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TMI Blog2023 (3) TMI 1022X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessment Years 2014-15 2015-16 respectively against the assessment order dated 30/10/2018 31/07/2019 passed by the DCIT, Circle-24 (2), New Delhi u/s 143(3) r/w Section 144C of Income tax Act, 1961,( the Act for short). 2. The assessee has raised the following substantive grounds of appeal:- 1. That the assessing officer erred on facts and in law in completing the assessment under section 144C read with section143(3) of the Income- tax Act, 1961 ( the Act ) at an income of Rs. 25,47,45,430 as against the loss of Rs 33,50,58,004 returned by the appellant. 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 making transfer pricing adjustment of Rs. 58,98,03,434 in relation to the advertisement, marketing and sales promotion expenses (hereinafter referred to as the AMP expenses ) incurred by the appellant. 4. That the DRP/TPO erred on facts and in law in not appreciating that the AMP expenses, etc., unilaterally incurred by the appellant in India could not be charac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... say in the decisions regarding incurring of advertisement in India without appreciating that such memorandum provides for advertisement and promotion of appellant s own products in India. 11. That the DRP/TPO erred on facts and in law in not appreciating that the only Transfer Pricing adjustment permitted by Chapter X of the Act. was in respect of the difference between the arm s length price (ALP) and the contract or declared price, but the said provision could not be invoked to determine the quantum / extent of business expenditure. 12. That the DRP/TPO erred on facts and in law in not appreciating that by virtue of long term right to use the Suzuki brand in India, the appellant has gained economic ownership of the said brand. 13. 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. 14. That the TPO erred on facts and in law in holding that the associated enterprise is benefiting from the AMP expenses incurred by the appellant on account of royalty, sale of goods etc. not appreciating that such transacti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uki brand. ITA No. 8054/Del/2019 1. That the assessing officer erred on facts and in law in completing assessment under section 144C read with section 143(3) of the Income-tax Act, 1961 ( the Act ) at Rs 26,24,95,900 as against returned loss of Rs 59,54,13,072 2. Thatthe assessing officer erred on facts and in law in erroneously considering the returned loss of the appellant at Rs 33,50,58,004 as against the correct returned loss of Rs 59,54,13,072 for computing the total income of the appellant. 3. Thaton the facts and circumstances of the case and in law, the impugned assessment order dated 31.07.2019 was passed beyond the limitation provided under section 153(1) of the Income Tax Act, 1961, is barred by limitation and therefore, is liable to be quashed 4. That the assessing officer erred on facts and in law in making transfer pricing adjustment of Rs. 59,73,53,904 in relation to the advertisement, marketing and sales promotion expenses (hereinafter referred to as the AMP expenses ) incurred by the appellant. 5. That the TPO/DRP erred on facts and in law in holding that there exists an international transaction of incurring AMP expenses alle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpenditure incurred by it. 13. That DRP erred on facts and in law in not appreciating that the Transfer Pricing adjustment made by the TPO in the present case was a mere quantitative adjustment, on the footing that the appellant had incurred excessive amount of AMP expenditure and consequently that such Transfer Pricing adjustment was not at all permitted or authorized by Chapter X of the Act. 14. The TPO/DRP erred on facts and in law in not appreciating that the advertisement and marketing expenses were incurred by the appellant wholly and exclusively for purposes of its business and not on behalf of or for the benefit of the AE; any benefit to the AE being only incidental. 15. The assessing officer erred on facts and in law in applying Bright Line Test not appreciating that use of bright line test for the purpose of undertaking benchmarking analysis has been jettisoned by the Hon ble Delhi High Court in the case of Sony Ericsson Mobile Communications Pvt Ltd 374 ITR 118. 16. That the TPO/DRP erred on facts and in law in not following the decision of the Hon ble Tribunal in the appellant s own case for AY 2010-11 on the basis that the Revenue is in the proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 119,96,95,353 Expenditure in excess of bright line 77,92,61,713 Reimbursement that should have been received along with a mark up of 20.72% for providing services 94,07,24,740 Reimbursement received by the assessee 22,87,65,000 Adjustment 71,19,59,740 4. The DRP vide order dated 17/09/2018, upheld the adjustment made by the TPO and directed the TPO to exclude one Company i.e. Atul Auto Ltd. from the set off comparables for the purpose of applying Bright Line Test (BLT) and further directed the TPO to exclude four comparables i.e. M/s Husys Consulting, M/s HSCC India Ltd., M/s BVG India Ltd., M/s Just Dial Ltd, from the set of comparables selected by the TPO for computing the operating margins for the purpose of calculating the adjustment. 5. In compliance of the directions of the DRP, the TPO computed the average AMP/sales of the comparables Companies at 3.264% and the mark up at 9.48% and made an adjustment of Rs. 58,98,03,434/- on account of AMP Expenses, accordingly the assessment order came to be passed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f AMP Expenditure for the Assessment Year 2013-14 was also been deleted by the Co-ordinate Bench of the Tribunal in ITA No. 7142/Del/2017 by following order of the Tribunal in Assessee s own case for Assessment Year 2010-11 made in ITA No. 476/Del/2015 (supra). 8. In view of the above discussions, by following the orders of the Tribunal in Assessee s own case for the Assessment Years 2010-11 2013-14 and by following the principle of consistency we are of the considered opinion that the adjustment made by the TPO/DRP/A.O by applying BLT on account of AMP expenses in the absence of international transactions between the tax payer and the A.E is not sustainable in the eyes of law. Hence, the same is order to be deleted. 9. In the result, the appeal filed by the assessee is allowed. ITA No. 8057/Del/2019 (A.Y 2015-16) 10. Even in the present appeal, the assessee has raised similar grounds which was raised in ITA No. 8176/Del/2018 since there is no change of circumstances in the present Assessment Year, and for the discussion made in the ITA No. 8167/Del/2018, by following the orders made in ITA No. 476/Del/2015 for Assessment Year 2010-11 and ITA No. 7142/Del/2017 for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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