TaxTMI 
TaxTMI 
TaxTMI 
2025 (10) TMI 300
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....3) of the Act on account of adjustments in the arm's length price ('ALP) of the alleged international transactions undertaken by the Appellant; Presumption of fictitious transaction in the nature of 'provision of brand promotion services' since AMP is not an international transaction 2. Erred in alleging that the AMP expense incurred by the Appellant is an international transaction under Section 928 of the Act; 3. Erred in ignoring that the Appellant has not rendered any service to the Associated Enterprises ('AEs') and hence erroneously treating and categorizing AMP expenses incurred by the Appellant on its own behalf, as an international transaction of the nature of provision of brand promotion services between the Appellant and AEs under Section 92CA of the Act; 4. Failed to appreciate the fact that AMP expenses were incurred 'wholly and exclusively for purpose of business of the Appellant in India and no benefit was passed on to the AE and hence, there should not be any reimbursement of such expenses to the Appellant; 5. Erred in ignoring that in absence of a valid international transaction, the adjustment....
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.... ought not to cannot be construed as an international transaction which warrants a separate adjustment; 12. Erred in applying bright line test ('BLT') using 'Other Method to determine the arm's length price of the AMP expenses incurred by the Appellant; Business and commercial expediency 13. Erred in holding that the Appellant incurred AMP expenses for promoting the brands owned by overseas AE, instead of appreciating that the Appellant was only carrying out its business by using the well- established brands and any benefit derived by the AE is purely incidental; 14. Erred in ignoring that the advertisements by the Appellant are product advertisements to enable higher sales of the products in the Indian market and not brand advertisements for or on behalf of the AE; Most appropriate method 15. Without prejudice to the above, erred in applying BLT and treating the same as routine ALP determination method under "Other Method to determine the arm's length price of the AMP expenses incurred by the Appellant; 16. Without prejudice to the above, erred in not appreciating that BLT does not take into account....
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....e Act; C Adjustment under section 143(1)(a) 25. The learned AO erred in holding that even after the assessment proceedings have culminated and are completed, the intimation under Section 143(1) of the Act is distinct from the assessment order passed under section 143(3) of the Act; 26. The Learned AO erred in not computing total income and tax liability of the Appellant in accordance with the provision of the Act and as required by Section 143(3) of the Act; 27. The learned AO erred in computing total income of the Appellant by mere relying on the intimation issued under Section 143(1) of the Act determining an erroneous total income and tax liability, and disregarding total income declared in Return of income filed by the Appellant; 28. The learned AO erred in computing total income of the Appellant without considering all the facts of the case and contents of response filed by the appellant against the proposed variation in the intimation under Section 143(1) of the Act; 29. The learned AO erred in not allowing credit for foreign taxes paid in Bangladesh of INR 14,46,220/-without appreciating the fact that the appellant has fi....
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....ord perused. The learned Authorised Representative (ld. AR) of the assessee submits that grounds of appeal raised by assessee are covered by the decision of Tribunal in assessee's own case for A.Y. 2008-09 to 2020-21 by various decisions of Mumbai Tribunal. Copies of all such decisions are placed on record. The ld. AR of the assessee submits that ground no. 1 to 23 relates to transfer pricing adjustment of advertisement, marketing and promotion (AMP) expenses of Rs. 184.75 crores. The ld. AR of the assessee submits that lower authority erroneously treated AMP expenses as international transaction in the nature of provision for promotion of brand of assessee's parent company. The assessee incurred AMP expenses wholly and exclusively for the purpose of business in India. The assessee has not claimed in reimbursement of such expenses from its AEs. There is no existence of agreement or any understanding between the assessee and its AEs for sharing such expenses. The lower authorities are making similar adjustment and on further appeal, the assessee is consistently allowed relief by Tribunal right from the assessment beginning from A.Y. 2008-09 onwards. The lower authorities are making ....
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....act, the co-ordinate bench of Mumbai Tribunal from A.Y. 2008-09 to 2020-21, the similar issue has been consistently held in favour of assessee. The Tribunal in earlier years has considered all objections and submissions of revenue while deciding similar issue in favour of assessee. We further find that while deciding the similar issue in appeal for A.Y. 2020-21 in ITA No. 4577/Mum/2024 dated 16.12.2024, the co-ordinate bench of this Tribunal passed the following order: "11. We have heard the rival submissions and perused the materials available on record. The ld. DRP in its finding has stated that grounds pertaining to the international transaction in the nature of provision of brand promotion service. AMP expenditure incurred by the assessee was a recurring issue which was there in the earlier years where the DRP in those cases have rejected the objections raised by the assessee. The ld. DRP relied on the findings of the ld. DRP in A.Y. 2018-19 which has concurred with the finding of the TPO that the expenses incurred in malls and retail outlets for sales were in the nature of advertisement and brand promotion and further stated that the said expenses were to maintain the....
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....the assessee and the AE implies that the assessee has to incur AMP expenses for the products bearing the licensed trade mark owned by the AE which according to TPO is an agreement between the assessee and its AE pertaining to AMP expenses, the same cannot be said to be a conclusive proof of arrangement between the assessee and the AE which has not been corroborated by any other evidence to conclude the impugned transaction to be for the benefit of AEs. The assessee's contention that the impugned expense related to marketing was only for the benefit of the assessee and not for the AEs holds merit. It is observed that the Tribunal in its earlier years have decided this issue in favour of the assessee by holding that the same does not amount to international transaction and that there was no arrangement between the assessee and its AE pertaining to the AMP expenses. The relevant extract of the decisions in ITA No. 1198/Mum/2021 and 802/Mum/2022 for the A.Y. 2016-17 and 2017-18 vide order dated 29.06.2022 are cited hereunder for ease of reference: "6. We have heard learned Departmental Representative and perused the record. We noticed that the issue of primary adjustment r....
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....on account of payment of royalty for use of technical know-how (Rs. 38.82 crores) and trademark (Rs. 25.16 crores) :- (i) Appellant's own ITAT order for A.Y. 2013-14 : Trademark royalty - page No. 35 para 23 Technical know-how royalty- page No. 37 para 25. (ii) Also appellant's own ITAT order for A.Y. 2012-13 - page No. 29 para 18 (iii) Further the TPO in his order has not examined whether or not the method adopted by the appellant to determine the Arm's length price (ALP) is the most appropriate method and has instead concluded that the payments for trademark and technical know-how royalty are excessive in nature (page 176 of appeal memo) (iv) Accordingly, the TPO has exceeded his jurisdiction by making an addition to the international transaction of payment of royalty for technical know-how and trademark. In this regard, the appellant relies on the Judgment of Bombay High Court in the case of CIT Vs. Lever India Exports Ltd. (78 taxmann.com 88) (copy enclosed as Annexure1) (v) Without prejudice to the above, it is submitted that the TPO has proposed the royalty adjustment, inter alia on the basis of AMP spend of the Appella....
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....s accessible to appellant, etc. along detailed write up on the nature of service/evidences and benefits of the services. Further, the Appellant submitted additional evidences to DRP comprising of cost allocation certificate and tables along copies of invoices. These have been examined by TPO in remand proceedings and no fault is found with the same Accordingly, the Appellant submits that considering that no adverse comments are provided by the TPO as well as the DRP, the said transaction should not be remanded back to the file of the AO/DRP as it would tantamount to giving a second inning to the Department and taking advantage of its own wrong. 5. In this regard, reliance is placed on the following judicial precedents: - Kansai Nerolac Paints Ltd. Vs Deputy Commissioner of Income-tax, [2014] 49 taxmann.com 208 (Bombay High Court) (Copy enclosed as Annexure 3); - K. Rajiv v. Additional Commissioner of Income-tax, [2018] 98 taxmann.com 418 (Madras High Court) (Copy enclosed as Annexure 4). 6. Further, it may be noted that in AY 2011 -12, the ITAT has remanded the issue of marketing support services availed to the DRP since additional evidences were submitte....
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....verifying the evidences, the TPO in his remand report has accepted that the services were rendered, that they have benefited the Appellant and were necessary. He has only made a vague allegation that cost justification in a third-party situation needs to be established. 5. Accordingly, the Appellant submits that the said transaction should not be remanded back to the file of the AO / DRP as it would tantamount to giving a second inning to the Department and taking advantage of its own wrong. 6. In this regard, reliance is placed on the following judicial precedents: - Kansai Nerolac Paints Ltd. Vs Deputy Commissioner of Income-tax (supra); -K. Rajiv v. Additional Commissioner of Income-tax (supra) 7. Further, it is humbly submitted that Transfer Pricing officer allowed identical expenses in earlier years and subsequent years of AY 2015-16 and AY 2016-17 after detailed scrutiny. 10 Per contra, learned Departmental Representative relied upon the orders of the authorities below. 11. Upon careful consideration we hold as under :- As regards the adjustment on account of AMP expenses in manufacturing segment the ITAT has decided the i....
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....he Clause 7 and 8 reveals that there is no agreement between the assessee and the AEs for sharing the expenses and the payments made by the assessee for the expenses of AMP. The TPO has also not brought any fact on record that there exist any agreement between the assessee and its AE to share or reimburse the AMP expenses. Moreover, we have seen that there is no material change in the facts for the year under consideration. Therefore, considering the above factual discussions and the decision of the coordinate bench of Tribunal for A.Y. 2008-09 to 2010-11, on the identical issue the ground No. 2 to 21 of the appeal is allowed." We thus in terms of our aforesaid observations, finding ourselves to be in agreement with the view taken by the Tribunal in the assesses own case for A.Y 2012-therefore, respectfully follow the same. Accordingly, being of the considered view that as the revenue had failed to discharge the onus that was cast upon it as regards proving that there was any 'understanding' or an 'arrangement' or 'action in concert' as per which the assessee had agreed for incurring of AMP expenses for brand building of its AE, viz. L'Oreal S.A....
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.... variation in fact, therefore, ground no. 1 to 23 of appeal is allowed. 8. Ground no. 24 of the appeal relates to time period of passing assessment order. At the time of submission, the ld. AR of the assessee submits that in case ground no. 1 to 23 are held in favour of assessee, this issue may be kept open till the decision of Hon'ble Apex Court on similar question of law. 9. Considering the fact that we have already allowed full relief to the assessee. Therefore, this ground of appeal has become infructuous and keeping the issue alive will not serve any purpose. In the result, this gorund of appeal is treated as dismissed being infructuous. 10. Ground No. 25 to 35 relates to foreign tax credit. The ld. AR of the assessee submits that assessee is not allowed credit of foreign tax, the assessee has filed an application under section 154 dated 23.04.2023. In addition to the assessee has also filed revised / updated ground of appeal vide application dated 07.04.2025 before Tribunal wherein the assessee has filed substituted ground no. 27 and 27A. The assessing officer considered the income of Rs. 55,25,788/- twice, without appreciating the fact that amount is already form pa....