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TMI Blog2017 (8) TMI 191X X X X Extracts X X X X X X X X Extracts X X X X ..... tting the appeal on 19th February 2016, the following question was framed for determination by this Court: "Whether in light of the decision in Maruti Suzuki Ltd. v. CIT (2016) 381 ITR 117 (Del) the ITAT was justified in holding that there was an international transaction between the Assessee and its Associated Enterprise with regard toadvertising, marketing and publicity (AMP) expenses and in remanding the matter to the Assessing Officer/Transfer Pricing Officer for determining the arms length price of such transaction for the purposes of transfer pricing adjustment?" 3. This Court has heard the submissions of Mr. Ajay Vohra, learned Senior Advocate for the Assessee and Mr. Sanjay Kumar, learned Senior Standing Counsel for the Revenue. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the Assessee towards AMP expenses. The remaining adjustment of Rs. 7.97 crores was towards the payment of royalty, which came to be deleted by the Dispute Resolution Panel ('DRP') by order dated 14th November, 2014. 7. The TPO applied the 'Bright Line Test' ('BLT') by comparing the proportion of AMP expenses, as a percentage of the total turnover incurred by the Assessee with that of the comparables. The TPO held that the AMP expenses as a percentage of the total turnover in case of the Appellant was 4.20% whereas for the comparables it worked out to an average of 0.51%. It was held by the TPO that the AMP expenses in excess of the BLT incurred by for enhancing the brand name 'Valvoline' owned by the AE had to be compensated by the AE. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Court had declared that the BLT had no statutory mandate and considering the excess expenditure beyond the bright line as an international transaction was 'unwarranted'. 10. In para 5 of the impugned order, the ITAT noted as under: "5. On enquiry from the Bench, Ld. Counsel of the assessee submitted that the facts and figures required for coming to the conclusion pleaded by him were not available on record and an opportunity may be given to him to present the same before the TPO. He further submitted that the Revenue is also required to verify the fresh data to be submitted by the assessee." 11. Ultimately, the ITAT stated that it had, in view of the submissions of the counsel of both sides, "no other option, but to set aside the issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne the issue afresh, de hors the BLT, and this was the reason why the entire matter, and not just the issue regarding determination of ALP, ought to be sent back to the TPO. Mr. Sanjay Kumar also placed reliance on this decision of this Court in Le Passage to India Tour & Travels (P) Ltd. v. The Deputy Commissioner of Income Tax (2017) 391 ITR 207. 15. The decision in Le Passage to India Tour & Travels (P) Ltd. (supra) turned on the fact that there was no determination by the TPO in the first place whether there was an international transaction. In the present case, however, the TPO did apply his mind to the existence of an international transaction involving AMP expense. The only ground on which the conclusion was reached by the TPO was t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent case. On the basis of the existing record, the TPO has found no basis other than by applying the BLT, to discern the existence of international transaction. Therefore, no purpose will be served if the matter is remanded to the TPO, or even the ITAT, for this purpose. 18. This Court has in similar circumstances in a series of decisions including Maruti Suzuki Ltd. (supra); Bausch & Lomb Eye care (India) Pvt. Ltd. v. Additional CIT (2016) 381 ITR 227 (Del) and Honda Siel Power Products Ltd. v. Dy. CIT (2016) 237 Taxman 304 emphasized the importance of the Revenue having to first discharge the initial burden upon it with regard to showing the existence of an international transaction between the Assessee and the AE. 19. For the aforement ..... X X X X Extracts X X X X X X X X Extracts X X X X
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