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TMI Blog2021 (10) TMI 782X X X X Extracts X X X X X X X X Extracts X X X X ..... ld be allowed as deduction under section 43B - HELD THAT:- By following the decision of Hon'ble High Court of Madras in the case of CIT v. Industrial Security Intelligence India Pvt. Ltd. [ 2015 (7) TMI 1063 - MADRAS HIGH COURT ] and the Ld.CIT(A) directed the AO to allow the deduction. Just because, the Revenue has preferred the Review Petition before the Hon ble High Court of Madras, the decision already rendered by the Hon ble Madras High Court cannot be held as invalid until and unless the said order is modified or altered. Thus, we are of the view that the Ld.CIT(A) has rightly followed the decision of the Hon ble Madras High Court and we find no infirmity in the Appellate Order passed by the Ld.CIT(A) on this issue. Accordingly, the ground raised by the Revenue stands dismissed. - IT (TP) A No.73/Chny/2019 - - - Dated:- 30-9-2021 - Shri Duvvuru R.L. Reddy, Judicial Member And Shri G. Manjunatha, Accountant Member For the Department : Mrs.R.Anita, Addl.CIT For the Assessee : Mr.Vikram Vijayaraghavan, Adv. ORDER PER DUVVURU RL REDDY, JUDICIAL MEMBER: The Revenue filed this appeal against the order of the Commissioner of Income Tax (Appeals)-8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on record and gone through the orders of the authorities below. 5. Similar issue was subject matter in appeal before the Tribunal in the assessee s own case for the AY 2011-12, wherein, the Tribunal has passed detailed speaking order and the relevant portions of the order are extracted as under: 2.8 We heard the rival submissions and perused the material placed before us. We have gone through the decisions relied upon by both the parties. The TPO has noticed that the assessee spent amounts towards advertisement, marketing and promotion expenses and held that the expenses were spent towards the brand building of the parent AE M/s.Nipon Trading Co. Ltd., Japan, and suggested for upward adjustment of difference of ₹12,58,86,884/- as AMP expenses and the mark-up @ 12.15% amount to ₹1,52,95,256/- as brand promotion. The assessee stated that there was no agreement enforcing to promote the brand name Nippon India, which obligated the assessee to spend towards the AMP. The assessee s AR also argued that the entire expenditure was a business expenditure of Nippon India Ltd., which improve their sales in the future years. The AO/TPO has not brought any evidence on record t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e High Court in the case of Sony Ericsson in relation to application of Bright Line Test and upheld that Bright Line Test is not a correct method as per the Indian TP Regulations to bench mark the transaction to AMP expenses. In this connection, the Ld.AR has invited our attention to Para No.120 194 of the Hon ble High Court, Delhi, decision in the case of Sony Ericsson reported in 374 ITR 118 Delhi. 120. Notwithstanding the above position, the argument of the Revenue goes beyond adequate and fair compensation and the ratio of the majority decision mandates that in each case where an Indian subsidiary, of a foreign associated enterprise incurs the AMP expenditure should be subjected to the bright line test on the basis of comparables mentioned in paragraph 17.4. Any excess expenditure beyond the bright line should be regarded as a separate international transaction of brand building. Such a broad-brush universal approach is unwarranted and would amount to judicial legislation. During the course of arguments, it was accepted by the Revenue that the Transfer Pricing Officers/Assessing Officers have universally applied bright line test to decipher and compute the value of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... single one and contribution is attributed to the aggregate package. Unhesitatingly, we add that in a specific case this criteria and even zero attribution could be possible but facts should so reveal and require. To this extent, we would disagree with the majority decision in L. G. Electronics India Pvt. Ltd. (supra). This would be necessary when the arm s length price of the controlled transaction cannot be adequately or reliably determined without segmentation of the AMP expenses. 2.11 The assessee also placed reliance on the decision of Delhi Tribunal in the case of Goodyear India Ltd., Vs. DCIT (ITA No.5650/Del/2011, 6240/Del/2012 916/Del/2014) and we extract the relevant paragraph as under: 24. The Hon ble Delhi High Court considering the dispute on facts of several distributors laid down important transfer pricing principles, viz. (a) Bright Line Test applied by the Revenue has no statutory mandate, and the contention of the Revenue that any excess expenditure beyond the bright line should be regarded as separate international transactions is unwarranted (b) clubbing of closely linked transactions is permissible, (c) benchmarking of a bundle of transactions app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here cannot be any adjustment under the transfer pricing provisions. Further, as held by the Hon ble High Court, Chapter X of the Act does not authorize the revenue to make quantitative adjustment under the transfer pricing provisions, such as AMP expense. The contention of the ld. DR about abnormal increase in 57 ITA Nos.5650/Del/11, 6240/Del/12 916/Del/14 advertisement expenses in comparison to preceding year, does not render any help to the Revenue, keeping in view the proportionate rise in turnover of assessee. We accordingly direct the assessing officer to delete the adjustment made on this account. 2.14 The TPO relied on Sec.92F(v) of Income Tax Act for taxing AMP s spent as an international transaction. Hon ble Delhi High Court in the case of Maruti Suzuki in Paragraph No.61 held as under: 61. The submission of the Revenue in this regard is: The mere fact that the service or benefit has been provided by one party to the other would by itself constitute a transaction irrespective of whether the consideration the same has been paid or remains payable or there is a mutual agreement to not charge any compensation for the service or benefit . Even if the word tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. By following the above decision as well as the decision of the Hon ble Delhi High Court in the case of M/s.Maruti Suzuki India Ltd., reported in 381 ITR 117, the Ld.CIT(A) directed the AO to delete the Transfer Pricing upward adjustment of ₹ 3,26,29,475/-. The Ld.DR could not controverted to the above findings of the Tribunal by filing the High Court decision having modified or reversed or altered. We, therefore, find no infirmity in the order passed by the Ld.CIT(A). Accordingly, the ground raised by the Revenue is dismissed. 7. The next ground raised by the Revenue relates to confirmation of disallowance of employees contribution amount to ₹ 8,03,227/- towards PF and ₹ 1,02,686/- towards ESI. 7.1 During the course of assessment proceedings, the Assessing Officer noticed that the assessee has made remittance of ₹ 9,05,913/- pertaining to employee s contribution to PF ESI beyond the due dates. Accordingly, the above amount was disallowed under section 36(1)(va) r.w.s. 2(24)(x) of the Act and brought to tax. On appeal, after considering the submissions of the assessee and by following the decision of Hon'ble High Court of Madras in the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X
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