9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (5) TMI 1681 - AT - Income TaxTP Adjustment - Advertising, Marketing and Promotion (AMP) adjustment - HELD THAT - As in assessee s own case 2018 (1) TMI 1033 - ITAT MUMBAI TPO had held that assessee should have been compensated by its AE for the AMP expenditure incurred by it. We have gone through the agreements entered in to by the AE.s with the assessee, that in the agreements there is no condition about sharing of AMP, that the agreements talks of using best efforts to market and distribute the product or promote the products in a commercially reasonable manner. In our opinion, these terms do not give any indication that the AE and the assessee had to share AMP expenses. Secondly, if the AE was benefitted indirectly by the AMP expenditure incurred by the assessee, it cannot be held that it had entered into agreement for sharing AMP expenses. We are also of the opinion that Bright Line Method should not have been applied by the TPO. Disallowance of depreciation on building - HELD THAT - We find that the above issue is covered in favour of the appellant by the decision of the ITAT in assessee s own case for AY 2009-10 2015 (12) TMI 1673 - ITAT MUMBAI granted depreciation on plant and machinery and building. Disallowance of payment to doctors - AO disallowed convention expenses incurred by the appellant u/s 37(1) on the ground that it was in violation of clause 6.8 of the MCI Regulations and consequently, was in violation of the CBDT Circular No.5/2012 dated 01.08.2012 - HELD THAT - ITAT in assessee s own case for the AY 2010-11, relying on the decision of Max Hospital 2014 (1) TMI 1829 - DELHI HIGH COURT and PHL Pharma 2017 (1) TMI 771 - ITAT MUMBAI held that (i) MCI guidelines are applicable to the professionals i.e. Doctors only and do not govern the other tax entities or individuals other than doctors and (ii) MCI, as a body can formulate policy for Doctors and the appellant is not a practicing professional and therefore, any guidelines issued by it cannot decide the allowability or otherwise of an expenditure under the Act. Facts being identical, we follow the above order of the Co-ordinate Bench. Depreciation on non-compete fees - HELD THAT - ITAT in assessee s own case for AYs 2003-04, 2004-05, 2008-09, 2011-12 has admitted the similar additional grounds filed on consequential depreciation and directed the AO to grant consequential depreciation on non-compete fees.
Issues:
1. Transfer Pricing Adjustment on AMP Expenses 2. Disallowance of Depreciation on Building 3. Disallowance of Payment to Doctors 4. Consequential Depreciation on Non-compete Fees 5. Academic Grounds Transfer Pricing Adjustment on AMP Expenses: The appeal concerns an Indian company, a subsidiary of a global medical technology leader, engaged in marketing and distribution of medical products. The Transfer Pricing Officer (TPO) found the AMP expenses excessive and made an adjustment of ?13,34,52,541, requiring reimbursement by the associated enterprises (AEs). The TPO compared AMP expenses with comparable companies using the Bright Line Test. The AO upheld this adjustment along with convention expenses. The appellant argued that the AMP expenses were domestic transactions outside section 92B, citing past ITAT decisions. The Ld. DR sought restoration to the AO pending a Supreme Court appeal. Relying on past ITAT rulings, the Tribunal allowed the appeal, deleting the adjustment. Disallowance of Depreciation on Building: The appellant claimed depreciation on a building despite discontinued manufacturing processes. The AO disallowed it, stating non-utilization. The appellant argued that assets in the same block lose individual identity for depreciation purposes, citing past ITAT decisions. The Tribunal, following precedent, allowed the depreciation claim. Disallowance of Payment to Doctors: The AO disallowed convention expenses under MCI Regulations, but the DRP granted relief for educational grants. The appellant cited favorable past ITAT rulings, which differentiated MCI guidelines for doctors only. The Tribunal, following precedent, allowed the appeal, considering MCI guidelines inapplicable to the appellant. Consequential Depreciation on Non-compete Fees: The appellant claimed consequential depreciation on non-compete fees paid in a previous year, disallowed by the AO. Citing past ITAT rulings, the appellant argued for the allowance of depreciation. The Tribunal, following precedent, directed the AO to grant consequential depreciation on non-compete fees. Academic Grounds: Certain grounds became academic due to the allowance of related appeals. The Tribunal allowed the appeal, pronouncing the order in favor of the assessee.
|
