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TMI Blog2019 (5) TMI 1424X X X X Extracts X X X X X X X X Extracts X X X X ..... who was engaged in marketing and distribution. Undisputedly, the assessee is engaged in marketing and distribution of Mary Kay products in India and the observation of the Hon ble Delhi High Court in assessment year 2010-11 in assessee s own case would apply mutatis mutandis in this year also. Once it is held that AMP expenditure is not an international transaction, the transfer pricing adjustment would have no feet to stand. Even though in the year under consideration, the assessee has accepted the addition in this regard in the quantum proceedings, the fact remains that such addition was not sustainable in view of the observation of the Hon ble Delhi High Court in assessee s own case that the AMP expenditure was not to be considered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration was filed at a loss of ₹ 9,81,15,974/-. The income of the assessee was assessed at a loss of ₹ 5,64,18,900/- after making a total addition of ₹ 4,16,97,074/- on account of Advertisement and Marketing Promotion (AMP) expenses after making reference to the Transfer Pricing Officer. Penalty proceedings u/s 271(1)(c) of the Act were also initiated on this addition. The assessee preferred an appeal against the quantum addition before the Ld. Commissioner of Income Tax (A) who allowed partial relief to the assessee by excluding selling and distribution expenses and modifying the comparables selected by the Assessing Officer. The additions made by the Assessing Officer were reduced to ₹ 2,04,48,472/- b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 92C of the Act, the Explanation 1 to Section 271(1)(c) had no implication, as such this issue is governed by the conditions prescribed under Explanation 7 to section 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as the Act ). 4. On the fact, in law and in circumstances of the case Ld. CIT(A) erred by disregarding the order of the Hon ble High Court of Delhi in Appellant s own case for AY 2010-11 wherein Advertisement and Sales Promotion expenses were held not to be a separate and independent international transaction. 3.0 The Ld. Authorised Representative (AR) submitted that the penalty has been imposed on the addition pertaining to advertisement, marketing and promotion expenses which was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l (C) No. 11485 of 2016) 3.2.0 It was further submitted by the Ld. AR that the penalty has been imposed in relation to the addition made under Chapter-X of the Act. Thus, Explanation 1 to Section 271(1)(c) of the Act, cannot be invoked. On the contrary, the Explanation 7 to Section 271(1)(c) of the Act was applicable. It was submitted that the assessee had submitted all the requisite details in respect of its all international transactions. In this regard, reliance was placed on the following judgements: DCIT vs. RBS Equities India Ltd. [2011 ] 133 ITD 77 (Mum. - Trib.) ACIT vs. Boston Scientific India (P.) Ltd. [2016] l77 TTJ 729 (Delhi - Trib.) Halcrow Consulting India (P) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stood as to what was the purport and import of the notice issued u/s 274 of the Act. The Ld. Sr. DR also filed written submissions in support of her contentions and list of judicial precedents on which she has vehemently relied on and which have been placed on record. 4.1 It was also submitted that even though the Hon ble Delhi High Court for assessment year 2010-11 in assessee s own case might have held that the AMP expenses should not be treated as a separate independent international transaction, under the Income Tax Act, assessment years are independent of each other and it might be possible that the facts in that year would be different from the year under consideration and, therefore, the same analogy cannot be applied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 2010-11. Further, we also note that the Hon ble Delhi High Court in assessee s own case for assessment year 2010-11 has dismissed the department s appeal and has held that there were no good grounds and reasons to treat advertisement and sales expenses as a separate and independent international transaction in the case of the assessee. The Hon ble High Court held that the revenue had erred in not treating this activity as a function performed by the assessee who was engaged in marketing and distribution. Undisputedly, the assessee is engaged in marketing and distribution of Mary Kay products in India and the observation of the Hon ble Delhi High Court in assessment year 2010-11 in assessee s own case would apply mutatis mutandis in this y ..... X X X X Extracts X X X X X X X X Extracts X X X X
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