2019 (8) TMI 22 - HC - Income Tax

TPA - AMP expenses - International transaction - Bright Line Test - whether the ITAT erred in remanding the issue of Advertising Marketing Promotion (AMP) expenses to the file of the Transfer Pricing Officer (TPO) for re-determination of the issue whether there is at all an international transaction involving the Assessee and its Associated Enterprise ( AE )? - HELD THAT - The facts of the present case need not be discussed in great detail because essentially, what the ITAT has done is to remand the matter to the TPO, and this by itself does not give rise to any substantial question of law. ITAT has noted that the Assessee is incurring its own selling and distribution expenses and there was no advertisement in the media nor were its products available in the shops. The issues of Reader s Digest were made available only through mail orders which had to be placed separately. ITAT has pointed out that there exists a distinction between product promotion and brand promotion and that the mechanism used by the Assessee is altogether different for its product promotion. Since the Bright Line Test has now been jettisoned by this Court in Sony Ericsson Mobile Communications India Pvt. Ltd. v. Commissioner of Income Tax-III 2015 (3) TMI 580 - DELHI HIGH COURT the ITAT was of the view that the entire exercise should be undertaken afresh by the TPO. - No substantial question of law

Summary

Issues:
1. Exemption application (CM APPL. 33399/2019)
2. Delay in re-filing the appeal (CM APPL. 33400/2019)
3. Appeal by the Revenue against ITAT order regarding AMP expenses

Exemption Application (CM APPL. 33399/2019):
The High Court allowed the exemption application, subject to all just exceptions, without further elaboration.

Delay in Re-filing the Appeal (CM APPL. 33400/2019):
The delay in re-filing the appeal was condoned and the application was allowed based on the reasons explained in the application.

Appeal Regarding AMP Expenses (ITA 694/2019):
The appeal by the Revenue was against an ITAT order related to Advertising Marketing Promotion (AMP) expenses for the Assessment Year 2011-12. The main issue was whether the ITAT erred in remanding the issue to the Transfer Pricing Officer (TPO) for re-determination of an international transaction involving the Assessee and its Associated Enterprise in Singapore. The ITAT highlighted the distinction between product and brand promotion, noting the Assessee's unique mechanism for product promotion. The Court observed that since the 'Bright Line Test' had been discarded in a previous case, the TPO needed to re-examine the issue. The Court found no substantial question of law arising from the ITAT's order and dismissed the appeal, upholding the ITAT's decision.

This detailed analysis of the judgment provides insights into the issues addressed by the High Court, including the exemption application, delay in re-filing the appeal, and the appeal concerning AMP expenses. The Court's reasoning and decision-making process are outlined, emphasizing the legal complexities involved in the case.