2024 (12) TMI 1554 - HC - Income Tax

TP Adjustment - Advertisement Marketing and Promotion AMP expenses - constitute an international transaction or not? - adoption of the bright line test method for making the protective adjustment by the AO - HELD THAT - Issues forming subject matter of consideration in these appeals have already been considered and disposed of by this Court in the case of the respondent-assessee itself in Casio India Company 2019 (9) TMI 1744 - DELHI HIGH COURT wherein as perusal of the impugned order shows that the same proceeds on the basis of the decision of this Court in Sony Ericson Mobile Communication India Pvt. Ltd 2015 (3) TMI 580 - DELHI HIGH COURT wherein this Court rejected the adoption of the bright line test method for making the protective adjustment by the Assessing Officer. In the present case as well the AO had adopted the bright line test method and the Tribunal by following the decision of this Court in Sony Ericson Mobile Communication India Pvt. Ltd. (supra) has rejected the said method. In view of the fact that this Court has already rendered its decision on the same issue we dismiss this appeal. No substantial questions of law.

Summary

In the judgment from the Delhi High Court, the appeals challenged the Income Tax Appellate Tribunal's (ITAT) decisions regarding Advertisement, Marketing, and Promotion (AMP) expenses. The ITAT had ruled that AMP expenses did not constitute an international transaction and should not be separately benchmarked, leading to the deletion of AMP adjustments for the respondent-assessee.The Transfer Pricing Officer (TPO) had initially proposed adjustments using the "Bright Line Test," which was followed by an upward adjustment by the Assessing Officer (AO) as directed by the Dispute Resolution Panel (DRP). The respondent-assessee successfully appealed to the ITAT, which ordered the deletion of the AMP adjustment.The appeals raised questions about whether the ITAT was justified in deleting the AMP expenses addition and whether the Revenue needed tangible evidence to establish an international transaction regarding brand building through AMP expenses. The High Court noted that these issues had been previously decided in favor of the respondent-assessee in a similar case, Deputy Commissioner of Income Tax-5(2) v. Casio India Company, where the court had rejected the "Bright Line Test" method, aligning with the decision in CIT Vs. Sony Ericsson Mobile Communication India Pvt. Ltd.Consequently, the High Court found no substantial questions of law remaining for consideration and dismissed the appeals.