2026 (4) TMI 123

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....ratum to the grounds raised in the appeal before us and the same are reproduced below: "1. That the impugned order of assessment framed by the assessing officer in pursuance of the directions of the Dispute Resolution Panel (hereinafter referred to as 'DRP') under Section 143(3) read with Section 144C of the Income-tax Act, 1961 ('Act'), is bad in law, violative of principles of natural justice and void abinitio. 2. That the assessing officer erred on facts and in law in determining income of the appellant at Rs. 606,72,19,696 against returned total income of Rs. 489,42,06,960 under normal provision of the act. 2.1 That the assessing officer/DRP erred on facts and in law in making addition of Rs. 57,11,67,349 on account of alleged difference in the arm's length price of international transactions resulting from the advertisement, marketing and sales promotion expenses (hereinafter referred to as the AMP expenses') incurred by the appellant. 2.2 That the DRP/TPO erred on facts and in law in not appreciating that the AMP expenses, etc., unilaterally incurred by the appellant in India could not be characterized as an internat....

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.... incurred AMP expenses towards promotion of brand which is legally owned by the foreign AE". 2.11 That the TO erred on facts and in law in making protective adjustment of Rs. 58,67,18,782 applying Bright Line test ("BLT') not appreciating that use of BLT to infer the existence of an international transaction is not mandated under the Act without appreciating that in absence of specific provision in the Transfer Pricing statutory provisions in India, adjustment on account of the arm's length price of the advertisement and brand promotion expenses could not be made. 2.12 That the TPO erred on facts and in law in not appreciating that the use of BLT has been negated by the Hon'ble Delhi High Court in the case of Sony Ericsson Mobile communications 374 ITR 118. 2.13 Without prejudice that the DRP/TO erred on facts and in law, in not appreciating that the AMP expenses incurred by the appellant was appropriately established to be at arm's length applying TMM. 2.14 Without prejudice that the DRP/TPO erred on facts and in law in considering following inappropriate comparable companies, being contact manufacturers, for the purpose of apply....

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....Act. 5. That the assessing officer erred on facts in not allowing foreign tax credit amounting to Rs. 78,91,061 to the appellant. The appellant craves leave to add, amend, alter or vary, any of the aforesaid grounds of appeal before or at the time of hearing of the appeal." 3. It comes up that assessee has further raised an additional claim in the form of additional ground which is also reproduced below: "That on the facts and circumstances of the case and in law, the assessing officer ought to have allowed deduction in respect of part of the warranty expenditure amounting to Rs. 4,63,14,580 accounted for in the financial statements of the relevant previous year, under the head finance cost' under the sub-heading 'Unwinding of Discount' but erroneously offered tax in the computation of income by the appellant." 4. On hearing both sides we find that that as with regard to the ground on merits ld. Counsel has drawn our attention to the fact that issue involved are primarily covered in favour of the assessee by decisions of the Tribunal and Hon'ble Delhi High Court too. 5. Ground No. 1 is general in nature and ground No. 2-2.15 are in re....

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....elow we find that in assessee's own case for AY: 2015-16 in ITA No. 9191/Del/2019 and AY: 2016-17 vide ITA No. 476/Del/2017 the Coordinate Bench has remitted the matter to the assessing officer for allowing the deduction after verification of details. The ld. AR has also drawn our attention to the fact that in effect giving order passed by ld. Assessing Officer giving relief to the assessee no addition is made. 11. In the light of aforesaid discussion the ground No. 4 is sustained in favour of the assessee with directions to follow directions of this Tribunal in AY 2015-16 and AY: 2016-17 (supra). The ground is sustained for statistical purposes. 12. Ground No. 5: The ground pertains to claim of foreign tax credit of Rs. 78,91,061/- which assessing officer did not allow. The ld. Counsel has drawn our attention to the decision in case of assessee for AY: 2015-16 and 2016-17 (supra) wherein matter has been remitted to the assessing officer for verification of certificates. Again the effect giving order shows that assessee had submitted statement of reconciliation of the amount along with copy of certificate and assessing officer has allowed the credit of tax relief. In the ligh....