2024 (12) TMI 772

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....ke note of the following principal issues which stand raised in these appeals and pertain to:- i) Transfer Pricing Adjustment on account of Advertising, Marketing and Promotional AMP expenditure ii) Disallowance under Section 14A of the Income Tax Act, 1961 Act iii) Disallowance of brand building expenditure under Section 37 of the Act iv) Disallowance of INR 10,80,000/- based on seized material pertaining to the preceding years. 2. It is these four principal issues which form the heart of the questions as would be evident from the common chart which has been placed for our consideration and is extracted hereinbelow: - COMMON CHART OF ISSUES INVOLVED ITA No. 872/2019 54/2020 54/2020 5....

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.... 4. In the present matter, the Transfer Pricing Officer TPO in its order dated 28 January 2014 held that the AMP expenses amounted to brand building for the benefit of the Associated Enterprise AE. However, in the absence of any material or evidence which may have tended to establish the existence of an arrangement between the Indian entity and its AE, or which may have been viewed as evidence of them acting in concert, the view expressed by the TPO is untenable and the order of the Tribunal is liable to be upheld. 5. This more so in light of the order passed by this Court in Principal Commissioner of Income Tax (Central) - 3 vs. Seagram Manufacturing Private Ltd. (now Pemod Richard India Pvt. Ltd.) [ITA 885/2016 decided on 09 Decembe....

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....curred by the assessee. The arrangement inter alia between the assessee and the brand proprietor was such that specified required brands were made available in the assessee deals. No doubt, the profits reported were put through the recourse of transfer pricing exercise for the purpose of Arm's Length Price determination. Yet, the fact remains that the overseas owner did not set up any other licensee, at least in the area where the assessee operated, to operate as a rival. Under the Trade Mark Act, especially Section 48, as long as the arrangement existed, the assessee, who was a licensee of the products, was entitled to claim them as business expenditure though in the ultimate analysis they might have enhanced the brand of the overseas owne....