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TMI Blog2017 (6) TMI 873X X X X Extracts X X X X X X X X Extracts X X X X ..... SIDENT, AND SMT SUCHITRA KAMBLE, JUDICIAL MEMBER For The Appellant : Sh. Vishal Kolra, Sh. Gaurav Gupta, Ms. Khayati Dadwal, Advs. For The Respondent : Sh. Amrendra Kumar, CIT DR ORDER PER SUCHITRA KAMBLE, JM These three appeals are filed by the assessee against the orders of the Assessing Officer passed u/s 143(3) read with Section 144C (13) of the Income-tax Act, 1961 for Assessment Year 2006-07, 2007-08 2008-09. Date of Hearing 12.04.2017 Date of Pronouncement 17.04.2017 ita 2. During the course of hearing the Ld. AR submitted that the Hon'ble Delhi High Court vide order dated 27th July 2016 has remanded the issue regarding the existence of international transaction involving AMP expenses between the assessee and its AE to the ITAT. The Ld. AR further submits that as per the instructions from the assessee/client he is requesting for remand of this issue before the TPO/A.O for determining the existence of international transactions involving AMP expenses. He further submitted that selling expenses should not be considered within the ambit of AMP. For Assessment Year 2007-08 2008-09, the Ld. AR submitted that on the legal issue it is covere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Reimbursement of freight charges - 8,81,893 10 Other recoverable TNMM 2,97,946 11 Cost reimbursement TNMM 83,87,418 12 Consultancy services TNMM 48,51,450 4.2. The transaction pertaining to import of finished goods for distribution was accepted at arm s length based on the following comparability analysis: S No Company Name Weighted Average GP/Sales (%) 1. ACI Infocom Limited 0.12 2. Business Link Automation (India) Limited 1.59 3. Compuage Infocom India Limited 1.89 4. Control Print (India) Limited 19.81 5. Iris Computers Limited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the question regarding the existence of international transaction with the direction that the Tribunal shall not remand the matter to lower authorities for decision. ita 4.6. Exclusion of direct selling expenses from AMP expenditure for the purpose of determination of ALP, as per the directions of the Delhi HC in Sony Ericsson 374 ITR 118 Particulars Amount (INR) Sales Commission (Refer pg 281 vol 1 of PB) 60,660,239 Publicity Sales Promotion (Refer pg 281 Vol 1 of PB) 40,301,259 Total AMP considered by TPO 100,961,498 Less: Sales Commission 60,660,239 Less: Selling and Dealer incentive 15.491250 AMP without direct selling expenses ( 24,810,009 ) Assessment Year 2007 - 08 4.7 The Assessee entered into the following international transactions with its AEs: International Transactions Transfer Pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bright Line Test wherein he selected 7 out of the 10 comparable companies selected by the Assessee Company name AMP/ Sales - as per TPO Order (%) ACI Infocom limited 0.44% Business Link Automation (India) Limited 1.51% Compuage Infocom India Limited 0.00% Kilburn Office Automation Limited 1.07% Priya Limited 0.08% Iris Computers Limited 0.56% Control Print (India) Limited 1.00% Mean 0.66% 4.10 The Assessee preferred an appeal before the Income Tax Appellate Tribunal ( ITAT ) and the ITAT vide order dated July 31, 2013, followed the Special Bench decision in the case of L.G. Electronics; [2013] 22 ITR(T) 1 and granted partial relief by excluding sales commission amounting to INR 7,79,07,784 at the threshold itself. However, the legal issues in respect of AMP expenses wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion was accepted at arm s length based on the following comparability analysis: S No Company Name Weighted Average (%) OP/OR 1. Bajaj Electricals Limited 9 08 2. Khaitan (India) Limited 8.84 3. Media Video Limited 8.25 4. Modi Hoover International Limited 2.91 5. Usha International Limited 10.40 Mean (%) 7.89 4.14 However, the TPO observed that the Assessee had incurred excessive AMP Expenditure by applying the Bright Line Test , wherein 3 comparable companies were selected for application of bright line: Company name AMP/ Sales - as per TPO Order (%) Kilburn Office Automation Limited 1.07 Priya Limited 0.24 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nternational transaction to the TPO/AO. The TPO/AO is further directed that selling expenses should not be considered within the ambit of AMP. The Ld. AR s contention in the tabulated form for Annexure 3 annexed to his submissions for all the years has to be considered by the TPO/AO. For Assessment Year 2007-08 2008-09 though the Hon ble High Court in case of Sony Ericson Mobile Communication India Pvt. Ltd. has decided the legal issue against the assessee, the factual aspect related to international transaction related to AMP in assessee s case has to be dealt with by the TPO/AO. Therefore, the issue related to these three appeals filed by the Particulars Amount (INR) Publicity Sales Promotion (A) (Refer Page 270 of PB) 8,10,18,516 Sales Commission (B )(Refer page No. 270 of PB) 9,73,58,499 178,377,015 Less: Sales Commission (97,358,499) Less: Selling and dealer incentives (33,802,245) Total AMP to be considered by applying HC principles 47,216,271 ita assessee are remanded back to the TPO/A.O for deciding as per the directions given hereinabove. 6. In result, all the three appeals are partly allowed for statistical purposes. Order pronounced in the Open Court on this 17 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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