TaxTMI 
TaxTMI 
2026 (7) TMI 1494
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....fficer (Ld. TPO) is erroneous and bad in law to the extent it makes adjustment to returned income towards advertising, marketing, and promotion ('AMP'), by applying Bright Line Test. 2. Impugned order erred in making transfer pricing adjustment without establishing the existence of international transaction of AMP. 3. Without prejudice to above, there is no justification for any protective adjustment more so by application of Bright Line Test which is invalidated by the jurisdictional High Court. Final Assessment Order computing total income by including such adjustment made on BLT and consequential demand are unlawful and deserves to be corrected, and a direction to accept the returned income as final, deserves to be issued 4. Without prejudice, the Ld. TPO/ Ld. AO erred in determining the 'non-routine' quantum of the AMP expenditure incurred by the Appellant based on BLT test. 5. On facts and circumstances of the case and in law, the Ld. TPO/Ld. AO erred by holding that the Appellant was incurring non-routine expenditure primarily for promotion Fuji brand and creating marketing Intangibles for parent company, ignoring that the s....
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....rnational transactions entered into by the assessee with its AE's were reported by the assessee in its Form No. 3CEB, and details of such transactions are recorded by the ld. TPO in its TP order at page no. 2 and 3. The TPO also observed that the assessee has incurred Advertising, Marketing and Promotion Expenses( in Short "AMP"), which are for promotion of Brand 'Fuji' owned by its parent AE, which as per TPO is an international transaction entered into by the assessee with its AE and is for brand building for its AE, while the brand is not owned by the assessee but by its parent AE . Thus, as per TPO, AMP expenditure by the assessee benefitted assessee's parent AE by way of building of Brand 'Fuji' as brand 'Fuji' is owned by assessee's parent AE, and the assessee should have been adequately compensated by its parent AE, which in the instant case was not been done by assessee's parent AE. The TPO also observed that the assessee has not reported said international transaction of incurring AMP expenses in its Form No. 3CEB, and the same required determination of ALP of such international transaction of incurring of AMP expenditure. The TPO undertook detailed proceedings while deter....
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....lding owing to AMP expenditure incurred by the assessee, and the parent AE ought to have suitable compensated assessee wrt AMP expenditure incurred by the assessee. The ld. DRP upheld Bright Line Test applied by TPO for determining ALP of the international transaction entered into by the assessee with respect to incurring of AMP expenses. The ld. DRP also directed TPO to verify margins of comparable companies from annual reports submitted by the assessee. The ld. DRP also directed that CSR is non-operating in nature and not to be included in computing operating expenses. There were other directions also issued by ld. DRP wrt selections of comparables as to their inclusion and/or exclusions etc., as are recorded in the ld. DRP directions. The ld. TPO passed order giving effect dated 25.06.2024 in pursuance to directions of ld. DRP, wherein TP additions as earlier proposed were reduced to the tune of Rs. 5,19,00,000/-, and consequently aforesaid TP additions were made by applying Bright Line Test by computing ALP of international transaction of AMP expenditure incurred in an uncontrolled situation . So far as TP addition by applying intensity method for computing ALP of the internati....
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....the case of Sony Ericsson(supra). Our attention was also drawn to base order passed by the Delhi Tribunal in the case of Casio India Company Private Limited v. DCIT, reported in (2019) 102 taxmann.com 492(Deli-Trib.). 4.2. The ld. CIT-DR submitted that AMP constitute an international transaction. Our attention was drawn to Rule 10B(2) and 10B(3) of the Income-tax Rules, 1962. The ld. CIT-DR submitted that Revenue has filed SLP with Hon'ble Supreme Court against judgment and order of Hon'ble Delhi High court in the case of Sony Ericsson(supra), and decision of Hon'ble Supreme Court is awaited. The ld. CIT-DR did not brought to our notice any other judgment of the Superior Courts taking a contrary stand to the aforesaid judgment and order of Hon'ble Delhi High Court in the case of Sony Ericsson(supra), nor ld. CIT-DR could point to any directions or stay order issued by Hon'ble Supreme Court staying the operation of judgment and order of Hon'ble Delhi High Court in the case of Sony Ericsson(supra). 4.3. The ld. Counsel for the assessee in rejoinder submitted that the assessee has conceded with respect to Ground No. 2, and is not pressing Ground No. 2 raised by the assessee in M....