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TMI Blog2023 (8) TMI 1272X X X X Extracts X X X X X X X X Extracts X X X X ..... r [hereinafter referred as the "AO"] 1 Dispute Resolution Panel [hereinafter referred as the "DRP"] / Transfer Pricing Officer [hereinafter referred as the "TPO"] are bad in law and void ab-initio. 2. That on facts and in law the TPO/DRP erred in not appreciating that in absence of a "transaction" as envisaged under section 92F of the Act between appellant and its AE for brand promotion or for establishing marketing intangible, the TPO had no jurisdiction to propose an adjustment on account AMP expenses. 3. That the Transfer Pricing adjustment of Rs 23,03,65,898/- on account of Advertisement, Marketing and Sales Promotion (AMP) expenses being the aggregate of: (i) Protective Adjustment Rs 11,18,03,968/- (ii) Substantive Adjustment R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant has failed to furnish any material to demonstrate that it enjoyed economic ownership of brand. (ix) Appellant has failed to show that for excessive AMP expenditure it was compensated by the AE through a set-off. (x) Margins earned by the appellant (applying TNMM) is not significantly more than the margins of the comparable companies. 5. Without prejudice, that on facts and in law the AO/TPO/DRP erred in not appreciating that the alleged transactions of AMP were "closely linked" with the main activity carried on by the appellant and hence it cannot be segregated and bench marked on a stand-alone basis. 5.1 That on facts and in law the AOITPO/DRP erred in holding that there is no suitable comparable available for benchmarking t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) Not excluding rental income of Rs 8,82,0001- from the Schedule BP (when the said income was already included in Schedule HP). (c) Making a disallowance on account of delay on deposit of PF of Rs 6,81,568/- and ESI of Rs 15,042/- without appreciating that PF/ESI were deposited by the appellant before due date of filling of ROI. (d) Erroneously charging interest u/s 115P when there was no delay in deposit of Dividend Distribution Tax. (e) Erroneously starting computation of total income with a figure of Rs. 79,63,45,588/- when the correct total income determined by CPC Bangalore in intimation u/s 143(1) dated 30- 03-2019 was Rs. 78,80,79,580/-. (f) Inadvertently allowing deductions under Chapter VI at a figure of Rs. 4,50,000/- when ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es for which it should have been suitably compensated by the associated enterprise to the extent of excessive advertisement, marketing and promotion expenditure incurred vis-a-vis comparable companies. Details of AMP expenses noted by TPO are as under :- Particulars Amount (Rs.) Advertisement & Promotion 1,30,34,442 Incentives Paid 8,26,57,188 Total 9,56,91,630 After holding that there exist a transaction for AMP Brand Promotion, TPO proposed an adjustment to total income as under :- (i) Protective Adjustment applying Bright Line Test (BLT) as under :- Particulars Amount (Rs.) Value of Gross Sales 138,95,55,834 AMP/Sales of the Comparable 0.39% Amount that represents Bright Line 54,54,368 Expenditure on AMP by assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her there exists a "transaction" for brand promotion in the instant case is now settled by appellate orders passed in case of assessee for earlier assessment years. Reference in this regard is invited to the decision of ITAT in for AY 2009-10 reported in 52 ITR(T) 83(Del). ITAT after considering the facts of the case has held that in absence of a "transaction" for brand promotion between assessee and its AE, no TP adjustment for alleged AMP expenses can be made. ITAT in AY 2009-10 has held as under :- "Considering the material facts like the absence of an agreement, arrangement or understanding between the appellant and ifs associated enterprise for sharing the advertisement, marketing and promotion expenses or for incurring the adverti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oth the sides and perusing the records, we find that this issue is squarely covered in favour of the assessee by the decision of Hon'ble jurisdictional High Court in the case of Cheminvest Ltd. vs. CIT - (2015) 378 ITR 33 (Delhi) and CIT vs. Holcim India (P) Ltd. in ITA No.486/2014. Accordingly, this issue is decided in favour of the assessee.
10. Apropos Ground No.10 : In this ground, assessee has pointed out various errors in the assessment order. We find that in the interest of justice, this issue needs to be remitted to the file of AO to decide as per law. We order accordingly.
9. In the result, assessee's appeal stands partly allowed as above.
Order pronounced in the open court on this 24th day of August, 2022. X X X X Extracts X X X X X X X X Extracts X X X X
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