TaxTMI 
TaxTMI 
2026 (4) TMI 1254
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....re-requisite for applying Chapter-X, Le, existence of an international transaction between two Associated Enterprises ('AE") under section 92B of the Act, was not satisfied or existed as there was no agreement, understanding or arrangement between the Appellant and the AE for incurrence of such expenditure by the Appellant and the DRP erred in upholding the same. 2.1. That on the facts and circumstances of the case and in law, the AO/DRP/TPO have erred in re-characterizing the Appellant as service provider rendering brand building services to its AE, without appreciating that it is a full risk bearing retailer incurring AMP expenditure in the course of its own business to promote its sales in India. 3. That on the facts and circumstances of the case and in law, the orders passed by the AO/DRP/TPO were bad in law as the unilateral AMP expenditure incurred by the Appellant was categorized as 'international transaction' under chapter X of the Act, by the AO/DRP/TPO, contrary to law in as much the AO neither granted any opportunity of being heard to the Appellant, nor passed a speaking order recording his satisfaction in relation to characterisation/catego....
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....action, without appreciating that adjusted gross profit margin as well as operating margin of the Appellant was better than the comparable companies 8. That on the facts and circumstances of the case and in law, AO/DRP/TPO have erred in not appreciating that the Appellant had not provided any value added/brand building services to its AE by incurring AMP expenditure, and therefore, no mark-up could have been charged / levied on such expenditure, even if the same was to be characterized as an international transaction'. 8.1. Notwithstanding and without prejudice that no mark-up could have been levied, on the facts and circumstances of the case and in law, AO/DRP / TPO have erred in cherry picking the comparable companies for purpose of computing the mark-up for the alleged AMP as an international transaction. 8.2. Notwithstanding and without prejudice that no mark-up could have been levied, on the facts and circumstances of the case and in law, the AO/DRP/TPO have erred in selection of improper comparable companies for application of mark-up, being entities providing market support functions and without sharing a search process for identifying the comp....
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....outset submits that ground No.1 to 5 of grounds of appeal of the assessee are not pressed. In view of the submissions of the Ld. Counsel ground Nos. 1 to 5 of grounds of appeal are dismissed as not pressed. 4. Similarly, it is submitted by the Ld. Counsel for the assessee that ground No. 7 to 10 of grounds of appeals of the assessee are not pressed. In view of the submission of the Ld. Counsel ground No.7 to 10 of grounds of appeal are dismissed as not pressed. 5. Coming to ground No.6 and 6.1 of the grounds of appeal of the assessee which are relating to applying Bright Line Test (in short "BLT") for making transfer pricing adjustment, the Ld. Counsel for the assessee submitted that the issue came up for consideration in assessee's own case before the Tribunal for the A.Y.'s 2012-13 and 2020-21 in ITA Nos. 980/Del/2017 dated 06.10.2017 and ITA No.4348/Del/2024 dated 28.05.2025 respectively, wherein the Tribunal held that no transfer pricing adjustment should be made by applying BLT in view of various judgments of the Hon'ble Jurisdictional High Courts. 6. The Ld. Counsel for the assessee further submitted that BLT approach has been discarded by the Hon'ble High Court in t....
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....MM intensity approach has established that the assessee's operating margins are at arm's length price and accordingly no adjustment on account of AMP expenses is warranted. 11. On the other hand the Ld. DR placed reliance on the findings of the Ld. TPO/AO. 12. Heard rival submissions and perused the orders of the authorities below. In so far as the application of BLT for making transfer pricing adjustment on account of AMP expenses is concerned the issue is squarely covered by the decision of the coordinate Bench in assessee's own case for the A.Y.2012-13 in ITA No.980/D/2017 dated 06.10.2017 and the decision of the coordinate Bench for the A.Y.2020- 21 in ITA No.4348/Del/2024 dated 28.05.2025. We observe that the coordinate Bench for the A.Y 2020-21 following the decision for the A.Y.2012-13 held as under :- 21. Ground No. 4 is regarding adjustment of Rs. 1,84,35,150/-on protective basis on the ground of excess advertisement, marketing and promotion expenditure. 22. The Ld. Counsel for the Assessee submitted that Bright Line Test does not have a statutory mandate and cannot be applied in order to determine the international transaction relate to incurring o....
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....rt, referred to above, viz., Rayban Sun Optics India Ltd. Vs. CIT (order dated 14.9.2016), Pr. CIT VS. Toshiba India Pvt. Ltd. (order dated 16.8.2016) and Pr. CIT VS. Bose Corporation (India) Pvt. Ltd. (order dated 23.8.2016) in all of which similar issue has been restored for fresh determination in the light of the earlier judgment in Sony Ericsson Mobile Communications India Pvt. Ltd. (supra). Accordingly, the contention of the Ld. AR, claiming departure from the earlier year, on this score, is not tenable. Therefore, in light of the non-sustainability of the objections taken by the Ld. AR and following the earlier view taken by the ITAT in assessment year 2010-11 in the case of the assessee, we set aside the impugned order and remit the matter to the file of TPO/AO for a fresh determination of the question as to whether there exists an international transaction of AMP expenses. If the existence of such an international transaction is not proved, the matter will end there and then, calling for no transfer pricing addition. If, on the other hand, the international transaction is found to be existing, then the TPO will determine the ALP of such an international transaction in the l....
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....0 [ITA 67/2022] and which had placed reliance upon the respondent assessee's own case in Assessment Year2 2010-11 while arriving at the finding that Advertisement, Marketing and Promotion3 expenses did not constitute an international transaction and could thus not be separately benchmarked and as a result of which the adjustment of AMP was directed to be deleted. 2. For the purposes of convenience, we propose to take note of the facts as they emanate from ITA 211/2022 which pertains to AY 2011-12. The Transfer Pricing Officer had proposed adjustments to the tune of INR 5,92,56,798/- on the issue of AMP expenses using the 'Bright Line Test'. The Assessing Officer5 had thereafter come to frame an assessment order in accordance with the directions framed by the Dispute Resolution Panel6 directing an upward adjustment of INR 7,65,16,936/-. 3. The respondent-assessee, being aggrieved by the order of the AO, had approached the Tribunal which had come to pass orders in its favour and directed the deletion of adjustment of AMP. 4. Identical issues were being considered in ITA 67/2022 pertaining to AY 2015-16. These appeals came to be admitted on 15 May 2024 on th....
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....hereby the Tribunal has decided three ITAs being ITAs 385/Del/2016, 341/Del/2017 and 6733/Del/2017 relating to the AYs 2011-12, 2012-13 and 2013-14 and this Court by relying upon the order passed in Pr. Commissioner of Income Tax-1 v. Casio India Company Pvt. Ltd, ITA 211/2022 has dismissed the appeals filed by the appellant/revenue. 6. For parity of reasons as given by this Court in ITA 211/2022, which we have reproduced above, the present appeal is also dismissed as no substantial question of law arises for consideration." 14. Thus, respectfully following the said decision we hold that no transfer pricing adjustment is warranted on account of AMP expenses in the case of the Assessee. Ground No.6 is allowed. 15. Coming to corporate tax grounds, ground No.11 is stated to be general ground and thus the same is not adjudicated. 16. The Ld. Counsel for the assessee submits that ground No.12 and 12.1 are not pressed. In view of the submissions these grounds are dismissed as not pressed. 17. Coming to ground No.12.2. which is in respect of addition made on account of disallowance of bonus expenses u/s. 43B while processing return u/s. 143(1) of the Act, the Ld. Coun....