9911796707
TMI Blog2023 (1) TMI 259X X X X Extracts X X X X X X X X Extracts X X X X ..... JUDICIAL MEMBER Assessee by : Shri Chavali Narayan, CA Revenue by : Dr. Manjunath Karkihalli, CIT DR ORDER PER BEENA PILLAI, JUDICIAL MEMBER Present appeal is filed by the assessee against the final assessment order dated 30.03.2021 for Assessment Year 2016-17 passed by the Ld.ACIT, National e-Assessment Centre, Delhi on following grounds of appeal: "Based on the facts and circumstances of the case and in law, Essilor India Private Limited (hereinafter referred to as "EIPL" or the "Company" or the "Appellant"), respectfully craves leave to prefer an appeal against the order passed by the Additional / Joint / Deputy / Assistant Commissioner of Income Tax / Income Tax Officer, National e-Assessment Centre, Delhi (hereinafter referred to as "learned Assessing Officer" or the "learned AO"), under section 143(3) read with section 144C(13) and 144C(13) read with sections 143(3A) & 143(3B) of the Income Tax Act, 1961 ("the Act") dated 30March 2021 for the Assessment Year ("AY") 2016-17("impugned order"), in pursuance of the directions issued by the Hon'ble Dispute Resolution Panel (hereinafter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a) AY 2009-10 reported at IT(TP)A No. 29/Bang/2014 b) AY 2010-11 reported at IT(TP)A No. 227/Bang/2015 c) AY 2011-12 reported at IT(TP)A No. 542(B)/2016 and IT(TP)A No.551(B)/2016 d) AY 2012-13 reported at IT(TP)A No. 358(B)/2017 e) AY 2013-14 reported at IT(TP)A No. 2905(B)/2017 f) AY 2014-15 reported at IT(TP)A No. 3328(B)/2018 10. Without prejudice to the above grounds, the learned AO/ TPO/ DRP has erred in law and in fact, by not appreciating that even if the incurrence of excess AMP expenditure is considered as cost, the net margin of the Appellant at 5.86% on operating revenue computed by the TPO based on TNMM is higher than the weighted average operating margin earned by comparable companies at 0.98% and thereby indicating that the Appellant has already been adequately remunerated/ compensated for AMP as well. 11. Without prejudice to the above grounds, the learned AO/ TPO/ DRP erred in law and fact, by considering 'Other method' as the Most Appropriate Method ("MAW) and in not appreciating that TNMM has been considered as the MAM and the operating margin of the Appellant is higher that the operating margins of the comparable companies, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come Tax Act, 1961 dated 04.07.2017 was duly served on the assessee. Further notice u/s 142(1) r.w.s 129 dated 05.09.2019 and notice u/s 142(1) dated 04.12.2019 were issued and served on the assessee company as there is change in incumbency. 2.2 During the F.Y. 2015-16, the assessee company had international transactions as per Section 92 of the Income Tax Act, 1961. According to Section 92CA of the Income Tax Act, 1961, the case was referred to the Transfer Pricing Officer in order to determine the Arm's Length Price after obtaining necessary approval of the Ld.Pr.CIT, Bengaluru. The Ld.TPO passed order u/s 92CA of the Income Tax Act, 1961 on 31.10.2019, he held that, Rs.47,11,90,667/- as TP adjustments is required to be made u/s 92CA to the Arm's Length Price, declared by the assessee in respect of international transactions. 3. Against the draft assessment order, the assessee raised objections before the DRP. The DRP upheld the action of the Ld.TPO in computing the excess of AMP incurred by assessee at Rs.46,16,66,814/- as transfer pricing adjustment. On receipt of the DRP directions, the Ld.AO passed the final assessment order making the addition in the hands of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fresh show-cause notice. The High Court has further directed the Transfer Pricing Officer to decide the matter in accordance with law. Further, on going through the impugned judgment of the High Court dated July 1, 2010, we find that the High Court has not merely set aside the original show cause notice but it has made certain observations on the merits of the case and has given directions to the Transfer Pricing Officer, which virtually conclude the matter. In the circumstances, on that limited issue, we hereby direct the Transfer Pricing Officer, who, in the meantime, has already issued a show cause notice on September 16, 2010, to proceed with the matter in accordance with law uninfluenced by the observations/directions given by the High Court in the impugned judgment dated July 1, 2010. The Transfer Pricing Officer will decide this matter on or before December 31, 2010. The civil appeal is, accordingly, disposed of with no order as to costs." 17. The Hon'ble Delhi High Court in an other case of Maruti Suzuki India Ltd. Vs. CIT 381 ITR 117 (Delhi) held that the fact that the benefit of such AMP expenses would also ensure to the AE is itself insufficient to infer t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... MSIL the right to use Suzuki's trade mark and logo on the product. Pursuant to this agreement, MSIL was using the co-brand, i.e., Maruti Suzuki trade mark and logo for more than 30 years. This co-brand could not be used by SMC and was not owned by it. The clauses in the agreement between MSIL and SMC indicated that permission was granted by SMC to MSIL to use the cobrand "Maruti Suzuki" name and logo. The mere fact that the cars manufactured by MSIL bore the symbol "S" was not decisive as the advertisements were of a particular model of the car with the logo "Maruti- Suzuki". The Revenue had been unable to contradict the submission of MSIL that the co-brand mark "Maruti- Suzuki" in fact did not belong to SMC and could not be used by SMC either in India or anywhere else. The decision in the case of Sony Ericsson requires that the mark or brand should belong to the foreign associated enterprise. The Revenue also did not deny that as far as the brand "Suzuki" was concerned its legal ownership vested with the foreign associated enterprise, i.e., SMC. Moreover as MSIL was concerned, its operating profit margin was 11.19 per cent. whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concert and further that there was an agreement to enter into an international transaction concerning advertising, marketing and sales pro-motion expenses." 19. In the light of the law as it exists today, we shall examine the arguments of the rival parties. There has been no agreement between Essilor International which owns the various brands set out by the TPO in his order and the Assessee to incur any Advertisement and Marketing or Sales promotion expenses. None of the other reasons given by the TPO which have been explained by the Assessee and set out in the earlier paragraph can be the basis to hold that there was in fact an international transaction in the matter of incurring of AMP expenses by the Assessee. The order of the Tribunal in Assessee's own case for A.Y.2009-10 and 2010-11 in our view requires to be followed and there are no reasons whatsoever to take a different view. Consequently, there could not be any exercise of determining the ALP of the AMP expenses by comparing the expenses incurred by the Assessee with comparable companies. In view of the above conclusions, the other aspects whether the comparable companies chosen by the TPO are in fact compar ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
