TaxTMI 
TaxTMI 
2024 (5) TMI 1569
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....stablished in India in the year 2005. It is a wholly owned subsidiary of Nissan International Holdings B.V, Netherlands ("NIHBV") and is ultimately held by Nissan Motor Company Limited, Japan("NML"), a Japanese automobile manufacturer. The assessee is engaged in the distribution of Nissan brand cars in the domestic and export markets, export of locally sourced automobile-parts and components to its Associated Enterprises("AE") for resale ("After-Sales Business"/"AS Business"), and export parts / components to its AEs for manufacture ("Parts Consolidation Centre Business" / "PCC Business"). The Nissan Brand cars that were sold by the assessee were purchased from Renault Nissan Automotive India Private Limited("RNAIPL"), which was engaged in manufacture of the said cars in India. RNAIPL was established in the year 2007 as a JV between NML (having 70% shareholding approx.) and Renault Group BV, Netherlands ("RGBV") (having 30% shareholding approx.), pursuant to a global alliance between the Nissan and Renault Groups, with a view to leverage on the strategic and commercial advantages of operating a combined manufacturing facility. For the purpose of manufacture of 'Nissan' brand cars, ....
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.... Appellant were together considered as a single economic unit / OEU, which is referred to as 'Nissan India, for undertaking an analysis of functions, assets and risks ("FAR") vis-à-vis its AEs. Accordingly, the assessee benchmarked its international transactions of its Car and AS business segments (consisting of import of parts, capital goods, after sales parts, Export of CBU and after sales parts, payment of royalty) and PCC business (sale of PCC parts) following the 'Transaction Net Margin Method' ("TNMM") as the most appropriate method ("MAM") for benchmarking, by considering Nissan India as the tested party ( Pg. 14 of NMIPL's APA agreement supports this argument of the assesee.). It was further submitted that, the combined operating margin of the Appellant (at an entity level) and that of the Nissan Segment of RNAIPL were considered as the margin earned by 'Nissan India' for the Car and AS business segments (reliance was placed on Pg.3 of NMIPL's APA agreement for definition of "Nissan India"). The assessee informed that the AY 2014-15 is the first year covered under the said APA, which covers a total period of 5 years, i.e., AY 2014-15 to AY 2018-19 (reliance was place....
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....adjustment made by the TPO, in relation to AMP, amounting to INR 101 Crores, deserves to be deleted. 11. The assessee submitted that it contested the adjustments made by TPO before the DRP which passed its order on 27.09.2018 rejecting the arguments put forth by the assessee. Reference was invited to para 8.9 and 8.10 of the order of the DRP Supra, reproduced hereunder:- "... In light of the above discussion, we find that there is sufficient empirical information to infer that there is an 'understanding' or 'an arrangement' or 'action in concert' between the assessee and its AE as regards AMP Spend for brand promotion. The strategic management and operational control, the requirement on the assessee to promote brand and incur expenditure, the business plan, the budgetary control with AE, reveal the 'common shared objective and purpose' between the assessee and the AE in the AMP Spend for brand promotion. The consequent conduct of the assessee in the excessive AMP Spend also go to prove such common shared objective. All these lead to the irresistible conclusion as to existence of international transaction as to provision of service or benefit for brand promotion of the AE i....
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...., the assessee, inter-alia, placed reliance on the decision of the Hon'ble Delhi High Court in the case of Magneti Marelli Powertain India (P.) Ltd. (389 ITR 469) wherein it was held that once TNMM is adopted to benchmark all its international transactions, it would not be open to Ld.TPO to subject only one element which is included therein, to a separate benchmarking exercise. The assessee informed that the SLP filed by the Revenue against the said decision was also dismissed by the Hon'ble Supreme Court [2018] 89 taxmann.com 8). 13. Without prejudice to the above submission, the assessee submitted that expenses incurred by it towards marketing and sales promotion, do not constitute an international transaction as defined under section 92B of the Act. This position of law was reportedly upheld in several judicial pronouncements including the decision of Hon'ble Delhi High Court in the case of Maruti Suzuki India Ltd. (381 ITR 117). 14. The TPO had not demonstrated the existence of any agreement or arrangement between the Appellant and its AEs towards incurring of AMP expenses, in order to hold that it constitutes an 'international transaction'. Unilateral action by one of the pa....