2015 (4) TMI 1356 - AT - Income Tax

TP adjustment - two international transactions namely payment of export commission and payment of royalty for export to the Associated Enterprises (AEs) - HELD THAT - After considering the rival submissions and perusing the relevant material on record we find that similar issues were raised in appeal by the assessee for the AY 2008-09 2015 (5) TMI 350 - ITAT DELHI which came to be heard simultaneously with the instant appeal. We have passed separate order for the above referred AY 2008-09 in which the question of determination of ALP in respect of Export commission has been restored to the file of AO/TPO with certain directions and the payment of royalty for exports to AE has been accepted at arm s length price. No distinguishing feature has been brought to our notice in the facts of the instant year vis- -vis those of the above referred AY 2008-09. We adopt the same reasons for the year under consideration as well and accordingly remit the international transaction of payment of export commission to the file of AO/TPO for a fresh determination as per the guidelines given in our above referred order and delete the addition on account of payment of royalty in respect of exports made to the AEs. Disallowance being Sales tool expenses incurred by the assessee - HELD THAT - After considering the rival submissions and perusing the relevant material on record we find that similar issue has been raised by the assessee in its appeals for the AYs 2006-07 2015 (4) TMI 502 - ITAT DELHI and 2008-09 2015 (5) TMI 350 - ITAT DELHI for which separate orders have been passed. In the order passed for the AY 2006-07 we have remitted the matter to the file of AO for deciding this issue in conformity with the final view taken in earlier years. Since the fact situation remains similar for the instant year as well inasmuch as neither the ld. AR nor the ld. DR could clearly inform about the final view taken on this issue for the earlier years we set aside the impugned order and send the matter back to the file of AO for deciding it in conformity with the view taken by us in our order for the A.Y. 2006-07. Appeal is allowed for statistical purposes.

Summary

Issues:
1. Transfer pricing adjustment on international transactions
2. Disallowance of sales tool expenses

Transfer Pricing Adjustment on International Transactions:
The appeal was against the final assessment order concerning the addition towards transfer pricing adjustment on two international transactions: payment of export commission and royalty for exports to Associated Enterprises (AEs). The Transfer Pricing Officer (TPO) determined the arm's length price (ALP) for the export commission transaction as 'Nil' and disputed the royalty payment on exports to AEs, considering the assessee as a 'Contract manufacturer'. The TPO proposed a transfer pricing adjustment for royalty payment to AEs. The Appellate Tribunal found no distinguishing feature in the facts of the current year compared to the previous year and remitted the export commission issue to the AO/TPO for fresh determination. The addition on account of royalty for exports to AEs was deleted based on the reasons given in the previous year's order.

Disallowance of Sales Tool Expenses:
The second ground of the appeal was against the disallowance of sales tool expenses incurred by the assessee. Similar issues had been raised in previous assessment years, and separate orders were passed. The Tribunal remitted the matter back to the Assessing Officer (AO) for a decision in line with the final view taken in earlier years. As the final view on this issue for previous years was unclear, the impugned order was set aside, and the matter was sent back to the AO for a decision consistent with the Tribunal's order for a prior assessment year.

In conclusion, the appeal was allowed for statistical purposes, and the Tribunal pronounced the order on April 24, 2015.