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TMI Blog2018 (12) TMI 2006X X X X Extracts X X X X X X X X Extracts X X X X ..... 580 - DELHI HIGH COURT ] we hold that direct marketing and sales related expenses or discounts/concessions would not form part of AMP expenses. Admittedly, TPO has considered the rebate and discount of 22.64 crores as part of AMP expenses which is to be excluded from AMP expenses as per the above decision of Hon ble Jurisdictional High Court. After excluding the same, the net AMP expenses work out to 24.14 crores the mark up of 9% as upheld by the DRP is applied, then the arm s length price of AMP would be worked out to 26,31,40,313/-. The grant received by the assessee from its AE is 27,23,46,104/-, which is more than the arm s length price of AMP expenses. Since the grant received by the assessee exceeded the arm s length price of AMP, n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the ITAT. The relevant findings of Their Lordships read as under :- "6. Mr. Ajay Vohra, learned Senior counsel for the Assessee, points out that the ITAT committed a factual error in recording that the Assessee is a distributor of various consumable durable products of its AE. He points out that the Assessee is in fact a manufacturer through other entities. Secondly, it is pointed out that at the time the ITAT passed the order, it did not have the benefit of order subsequently passed by this Court in Sony Ericsson Mobile Communications v. CIT (order dated 28th January 2016 in ITA 638 of 2015) and Daikin Air-conditioning India Pvt. Ltd. (order dated 27th July 2016 in ITA 269/2016) wherein this Court had emphasized that prior to commencin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hall be listed before the ITAT on 18th September, 2017 for directions. 12. The appeal is disposed of in the above terms." 3. The appeal has been fixed for hearing today for giving effect to the above order of Hon'ble Jurisdictional High Court. 4. At the time of hearing before us, Shri Ajay Vohra, learned Senior Advocate stated that the grant received by the assessee from its AE during the assessment year in question exceeded the net AMP expenses incurred by the assessee thereby obviating any TP adjustment on that score as proposed by the TPO. He furnished a chart giving details of grant received from AE and the AMP expenses excluding selling and distribution expenses. He submitted that the same chart was furnished before Hon'b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the incurring of AMP expenses is an international transaction or not is pending for consideration before the Hon'ble Apex Court and therefore, if the question whether the incurring of AMP expenses is an international transaction or not is to be decided, then the matter should be kept pending till the decision of Hon'ble Apex Court. However, he has no objection in adjudicating the matter on facts. The learned counsel for the assessee also agreed with the submission of the learned DR and stated that the present appeal of the assessee can be adjudicated on facts. 6. We have carefully considered the arguments of both the sides and perused the material placed before us. The TPO in the order passed u/s 92CA(3) of the Act proposed an adjustment o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consumer goods. Distribution and marketing exercise in case of tangibles requires transfer/sale of goods to third parties, be it sub distributors or retailers. The said transaction is in the nature of sale of goods for consideration. The marketing or selling expenses like trade discounts, volume discounts, etc. offered to sub-distributors or retailers are not in the nature and character of 'brand promotion'. They are not directly or immediately related to 'brand building' exercise, but have a live link and direct connect with marketing and increased volume of sales or turnover. The brand building connect is too remote and faint. To include and treat the direct marketing expenses like trade or volume discount of incentive as 'brand building ..... X X X X Extracts X X X X X X X X Extracts X X X X
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