9911796707
TMI Blog2019 (2) TMI 1774X X X X Extracts X X X X X X X X Extracts X X X X ..... C of the Income-tax Act, 1961 ('Act'), is bad in law, violative of principles of natural justice and void ab-initio. 2. That on the facts and circumstances of the case and in law the impugned order passed by the assessing officer is barred by limitation and therefore, is liable to be quashed. 3. That the assessing officer erred on facts and in law in determining income of the appellant at Rs. 1,78,31,84,906/- against returned total income of Rs. 130,81,76,250/- under normal provision of the Act. 3.1. That the assessing officer/DRP erred on facts and in law in making addition of Rs. 42,59,009/- on account of alleged difference in the arm's length price of international transactions resulting from the advertisement, marketing and sales promotion expenses (hereinafter referred to as 'the AMP expenses') incurred by the appellant. 3.2. That the assessing officer/DRP erred on facts and in law in not appreciating that the AMP expenses, etc., unilaterally incurred by the appellant in India could not be characterised as an international transaction as per section 92B, in the absence of any proved understanding/arrangement between the appellant and the associated enterprise, so a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssociated enterprise controls the development and growth of its intangible not appreciating that in terms of the global marketing policy of the Whirlpool group, the critical decisions relating to incurring of AMP expenses are taken by the board and management of the appellant independently. 3.11. That the DRP/TPO erred on facts and in law in arbitrarily holding that with regard to export of goods the appellant is operating as a contract manufacturer not appreciating that (i) the appellant is operating as a full risk entrepreneur even with regard to export of goods and is responsible for performing critical decision making functions and (ii) the AMP expenses are incurred by the appellant in India for promoting sale of products in the Indian market. 3.12. That the DRP/TPO erred on facts and in law in not appreciating that adjustment on account of allegedly excess AMP expenses is not warranted in the case of the appellant, a full risk bearing entrepreneur. 3.13. That the DRP/TPO erred on facts and in law in holding that benefit derived by the associated enterprise as a result of AMP expenses incurred by the appellant is reflected in the improvement in overall global brand ran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prejudice that the DRP/TPO erred on facts and in law in considering inappropriate comparable companies for the purpose of computing the mark up charged on AMP expenses. 4. That the Assessing Officer/DRP erred on facts and in law in making disallowance of Rs. 28,71,12,011/- u/s 37(1) of the Act on account of advertisement and marketing expenses incurred by the appellant holding that the expenditure was incurred by the appellant for developing the brand in favour of the parent company, being the legal owner of the brand. 4.1. That the assessing officer erred on facts and in law in not appreciating that the advertisement and marketing expenses were incurred by the appellant wholly and exclusively for the purpose of its business and were deductible as business expenditure. 4.2.That the assessing officer erred on facts and in law in not appreciating that the appellant has a long term right to exploit the trademark 'Whirlpool' and benefits arising from the advertisement and marketing expenditure incurs solely to appellant. 4.3. That the assessing officer erred on facts and in law in not appreciating that the right allowed by the associated enterprise to the appellant to use t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and made adjustments. It was observed that during the year under consideration as in the earlier year, assessee was engaged in the business of manufacturing and sale of home appliances like Refrigeraters, Washing Machines, Air Conditioners and Microwave Ovens. Ld.TPO in his order dated 31.10.2017 observed as under: "the assessing officer, will accordingly, enhance the income of the tax payer by Rs. 45,57,651/- on substantive basis. The protective adjustment of Rs. 28,71,12,011 has been put on hold awaiting judgment of the Hon'ble Supreme Court over the concerned issue. This shall be treated as adjustment u/s 92CA." Thereafter, upon receipt of such intimation from Ld.TPO, Ld.AO passed final assessment order by determining the ALP of AMP expenditure at Rs. 42,59,009/-. Ld.AO after considering other disallowances computed income at Rs. 178,31,84,910/-. 3. Aggrieved by order of Ld. AO, assessee is in appeal before us now. 4. Ground No.1 is general in nature. Ground No.2 not pressed by Ld.Counsel. 5. Ground No. 3 to 3.21 have been raised against adjustment made by Ld.AO on account of alleged excessive AMP expenses amounting to Rs. 42,59,009/-. It has been submitted by Ld. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... answered. Further, the only question framed in the Revenue's Appeal viz., "Whether the ITAT erred in deleting the addition of Rs. 180,73,10,769 made by the AO/TPO on account of AMP expenses under Section 37 of the Act?" is answered in the negative, i.e. in favour of the Assessee and against the Revenue. 49. The impugned order of the ITAT and the corresponding orders of the DRP and the TPO, on the above issues are hereby set aside. The appeal of the Assessee, ITA No. 228 of 2015 is allowed and the appeal of the Revenue, ITA No. 610 of 2014 is dismissed in the above terms, but in the circumstances with no orders as to costs." 6.3. On perusal of orders passed by Ld.TPO/AO/DRP for year under consideration, it is observed that AMP expenditure has been considered to be international transaction by applying bright line test, whereby Ld.TPO proposed an adjustment of Rs. 42,59,009/-. 6.4. Ld.Sr.DR preferred adjournment application on the ground that issue involved in present appeal is in respect of AMP adjustment. He submitted that consistent stand has been taken by revenue before this Tribunal to request for adjournment in all appeals, where AMP adjustment has been disputed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is observed that similar view has been taken by this Tribunal in assessee's own case for assessment year 2009-10 in ITA No.1254/del/2014 vide order dated 26/11/18, and for A.Y. 2010-11, 2011-12, 2012-13 ITA 1972/Del/15, ITA No.1787/Del/16 & ITA No.7085/Del/17 respectively vide order dated 18.01.2019. 7.2. However, we appreciate the concern raised by Ld.Sr.DR that decision of Hon'ble Supreme Court will be binding upon assessee as well as revenue. We are therefore, inclined to set aside this issue to Ld.AO/TPO to pass fresh order considering decision of Hon'ble Supreme Court. Needless to say that proper opportunity shall be granted to assessee of being heard. 7.3. Accordingly Grounds 3 to 3.21 stand allowed for statistical purposes. 8. Ground No.4 to 4.3 Ground No. 4 to 4.3 have been raised by assessee regarding disallowance of expenses under section 37 of the Act, incurred by assessee on account of alleged advertisement and marketing expenses. 8.1. Ld.Counsel submitted that this issue has been considered by Hon'ble High Court assessee's own case which has been referred to herein above. He submitted that issue relates to AMP expenses which have been disallowed by Ld.AO und ..... X X X X Extracts X X X X X X X X Extracts X X X X
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