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TMI Blog2017 (11) TMI 386X X X X Extracts X X X X X X X X Extracts X X X X ..... is appeal by the assessee is directed against order dated 28/09/2017 passed by the Deputy Commissioner of Income-tax, Circle-3, Gurgaon (hereinafter called as the Assessing Officer ) pursuant to the direction of the ld. Dispute Resolution Panel (DRP), raising following grounds: 1. That on the facts and circumstances of the case and in law, the AO has erred in assessing the total income of the Appellant under section 143(3) of the Act, for the relevant assessment year at INR 46,73,05,373 as against the returned income of INR 3,82,78,270. 2. That on the facts and circumstances of the case and in law, the orders passed by the AO/TPO were bad in law as the pre-requisite for applying Chapter-X, i.e., existence of an international transaction between two Associated Enterprises ( AE ) under section 92B of the Act, was not satisfied or existed as there was no agreement, understanding or arrangement between the Appellant and the AE for incurrence of such expenditure by the Appellant and the Dispute Resolution Panel ( DRP ) erred in upholding the same. 2.1 That on the facts and circumstances of the case and in law, the AO/DRP/TPO have erred in re-characteri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that BLT has been expressly rejected by the Hon ble Tribunal in Appellant s own case for earlier AYs. 7. That on the facts and circumstances of the case and in law, AO/DRP/TPO have erred in not appreciating that the Appellant had not provided any value added/brand building services to its AE by incurring AMP expenditure, and therefore, no mark-up could have been charged/levied on such expenditure, even if the same was to be characterized as an international transaction . 7.1 Notwithstanding and without prejudice that no mark-up could have been levied, on the facts and circumstances of the case and in law, AO/DRP/TPO have erred in law and facts, by cherry picking the comparable companies for purpose of computing mark-up for the alleged international transaction and without providing an opportunity of being heard in this regard. 7.2 That on the facts and circumstances of the case and in law, the AO/DRP/TPO has erred in not granting set-off of excess profit from distribution of products while benchmarking the alleged international transaction of incurrence of excessive AMP expenditure. 8. That on the facts and circumstances of the case and in law, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 143(3) r.w.s. 144C of the Act. The assessee filed objections against the draft assessment order before the Ld. DRP. After taking into consideration the objections of the assessee, the Ld. DRP issued directions to reduce the AMP adjustment on substantive basis to nil against the addition proposed of ₹ 33,08,51,870/- by the Assessing Officer. The Ld. DRP, however, upheld the proposal of the Assessing Officer to make an adjustment for AMP on protective basis amounting to ₹ 42,90,27,103/-. In view of the directions of the Ld. DRP, the Assessing Officer passed final assessment order on 28/09/2017 in terms of section 143(3) r.w.s. 144C of the Act, in which he made AMP adjustment amounting to ₹ 42,90,27,103/- on protective basis. Aggrieved with the order of the Assessing Officer, the assessee is in appeal before the Tribunal raising the grounds as reproduced above. 3. In the grounds raised, the only effective issue is, whether AMP adjustment could be made in the case of the assessee on protective basis following the Bright Line Test (BLT). 4. Before us, the learned counsel submitted that identical addition made on protective basis applying Bright Line Test ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the bright line test in several decisions. 17. Furthermore, Hon ble Delhi High Court in Sony Ericsson Mobile Communications India (P.) Ltd. vs. CIT-III ( 2015) 55 taxmann.com 240 (Delhi) also determined the identical issue as to applying the BLT for determining ALP of the AMP in favour of the assessee and has categorically held that BLT has no statutory mandate and it is not obligatory to subject AMP expenses to BLT and considered non-routine AMP as separate transactions by making following observations :- III. Section 92C of the Income-tax Act, 1961 - Transfer pricing - Computation of arm's length price (Comparables and adjustments/Adjustments - AMP expenses) - Assessees were several Indian subsidiaries of Multi National Enterprises (MNEs) engaged in distribution and marketing of imported and branded products, manufactured and sold to them by foreign AEs - They had applied TNMM/RPM for computing ALP - TPO accepted methods so applied by assessees, however, found that assessees had incurred AMP expenses towards promotion of brand in India, however, no reimbursement of expenses was made from AEs - Hence, he used bright line test by segr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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