9911796707
TMI Blog2021 (8) TMI 953X X X X Extracts X X X X X X X X Extracts X X X X ..... not appreciating the fact that bright line is a mere step [of the most appropriate method for benchmarking the AMP service] carried out to estimate and bifurcate expenditure pertaining to the taxpayer for its own routine distribution function and the expenditure incurred on AMP service provided to the AE in a situation where the assessee has not reported the international transaction pertaining to marketing function? (2) Whether in the facts and circumstances of the case and in law the DRP was justified in stating that routine selling and distribution expenses would not form part of AMP expenses (disregarding the fact that these expenses contribute to creation of marketing intangible) even while the same is a factor for comparability anal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontract or declared price, but the said provision could not be invoked to determine the 'quantum'/extent of business expenditure. 1.3 That the DRP/TPO erred on facts and in law in holding that expenditure incurred by the appellant which incidentally resulted in brand building for the foreign AE, was a transaction of creating and improving marketing intangibles for and on behalf of its foreign AE and further that such a transaction was in the nature of provision of a service by the appellant to the AE. 1.4 Without prejudice, the DRP/TPO erred on facts and in law, in not appreciating that the AMP expenses incurred by the appellant was appropriately established to be at arm's length applying RPM and TNMM. 1.5 Without prejudic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee for the products having brand name 'HAIER', applying Bright Line Test ('BLT'), made an adjustment of Rs. 25,17,20,341/- being the purported difference on account of advertisement and sales promotion expenses incurred by the assessee. 7. The ld. DRP following the decision of Hon'ble High Court in the case of Sony Erickson Mobile Communication India Pvt. Ltd. 374 ITR 118 rejected the application of BLT and directed the computation by considering Cost Plus Method (CPM) as the most appropriate method leading to adjustment of Rs. 11,19,14,589/-. 8. Further, we find that the similar issue has been adjudicated in the case of the assessee for the earlier years i.e. assessment year 2008-09 vide order dated 21.09.2020 in ITA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 51/-. The assessee has claimed that in the above working, the TPO has considered the rebate and discount of Rs. 22,64,61,618/- which is evident from paragraph 4 of the TPO's order. Hon'ble Jurisdictional High Court in the case of Sony Ericsson Mobile Communications (supra) held as under:- "176. The aforesaid argument, when AMP expenses are segregated from the composite transaction including distribution and marketing function, is flawed and has to be rejected. The respondent-appellants are engaged in distribution and marketing of consumer goods. Distribution and marketing exercise in case of tangibles requires transfer/sale of goods to third parties, be it sub-distributors or retailers. The said transaction is in the nature of sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as per the above decision of Hon'ble Jurisdictional High Court. After excluding the same, the net AMP expenses work out to Rs. 24.14 crores as under:- Particulars Amount ( Rs.) Total AMP expenses determined by the TPO 46 , 78 ,74 ,750 Less: Rebate & Discount 22 , 64 ,61 ,618 Net AMP expense incurred by the appellant 24 , 14 ,13 ,132 9. When, on the above figure, the mark up of 9% as upheld by the DRP is applied, then the arm's length price of AMP would be worked out to Rs. 26,31,40,313/-. The grant received by the assessee from its AE is Rs. 27,23,46,104/-, which is more than the arm's length price of AMP expenses. Since the grant received by the assessee exceeded the arm's length price of AMP, no TP adjustment in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ading AE Trading Non AE Sale 1,050,027,873 1,856,821,011 Service Income 16,218,717 2,097,007 Total Revenue A 1,066,246,591 1,858,918,018 Opening Stock -FG 109,636,499 144,855,566 Purchase & Direct Expenses 1,101,541,914 1,699,044,802 Less: Closing Stock -FG 350,359,681 218,759,982 Total Cost of Goods Sold B 860,818,732 1,625,140,386 Gross Margin A-B 205,427,859 233,777,631 Gross Margin % A-B/A 19.56% 12.59% Advertisement & Publicity [Net of selling and distribution expenses as taken by the TPO in order passed after DRP] 46,322,965 81,915,401 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
