5.14% 1.97% Regarding, the segmental margins of the assessee, the details submitted by the assessee does not have any audited backing. In light of this, TPO is not able to provide this relief to the assessee. Based on the above computed table, the following effect is provided in computation ojfAwp's Length Price:- Operating Revenue 5,442,979,466 Arm's Length Price at a margin of 1.97% 10,72,26,695 Arm's length Price 5,335,752,771 Price ....
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....e facts for the year under consideration are identical to the facts considered in A. Y. 2013-14, the grievance raised by the assessee has been decided by the Tribunal in favour of the and against the revenue. 8. Per contra the DR stated that though bright line test (BLT ) has been discarded by the Hon'ble Jurisdictional High Court in case of Sony Mobile Communications 374 ITR 118, therefore, the matter should be restored to the file of the TPO to decide the AMP adjustment without applying BLT. 9. We have given a thoughtful consideration to the orders of the authorities below. As can be seen from the order giving fact to the directions of the DRP the only dispute before us is the bench marketing done on protective basis. Since the order of the DRP has been accepted by the revenue and since the revenue is not appeal before us, we are only adjudicating on the issues raised by the assessee before us. 10. We find force in the contention of the Ld. Counsel for the assessee. On identical set of facts the coordinate bench in A. Y. 2013-14 in ITA No.6565/Del/2017 has deleted the addition made on protective basis. The relevant findings of the Tribunal read :- "6. Having heard the rival ....
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.... loss of Rs 26,25,85,933 incurred in the assessment year 2012-13 which could not have been set off for the prior years, and the only year following the said assessment year is the year before us. It is also pointed out that the ALP adjustment, in respect of AMP expenses by applying the bright line test (BLT), which is now decided in favour of the assessee. While learned Departmental Representative did not really address on all these aspects, he fairly agreed to our suggestion that the matter is required to be examined afresh by the Assessing Officer in the light of outcome of the appellate proceedings for the other assessment years as also by way of a speaking order dealing with the specific contentions of the assessee. In the light of this undisputed position within a narrow compass of material facts, we remit the matter to the file of the Assessing Officer for fresh adjudication in the light of our above observations. We also direct the assessee to fully cooperate with the Assessing Officer in expeditious disposal of the remanded proceedings. Ordered, accordingly." 11. Respectfully following the findings of the coordinate bench the addition of Rs.27,12,84,352/- is deleted. 12. ....