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TMI Blog2023 (12) TMI 721X X X X Extracts X X X X X X X X Extracts X X X X ..... ng to the TPO, the AMP expenditure incurred by the respondent/assessee resulted in increased sales in India for products, albeit developed by the AE but sold by the respondent/assessee. The fact that the comparables chosen by the TPO had a net margin lower than that registered by the respondent/assessee would persuade us to hold that no upward adjustment concerning AMP expenses ought to have been made. Lastly, the application of the BLT tool, by the TPO, in determining ALP, injected the order issued by him, which was incidentally approved by the DRP, with a legal error. [See Sony Ericsson Mobile Communications India case [ 2015 (3) TMI 580 - DELHI HIGH COURT] ]. We are not inclined to interfere with the impugned order passed by the Tribunal, as no substantial question of law arises for our consideration. Thus, for the foregoing reasons, we are not inclined to interfere with the impugned order passed by the Tribunal, as no substantial question of law arises for our consideration. - HON'BLE MR. JUSTICE RAJIV SHAKDHER AND HON'BLE MR. JUSTICE GIRISH KATHPALIA For the Appellant Through: Mr Zoheb Hossain, Senior Standing Counsel along with Mr Sanjeev Menon, S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ked up for scrutiny, and accordingly, notices under Sections 143(2) and 142(1) of the Act were issued. 4.2 In the course of assessment proceedings, a reference was made to the TPO, under Section 92CA of the Act, for the determination of ALP. 4.3 The TPO issued a notice, dated 22.09.2010, calling upon the respondent/assessee to show cause as to why international transactions concerning reimbursement of advertisement expenses should not be benchmarked under the provisions of Section 92C of the Act. The thrust of the show cause notice was that the respondent/assessee, which was primarily engaged in the distribution of imported audio and visual products in the Indian market, was incurring AMP expenses on behalf of its AE. 4.4 As per the TPO, although the respondent/assessee had incurred Rs. 119,54,43,600/- towards brand promotion and developing marketing intangibles for its AE, it was reimbursed only Rs. 72,63,324/-. 4.5 In response to the notice, the respondent/assessee filed a reply dated 11.10.2010. 4.6 Ultimately, the TPO passed an order, dated 25.10.2010, whereby, Rs. 65,34,38,272/- was added to the taxable income of respondent/assessee, having regard to the amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would raise all pleas and contentions when the appeals are taken up for hearing. It will be open to the Revenue to rely upon judgments and ratios which they feel are in their favour. Counsel for the assessee states that he would have no objection but would contest the contention of the Revenue on merits. 8.2 Accordingly, the order impugned in the said cross-appeals was set aside, and the matter was remitted to the Tribunal for fresh decision, bearing in mind the directions contained in Sony Ericsson Mobile Communications India Pvt. Ltd. v. CIT-III, (2015) 55 taxmann.com 240 (Delhi). 9. On remand, the Tribunal allowed the appeal of the respondent/assessee. 10. Being aggrieved, the appellant/revenue has preferred the instant appeal. Submissions by counsels: 11. Arguments on behalf of the appellant/revenue were addressed by Mr Sanjeev Menon, whereas, submissions on behalf of the respondent/assessee were advanced by Mr Nageshwar Rao. 12. We may note that although an opportunity was granted to both parties to file written submissions, the appellant/revenue has not availed of the opportunity. 13. The submissions advanced by Mr Sanjeev Menon can be, broa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the import of goods amounted to Rs. 1445 crores. It was stated that these goods were sold in India for a gross value of Rs. 2340 crores, resulting in a net margin of 3.29% after adjusting AMP expenses, amounting to Rs. 119,54,43,600/-. As compared to the net margin earned by the respondent/assessee, the comparable companies/entities selected by the TPO, during the same period, earned a margin of 2.09%. (iii) The TPO had rejected the respondent s/assessee s contention that he ought to adopt the aggregated benchmark analysis. The TPO, instead, applied the BLT to determine ALP, contrary to the judgment of this court rendered in the Sony Ericsson Mobile Communications India case. (iv) The TPO s findings are contradictory in as much as, on the one hand, he notes that the money expended on AMP has resulted in increasing the sales of the respondent/assessee in India, while on the other, he concludes that the increase in sales has benefited the AE. The TPO, contrary to business realities, observed that the high AMP spend had resulted in lowering the respondent s/assessee s profitability. (v) Erroneously, the TPO rejected the respondent s/assessee s contentio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ense was, according to the Tribunal, received by the respondent/assessee in terms of higher profitability for the product sold. 17.2 Furthermore, even according to the TPO, the AMP expenditure incurred by the respondent/assessee resulted in increased sales in India for products, albeit developed by the AE but sold by the respondent/assessee. 18. The fact that the comparables chosen by the TPO had a net margin lower than that registered by the respondent/assessee would persuade us to hold that no upward adjustment concerning AMP expenses ought to have been made. 19. Lastly, the application of the BLT tool, by the TPO, in determining ALP, injected the order issued by him, which was incidentally approved by the DRP, with a legal error. [See Sony Ericsson Mobile Communications India case]. Conclusion : 20. Thus, for the foregoing reasons, we are not inclined to interfere with the impugned order passed by the Tribunal, as no substantial question of law arises for our consideration. 21. The appeal is disposed of in the aforesaid terms. 22. The application for condonation of delay in re-filing is rendered infructuous. 22.1 The application is, accordingly, closed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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