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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 ..... 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 covered against the assessee by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of warrants - 1,62,30,708 7 Reimbursement of commission TNMM 2,35,004 8 Payment of seminar expenses TNMM 2,32,920 9 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 1.41 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansaction between Assessee and its AE involving AMP expenses. Accordingly, the HC remanded the matter back to the file of the ITAT, to first decide 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had incurred excessive AMP Expenditure by applying the '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 sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enance services TNMM OP/OC 9,29,91,747 Reimbursement of expenses NA 1,68,00,247 Recovery of expenses NA 2,39,33,406 4.13 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 (%) 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers before the ITAT, the Hon'ble High Court in Para 12 (b) directed ITAT to itself decide the question regarding the existence of an international transaction involving AMP Expenses between the assessee and its AE. The Ld. AR fairly, at the outset, accepting that the decision on the question of AMP as an international transaction requires in-depth analysis of a large numbers of documents and facts, therefore, requested that the matter be restored to the TPO for decision. The Ld. DR also supported the Ld. AR in this regard. As such, we are accepting this submission and remanding the matter relating to the existence of international transaction to the TPO/AO. The TPO/AO is further directed that selling expenses should not be considered wi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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