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TMI Blog2014 (2) TMI 367X X X X Extracts X X X X X X X X Extracts X X X X ..... uding blades, razors, cartridges, shaving system, brushes etc. . The assessee e-filed its return of income on 29/9/2009 declaring an income of Rs. 159,13,40,653/- and declared book profit u/s 115JB of the I.T. Act, 1961 (hereinafter referred to as the Act) at Rs. 167,03,24,214/- for MAT purposes. The return of income was processed u/s 143(1) of the Act on 11/3/2011. Later on the case was selected for scrutiny. The Assessing Officer to ensure that the international transactions were at Arm's Length Price (ALP) referred the case to Transfer Pricing Officer (TPO) u/s 92CA of the Act, who passed the order on 30/01/2013 u/s 92CA(3). The Assessing Officer passed the draft assessment order against which the assessee made an appeal before the Dispu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the TPO without any direct or indirect evidence presumed that the assessee had contributed in the brand development of its parent company by incurring non-routine Advertisement, Marketing Promotional (AMP) and selling expenses. He had applied the bright line test and accordingly compared the entity level AMP & selling expenses ratio of the assessee with AMP expenses ratio of the third party companies(engaged in distribution operations) and proposed an adjustment of Rs. 1,10,87,46,110/- by placing the reliance on the decision of the Special Bench in the case of L.G. Electronics India Private Limited Vs. ACIT (2013) 152 TTJ (Del) (SB) 273 and the DRP upheld the aforesaid adjustment proposed by the Assessing Officer/TOP. 4. During the course ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s from its associated enterprises. However, the TPO/DRP has disregarded the economic analysis conducted by the assessee and determined the arm's length price of the aforesaid transactions as NIL and thereby made adjustment of Rs. 6,62,31,158/-. It was submitted that the commercial rational and the expediency relating to the business decision of the assessee, cannot be challenged by the Income Tax authorities. The reference was made to the following decisions of the various Benches of the Tribunal:- - CIT Vs. EKL Appliances Ltd. (ITA No. 2068/2011 and ITA No. 1070/2011, Delhi High Court) - `Hive Communication Private Ltd. Vs. CIT (ITA No. 306/2011, Delhi High Court). - Dresser Rand India Private Limited Vs. ACIT, Mumbai Tribunal (ITA No. 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account of deemed interest on delays in collection from the Associated Enterprises (A.E's). It was argued that the assessee had exported finished goods to its AE's for a sum of Rs. 28,57,16,513/- and the TPO/DRP had considered the delay in collection of the receivables from the AEs (On account of export of finished goods) as an extension of the credit/loan facility to the AE's and charged a notional interest @ 16.25% i.e. Rs. 80,95,948/- and accordingly, proposed the adjustment. It was stated that the assessee is a Zero debt company i.e. does not have any borrowings from the external sources and is not required to pay the interest and also did not charge any interest on the outstanding receivables from its local third party customers. Ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered as capital expenditure. 10. It was further stated that the payment of such a huge demand would cause financial hardship and irreparable damage to the assessee and it would also impact its routine business operations. The assessee prayed as under:- (i) to grant stay of demand till the appeal of the Petitioner is heard and decided by the Tribunal. (ii) that the Commissioner of Income Tax or the Additional Commissioner of Income Tax or the Respondent or the Tax Recovery Officer or their subordinates or their successors may be restrained from taking any coercive action as regards recovery of outstanding tax and interest, levied or leviable for the relevant Assessment Year. (iii) that its appeal be heard and decided by the Tribunal, on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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