2025 (10) TMI 84

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....ly incorporated under the provisions of Companies Act, 1956. It is engaged in the business of manufacturing and trading gold ornaments, textiles, life style products etc. The return of income for the A.Y. 2011-12 was filed on 30/11/2011 declaring total income of Rs. 150,75,82,230/- 5. The appellant-company also reported the following international transactions with the Associated Enterprises (AEs):- Sr. No. Name of the AE Nature of international transaction Total amount Method adopted 1. Joy AlukkasJewellery LLC, Dubai Export of Jewellery Rs. 18,84,01,929 TNMM 2. Joy AlukkasJewellery LLC, UAE Export of Textiles Rs. 5,12,56,914 TNMM 3. Alukkas Ltd., London Supply of gift items Rs. 2,86,032 --- 6. The appellant-company also submitted the TP study report adopting the internal TNMM as most appropriate method and sought to justify the above international transactions are at arm's length price (ALP). On noticing the above, the AO referred the matter to the TPO for the purpose of benchmarking the above international transactions. The TPO rejecting the TP study submitted by the appellant and proceeded with the benchmarking t....

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....9.1.2016 is against facts and law. 2. The Transfer Pricing Officer, assessing officer and Dispute Resolution are not justified is treating the transactions with AIRas as entered into Deemed Associated Enterprise and consequently holding that the transfer pricing provisions are attracted. The DRP failed to note that the assessing authorities had not established that AIRas was an associated enterprise within the meaning of explanation to section 92A(2), without first establishing that the transactions are entered with an associated enterprises, went on to confirm that the transactions were falling within section 92B(2). 3. The Dispute Resolution Panel is not justified in not passing any adjudication on the grounds raised by the appellant that AIRas was not an associated enterprises falling with section 92A(2), but went on confirm the upward revision towards TP adjustment proposed by the ΤΡΟ. 4. The Dispute Resolution Panel is erred in not appreciating the fact that the data relied on by the transfer pricing officer was not available in public domain while carrying out its TP documentation and hence such data should not have been considered f....

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....llowance and the department has accepted the same and the addition should not have been made. 10. The Assistant Commissioner of Income tax is not justified in treating a sum of Rs. 1,05,59,467 out of the advertisement expenditure as incurred towards brand building and hence capital in nature. The Assistant Commissioner of Income tax failed to appreciate that the expenditure is incurred on advertisement in print and visual media in respect of products dealt in by the company, show room launch, web site maintenance, various discounts offered customers, etc. These expenditure are incurred in the normal course of business of retail sales of jewellery and textiles. Expenditure is not 'capital' or 'revenue', but gets so classified on the basis of the purpose for which it is incurred. Expenditure on 'goods' and 'labour, for example, would be construed as of 'revenue' or 'capital' nature where incurred for a trading asset or, as the case may be, a capital asset. As such, no capital asset stands acquired by the appellant through its advertisement campaign. The very fact that the appellant had to incur the expenditure year after year, show....

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.... the file of AO/TPO to undertake fresh exercise of benchmarking of the international transactions. In view of the above facts, we are of the considered opinion that in the interest of justice, the matter requires remand to the file of AO/TPO to undertake the fresh exercise of benchmarking of international transaction taking into consideration the submissions made by the appellant before us. Thus, the grounds of appeal Nos. 2 to 8 raised by the appellant stand partly allowed for statistical purposes. 12. The ground of appeal No.9 challenges the disallowance of interest under the proviso to section 36(1) of the Act of Rs. 1,39,04,056/-. It is submitted before us that the issue stands covered in favour of the Assessee by this Tribunal in Assessee's own case for the A.Y. 2010-11 in ITA No. 190/Coch/2015 dt. 10/04/2018, wherein following the Assessee's own case in IT (TP) No. 06/Coch/2013 dt.09/05/2014, held as follows:- "3. "This tribunal in the first round of litigation in IT(TP)A No. 02/Coch/2012 found that the expenditure incurred by the assessee for renovating the premises taken on lease to set up a new show room is capital expenditure. In respect of the interest on bor....