9911796707
TMI Blog2017 (4) TMI 716X X X X Extracts X X X X X X X X Extracts X X X X ..... motion (AMP) expenses for Ay 2007-08 and 2008-09 respectively. 2. These appeals filed by the parties were earlier disposed of by the Tribunal vide its orders dated 13.12.2013 and restoring the computation of ALP of AMP expenses to the ld. TPO to be decided in accordance with the Special Bench decision in the case of LG Electronics India (P.) Ltd. v. Asstt. CIT [2013] 140 ITD 41/29 taxmann.com 300 (Delhi - Trib.). The assessee and revenue appealed against the Tribunal order before Hon'ble High court. 3. The Hon'ble jurisdictional High Court has disposed of the appeals of the parties in a batch of appeals with the leading order in Sony Ericson Mobile Communication (India) (P.) Ltd. v. CIT [2015] 374 ITR 118/231 Taxman 113/55 taxmann.com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther held that determination of the ALP of this international transaction may be determined by application of bright line test for working out the amount of non-routine AMP expenses on Cost plus method by treating AMP transaction as a separate and distinct from other international transactions. Ultimately, the matter was sent back to the TPO for undertaking the exercise afresh in the light of various directions. This decision of Special bench was challenged before the Hon'ble High Courts and in several cases including the case of the assessee for the year under consideration, has been disposed of by Hon'ble High Court conferring jurisdiction in the TPO to determine the ALP of the international transaction of AMP expenses. The Hon'bl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of AMP spend should be separately processed under the transfer pricing provisions for the purposes of determining its ALP separately. In such determination of ALP of AMP expenses in a segregated manner, proper set off on account of excess purchase price adjustment should be allowed. The Hon'ble High Court has set the view taken by the Tribunal in segregating routine and non-routine expenses on the basis of bright line test aside. The view taken by the Special Bench that the expenses concerned with the sales, such as, rebates and discounts etc., should be excluded from the ambit of AMP expenses, has been upheld. 6. The Hon'ble High Court has dealt with the case of the assessee in a group of cases who are either distributors or manufa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee and the comparables. As the bright line test primarily concentrates on the quantitative aspects of the AMP expenses alone, it overlooks the examination of the AMP functions carried out by the assessee on one hand and the comparables on the other. Now, the Hon'ble High Court in Sony Ericson Mobile Communications India (P.) Ltd. (supra) has proceeded held that AMP expense is a separate international transaction and also bright line test is not applicable for determining the ALP of AMP expenses. The manner for the determination of the ALP of the distribution activity and AMP activity has also been set out by the Hon'ble High Court to be conducted, firstly, in a bundled manner by considering the distribution and AMP functions per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions performed by a comparable case. If AMP functions performed by the assessee turn out to be different from those performed by a probable comparable company, then, an adjustment is required to be made so as to bring the AMP functions performed by the assessee as well as the comparable, at the same footings. If we concur with the contention of the ld. AR that the addition on account transfer pricing adjustment of AMP expenses be deleted without any examination of the AMP functions carried out by the assessee as well as comparables, it would be contrary to finding of the Hon'ble high court which has emphatically held AMP expenses to be international transaction, in whatever facts and circumstances. Hon'ble High Court has held that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht line test for determining the value of the international transaction of AMP expense and then applying the cost plus method for determining its ALP. The ld. AR also failed to draw our attention towards any material divulging the AMP functions performed by the assessee as well as comparables. As such, we are handicapped to determine the ALP of AMP expenses at our end, in either a combined or a separate approach. The ld. AR has also disputed the base of total AMP expenses taken by the TPO. He argued that some of expenses, which are in the nature of selling expenses directly incurred in connection with sales not leading to brand promotion in any manner, should be excluded. In principle, we agree with the contention of the ld. AR that Selling ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
