AMWAY INDIA ENTERPRISES PRIVATE LIMITED,NEW DELHI V. AO-NFAC, NATIONAL FACELESS ASSESSMENT CENTRE

ITA 4181/DEL/2024

AI Insights

The case involves Amway India Enterprises Private Limited, which appealed against the final assessment order for the Assessment Year 2020-21, which included significant adjustments based on AMP expenses and disallowances under section 80G. The TPO had proposed AMP adjustments amounting to Rs. 1,31,72,21,192, which were upheld by the DRP and included in the final assessment by the AO. The Tribunal found that the inclusion of commission paid to distributors in AMP expenses was inconsistent with the treatment in previous years and not in line with the business model of direct selling employed by Amway. Additionally, the Tribunal allowed the deduction under section 80G for CSR expenses, distinguishing it from the disallowances made under section 37(1). The Tribunal's decision emphasized the principles of consistency and the specific provisions of the Income Tax Act regarding deductions for donations.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 126886 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-04-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I
• Assessment Year: 2020-2021
• Other Referred Cases: Radhasoami Satsang v. CIT, Maruti Suzuki India Ltd. Vs. CIT, Whirlpool of India Ltd. v. CIT (LTU), First American (India) Pvt. Ltd v. ACIT, Honda Motorcycle and Scooter India Pvt Ltd vs ACIT, Teradata India Pvt Ltd vs. DCIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DHARM VEER SINGH
• Assessee Lawyers: SUDESH GARG
• Keywords: Set aside; Business income; Revenue expenditure; Transfer pricing; International transaction; Business expenditure; Rule of consistency; Wholly owned subsidiary; Charitable institution; CHAPTER IV; Ineligible deduction; Dispute Resolution Penal; Grounds of appeal; Chapter VIA; Dismissed; Mechanical; Judgment; Commissioner; Disallowing; AMP; DRP order; Transfer; Disallowance of CSR expenses; Exempt; Deleted; Advertisement; Directions; Department; Status of AOP; AY 2010-11; AY 2011-12; Claim of deduction; Explanation; Services; Allowability; Distributor; Form 3
• Section: 143(3); 143(2); 143(1); 11; 13; 37; 37(1); 80G; 20

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘I’: NEW DELHI BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENT AND SHRI MANISH AGARWAL, ACCOUNTANT MEMBER ITA No.4181/Del/2024 (ASSESSMENT YEAR 2020-21) Amway India Enterprises Private Limited, Ground Floor, Elegance Tower, Plot No.8, Non Hierarchical Commercial, Jasola, Delhi-110025 PAN-AAACA5603Q Vs. AO-NFAC, National (Appellant) (Respondent) Assessee by Shri Sudesh Garg, Adv. Shri Prince Bansal, CA & Ms. Bhavya Garg, AR Department by Shri Dharm Veer Singh, CIT-DR Date of Hearing 10/03/2025 Date of Pronouncement 23/04/2025 O R D E R PER MANISH AGARWAL, AM: This is an appeal filed by the assessee against the final assessment order passed u/s 143(3) r.w.s. 144C(13) r.w.s. 144B of the Income Tax Act, 1961 (the Act in short) dated 30.07.2024 for Assessment Year 2020-21. 2 ITA No.4181/Del/2024 Amway India Enterprises Private Limited vs. AO-NFAC 2. Brief facts of the case are that the assessee is wholly owned subsidiary of M/s Amway Corporation and is engaged in the business of manufacturing and selling of consumer products under direct selling through Multi Level Marketing (MLM). Return for the year under appeal was filed on 31.03.2021 declaring total income at Rs.16,02,75,450/-. The case was taken up for scrutiny under CASS in terms of notice issued u/s 143(2) dated 29.06.2021. The AO observed that one of the reason for scrutiny was transfer price risk parameters, therefore, he referred the case of the assessee to the TPO for working out the transfer pricing adjustments. The TPO passed the order u/s 92CA(3) wherein TPO proposed AMP adjustments of Rs.1,31,72,21,192/- based on intensity test. The TPO has proposed Nil adjustment under BLT approach on protective basis. Thereafter, a draft assessment order was passed by AO on 29.09.2023 where the variations were proposed on account of AMP adjustment of Rs.1,31,72,21,192/- as proposed by TPO and further variation of Rs.50,00,000/- is proposed on account of disallowance of deduction claimed u/s 80G. Against such draft order, the assessee filed objections before the Hon’ble Dispute Resolution Penal (Hon’ble DRP). The Hon’ble DRP vide its impugned order dated 30.06.2024 has supported the order of the TPO and held that the AMP expenditure claimed by the assessee is international transaction and further observed that the assessee is not a mere distributor of the products of the AE, rather it is providing large number of marketing and technical services attached which had resulted into substantial value additions to the products of the AE and accordingly confirmed 3 ITA No.4181/Del/2024 Amway India Enterprises Private Limited vs. AO-NFAC the action of the TPO in making AMP adjustments. The Hon’ble DRP further uphold the disallowance of donation proposed by the AO in the draft assessment order u/s 80G of the Act. In the result, the objections raised by the assessee were dismissed by the DRP. 3. The AO after following the directions of the DRP has passed the final assessment order on 30.07.24 at a total income of Rs.1,52,70,53,512/- by making addition of Rs.1,31,72,21,192/- being the variation proposed by the TPO on account of AMP adjustments based on intensity test and further disallowance of Rs.50,00,000/- was made out of deduction claimed u/s 80G of the Act. Against this order, the assessee is in appeal before the tribunal where around 12 grounds of appeal were taken in the appeal memo filed in Form 36. 4. During the course of hearing, the assessee has filed detailed grounds of appeal and later filed concise grounds of appeal which are as under: “1. The Ld. DRP/AO/TPO has erred on facts and in law in by erroneously making an adjustment of Rs. 131,72,21,192/-on account of AMP adjustment without following settled transfer pricing law and procedure on the aforesaid issue and in gross contradiction of the consistently settled position even though facts and circumstances of the matter were indisputably identical. 2. The Ld. DRP/AO/TPO has erred on facts and in law in disallowing claim u/s 80G amounting to Rs. 37,50,000/- by erroneously interpretating that deduction u/s 80G is not permissible if the corresponding donation has been made for meeting CSR obligation. 3. The Ld. AO/DRP has erred on facts and in law in disallowing claim u/s 80G amounting to Rs. 12,50,000/- solely on 4 ITA No.4181/Del/2024 Amway India Enterprises Private Limited vs. AO-NFAC account of factually incorrect allegation that donation receipt was not provided by the appellant for claiming deduction u/s 80G even though the same was indisputably furnished during the course of assessment proceeding.” 5. In ground of appeal No. 1, the assessee has challenged the inclusion of commission paid to local distributors in AMP expenses for working out the adjustment of Rs. 1,31,72,21,192/- on account of AMP adjustments and not followed the settled history of the assessee of preceding assessment years. 6. During the course of hearing, the ld. AR of the assessee submitted that an addition of Rs. 1,31,72,21,192/- was made on account of AMP adjustments. Ld. AR submitted that to work out the AMP adjustment, the TPO had considered total AMP expenses of Rs. 503.68 crores which includes a sum of Rs. 439.08 crore paid to distributors as commission. The ld. AR stated that the assessee company is engaged in the manufacturing and selling of consumable products such as nutrition products, personal care products, beauty products and home care products through direct sellers where they are allowed to build their business through their own sales effort and by inviting others to become direct seller in the chain. It is submitted that, assessee is taking all key decisions and performing all significant functions with respect to its business and thus bears the entrepreneurial risk in India. All expenses including revenues earned by assessee, are entirely on its own account and not on behalf of any of its AE. 5 ITA No.4181/Del/2024 Amway India Enterprises Private Limited vs. AO-NFAC 7. While explaining the nature of commission paid, the ld.AR submitted that, assessee’s business model is a direct selling model, where assessee is direct selling entity and distributes and sells its products through a network of independent members through the direct selling channel (chain of people referred to as associates / supervisors / members / distributors), which is vastly different from a normal retail sale model. It was submitted by the assessee that 'Direct Selling' means, marketing, distribution and sale of goods or providing of services as a part of network of direct selling to the consumers. The ld.AR submits that, this generally occurs in the consumers' houses, at their workplace or through demonstration of such goods and services at a mutually convenient venue. It is submitted that under this model, the associates / supervisors / distributors are paid incentives / commissions to remunerate them for bringing in new customers. The independent sales personnel sell products directly to end customers without the involvement of any retail chains. 8. The ld. AR submitted that the inclusion of commission paid to such direct sellers i.e. the distributors in the instant case in the AMP expenses is contrary to the approach taken by the revenue in assessee’s own case in preceding years where under the same business module, while making the AMP adjustments such commission was not treated as part of the gross value of AMP expenses. He further submitted that only in AY 2015-16, AMP adjustments were made by the TPO by treating the commission paid 6 ITA No.4181/Del/2024 Amway India Enterprises Private Limited vs. AO-NFAC to local distributors as non-routine expenses and is an international transaction. The DRP or the Hon’ble ITAT had deleted all such additions. In the written submission filed before us, the ld. AR has given a table containing the stand taken by the revenue in the assessments completed from AY 2009-10 to 2019-20 wherein the nature of AMP adjustments made, if any, and the orders of appellate authorities including DRP deleting such adjustment is explained. It was further submitted by ld. AR that this fact was submitted before the TPO as well as before the Hon’ble DRP who have failed to dealt with the same while passing the impugned order. The table is as under: Assessment Year Adjustments/Additions on account of AMP 2009-10 to 2012- 13 No adjustments were made even though the assessee had same business model and the facts and circumstances of the matter were the same. (Paper Book Page No.752 to 759) 2013-14 Adjustment of Rs.512,47,66,707/- was proposed in Show cause notice (‘SCN’) dated 21.10.2016 (paper Book Page No.760 to 763) on account of AMP adjustment but after considering the reply of the assessee and the facts and circumstances of the matter which are identical to the facts and circumstances for the year under consideration no addition was made in order passed by TPO .(Paper Book Page No.764 to 784) 2014-15 -----do-----(Paper Book Page No.785 to 812) 2015-16 Adjustment of Rs. 216,39,19,833/- was made on protective basis and adjustment of Rs.226,12,38,588/-was made on substantive basis by the TPO. (Paper Book Page No. 813 to 868) Hon'ble DRP considered the entire facts and circumstances of the matter in exhaustive details and deleted both the substantive and the protective additions. (Paper Book Page No. 869 to 918) The TPO passed the order giving effect to the order of Hon'ble DRP and in the final order passed by the TPO no adjustment on account of AMP was made. (Paper Book Page No. 919 to 922) 7 ITA No.4181/Del/2024 Amway India Enterprises Private Limited vs. AO-NFAC 2016-17 In the aforesaid order the TPO himself did not treat commission amounting to Rs. 427.07 crores to ABOs as AMP expenditure. (Paper Book Page No. 923 to 963) Adjustment of Rs. 68,74,84,700/- only was made by the TPO taking all other AMP expenses to be non-routine. The approach of the TPO was on account of the incorrect understanding of the order of the Hon'ble DRP for the preceding AY 2015-16. Hon'ble DRP in the proceeding for the AY 2016-17 did not deal with the fact available on record and confirmed the addition made by the TPO/AO. The Hon'ble ITAT vide order dated 30.03.2022 deleted the addition made by the TPO. (Paper Book Page No. 964 to 993). 2017-18 In the aforesaid order the TPO himself did not treat commission amounting to Rs. 403.69 crores to ABOs as AMP expenditure. (Paper Book Page No. 433 to 487) Only adjustment of Rs.57,58,87,200/- on account of AMP was made by the TPO by treating them to be non-routine. The approach of the TPO was on account of the incorrect understanding of the order of the Hon'ble DRP for the preceding AY 2015-16 and mechanically following his own order for AY 2016-17. The appeal against the aforesaid order is pending before the Hon'ble CIT(A). 2018-19 In the aforesaid order the TPO himself did not treat commission amounting to Rs. 457.07 crores to ABOs as AMP expenditure. (Paper Book Page No. 392 to 432) Only adjustment of Rs. 17,85,00,000/- on account of AMP was made by the TPO by treating them to be non-routine. The approach of the TPO was on account of the incorrect understanding of the order of the Hon'ble DRP for the preceding AY 2015-16 and mechanically following his own order for AY 2016-17 and AY 2017-18. The appeal is pending before the Hon’ble CIT(A). 2019-20 No TPO/assessment proceedings were carried out in the case of the assessee 9. It was the submission of the ld. AR that if the commission expenses of Rs. 439.09 crore is not counted as part of total AMP expenses, there is no requirement of making adjustments even if AMP 8 ITA No.4181/Del/2024 Amway India Enterprises Private Limited vs. AO-NFAC intensity adjustments is applied. He further submitted that only one occasion in AY 2015-16, the TPO had treated the commission expenses paid to direct sales distributors as AMP expense for the purpose of making adjustments and such order was deleted both on substantive and protective basis by the Hon’ble DRP after making a detailed analysis of the issue and in the final order passed by the TPO, giving effect to the direction of the DRP, no adjustment on account of AMP was made. He thus submitted that following the principle of consistency and looking to the fact that the business model of the assessee is consistent since beginning and there is no change whatsoever therefore, the action of the TPO and Hon’ble DRP in considering the commission paid to distributors as a part of AMP expense of non-routine nature to work out the AMP adjustment is contradictory to assessee’s own settled history. He further submitted that in Assessment Year 2016-17, the Co-ordinate Bench of ITAT in asessee’s own case has deleted the TP adjustment made on AMP expenses. He thus prayed to delete the addition made in this regard. For the Rule of principle of consistency, the Ld. AR relied upon the following judicial pronouncement: Radhasoami Satsang v. CIT [1992] 60 Taxman 248 (SC) 13. We are aware of the fact that strictly speaking res judicata does not apply to income tax proceedings. Again, each assessment year being a unit, what is decided in one year may not apply in the following year but where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year. 14. On these reasonings in the absence of any material change justifying the revenue to take a different view of the matter-and if there was no change it was in support of the assessee-we do not think the question should have 9 ITA No.4181/Del/2024 Amway India Enterprises Private Limited vs. AO-NFAC been reopened and contrary to what had been decided by the Commissioner in the earlier proceedings, a different and contradictory stand should have been taken. We are, therefore, of the view that these appeals should be allowed and the question should be answered in the affirmative, namely, that the Tribunal was justified in holding that the income derived by the Radhasoami Satsang was entitled to exemption under sections 11 and 12. (Emphasis Supplied). [2004] 135 Taxman 34 (Delhi): Lovely Bal Shiksha Parishad 7. In this regard we may usefully refer to the decision of the Apex Court in Radhasoami Satsang v. CIT [1992] 193 ITR 3211, wherein their Lordships of the Supreme Court had observed that though strictly speaking res judicata does not apply to income-tax proceedings but where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year. These observations squarely apply to the facts in hand. [2018] 96 taxmann.com 157 (Bombay): Quest Investment Advisors (P.) Ltd Section 37(1) of the Income-tax Act, 1961 Business expenditure - Allowability of (Principle of consistency) - Assessment year 2008-09- Whether since principle accepted and followed by revenue for 10 earlier years and for 4 subsequent years to subject assessment year was that entire expenditure of assessee was to be allowed against professional income and no expenditure was to be allocated to capital gain, in absence of any change in circumstances, Tribunal was justified in allowing assessee's claim in relevant assessment years also, following principle of consistency Held, yes [Para 9) [In favour of assessee) [2016] 69 taxmann.com 221 (Bombay): Madhukar C. Ashar Section 4 of the Income-tax Act, 1961 Association of persons Assessable as (Assessment of) Assessment year 2011-12 Since assessment year 2005-06, assessee was filing its return of income in status of AOP However, tax payable on income earned by AOP was allocated amongst various members of AOP and it was accepted by revenue However, as return of income for assessment year 2011-12 had been filed electronically, earlier consistent practice of profit of AOP being allocated to its members could not be brought to notice of Assessing Officer - Assessing Officer issued intimation under section 143(1) determining tax liability of AOP - On revision, Commissioner upheld intimation under section 143(1) holding that assessee was liable to pay tax as an AOP as shares of members of AOP were indeterminate - Whether though principle of res judicata would not apply to tax matters, yet there being no change either in facts or in law, views expressed in one year 10 ITA No.4181/Del/2024 Amway India Enterprises Private Limited vs. AO-NFAC are binding for subsequent years and, therefore, if impugned order wanted to depart from consistent view taken earlier, it must so justify Held, yes [Para 6][Matter remanded/In favour of assessee. [2016] 71 taxmann.com 30 (Delhi): JCB India Ltd. \"The Revenue has not been able to persuade the court that an error has been committed in any of the previous assessment years where the assessee's explanation was accepted and the expenditure on development charges was treated as revenue expenditure. In the facts and circumstances of the case, the court is additionally persuaded to adopt the rule of consistency as explained in Radhasoami Satsang v. CIT [1992] 193 ITR 321/60 Taxman 248 (SC) and decline the plea of the Revenue to remand the matter to the Assessing Officer for a fresh determination\". [2010] 326 ITR 640 (Punjab & Haryana): Haryana State Industrial Development Corporation Ltd. \"3. Having heard learned counsel on the aforesaid issue, we find that the Tribunal has taken a correct view by applying the principle of consistency. It has rightly placed reliance on the judgment of the hon'ble Supreme Court rendered in the case of Radhasoami Satsang v. CIT [1992] 193 ITR 321 (SC). The hon'ble the Supreme Court in that case had negated the argument regarding application of principles concerning res judicata to the income-tax proceedings. It was observed that where a fundamental aspect permeating through different assessment years has been found as a fact one way or the other and the parties had allowed that position to be sustained by not challenging that order then it would not at all be appropriate to permit that position to be changed in a subsequent year. The aforesaid view has been widely accepted, followed and applied by the hon'ble Supreme Court in various judgments including the judgment rendered in the case of Municipal Corporation of City of Thane v. Vidyut Metallics Ltd. [2007] 8 SCC 688.\" [2019] 112 taxmann.com 66 (Delhi Trib.): NIIT Ltd. \"7.1 It is well settled Law that rule of consistency do apply to the income tax proceedings. Therefore, the A.O. should not have taken out a different view in the assessment year under appeal, when similar claim of assessee have been allowed as revenue expenditure in earlier years. Considering the totality of the facts and circumstances of the case and nature of infrastructure facilities provided to the assessee on lease rent, it is clear that the same have been provided through Agreement for business purpose of the assessee. Since assessee used these items wholly and exclusively for the purpose of business and was not the owner of the same, therefore, assessee rightly claimed the same as revenue expenditure and rightly claimed the deduction of the same. It is also well settled Law that the liability under the Act is governed by the provisions of the Act and is not depending on the treatment followed for the same in the 11 ITA No.4181/Del/2024 Amway India Enterprises Private Limited vs. AO-NFAC books of account. It is also well settled that whether the assessee was entitled to a particular deduction or not, would depend upon the provisions of Law relating thereto, and not on the view, which the assessee might take of his right, nor could the existence or absence of entries in the books of account by decisive or conclusive in the matter. In view of the above discussion, we do not find any justification to sustain the addition. We, accordingly, set aside the Orders of the authorities below and delete the entire addition.\" 10. On the other hand, the ld. CIT-DR supports the order of the lower authorities and requested for the confirmation of the adjustments so made on account of AMP expenses to the total income of the assessee as the commission paid is ultimately improve the brand image of the products of AE. 11. We have heard the rival submissions and perused the material available on record. In the instant case, from the perusal of the chart given by the assessee, it is seen that in preceding assessment years except in one year i.e. AY 2015-16 either no adjustment was made on account of AMP expense or while making the adjustment on account of AMP expense the commission paid to distributors was not considered as part of the AMP expenses. It is for the first time, the TPO and Hon’ble DRP has uphold the inclusion of commission paid to the local distributors as part of AMP expenses for making adjustments. The Hon’ble DRP while deleting the proposed adjustment by TPO in AMP adjustments in AY 2015-16 where such commission paid to distributors on the sales achieved by them was excluded for the purpose of AMP adjustment by observing in para 2.3.9.1 as under: “2.3.9.1 In this view of the matter, on consideration of the submissions of the assessee and observations of the TPO himself/herself in preceding 12 ITA No.4181/Del/2024 Amway India Enterprises Private Limited vs. AO-NFAC assessment years, we are of the considered view that assessee being engaged in the direct sale model of business wherein commission and incentive/retail margin is paid to the distributors, only linked to sales, in the business model of the assessee, and similar cases, commission and incentives paid to distributors can at no stretch of imagination be considered as advertisement, marketing and promotion expenses. If that be so, in any business of distribution or trading the expenses incurred for creating distributors/dealers, and for enhancing distributor/dealer base or for incentivizing the distributor/dealers for increasing sales in the form of payment of commission/incentives or for rewarding good distributor/dealers would constitute AMP expenses. In view of this conclusion of ours, the TPO's conclusion in this year that the commission agents are actually the marketing agents who are responsible for selling as well as popularizing the products of the brand \"AMWAY\", and that commission \"are earned through firstly, increasing sales and secondly, through introducing new commission agents\" and that \"since a portion of this commission is in fact for introduction of new commission agents, it can be seen that a part of this commission is actually delinked from direct sales and contributing instead to brand awareness and market penetration only is not appropriate in the business model of the assessee, and therefore such conclusion of the TPO cannot be approved. As such, in our considered view the expenses on account of commission paid for creating distributors/dealers, and for enhancing distributor/dealer base or for incentivizing the distributor/dealers for increasing sales, and expenses for similar purposes booked under 'seminars', 'literature, postage and others', 'distributor training', cannot be considered as AMP expenses which could be benchmarked as an international transaction.” 12. It is further seen that the assessee in the business of selling of consumer products through MLM where persons were appointed as direct sellers who create a chain below them where they further appoint direct sellers and all the individuals coming in such chain were benefited by way of commission on the sales achieved through them. This is a unique kind of marketing technique where payment 13 ITA No.4181/Del/2024 Amway India Enterprises Private Limited vs. AO-NFAC of commission is fully dependent upon the sales achieved and has nothing to do with the product building exercise. 13. With regard to the application of bright line test (though no addition is made), the Hon’ble Delhi High Court in the case of Maruti Suzuki India Ltd. Vs. CIT 381 ITR 117 (Delhi) and further the Hon’ble Delhi High Court in the case of CIT (LTU) v. Whirlpool of India Ltd., 381 ITR 154 held that bright line test is not a valid method for determination of existence of international transaction or determination of arm’s length price. Therefore, in the instant case, even otherwise though no addition has been made of bright line test on protective basis, however, by following the judgements of Hon’ble Jurisdictional High Court in above cases, we hold that bright line test cannot be applied. 14. In the case of the assessee itself in Assessment Year 2016-17, the TP Adjustment were made on account of AMP expenses (though commission was not included in the same) where the Co-ordinate Bench of the ITAT, Delhi in ITA No.804/Del/2021 vide order dated 30.03.2022 by following the rule of consistency has deleted the TP Adjustment made by AO by observing in para 18 of the order as under: “18. From the various details furnished by the assessee in the paper book, we find no adjustment on account of AMP was made for AY 2009-10 although the assessee had same business model and the facts and circumstances of the matter are the same. The copy of the order of the TPO for AY 2009-10 is placed at page 530 of the paper book. Similarly, the perusal of the TPO order for AY 2010-11, copy of which is placed at paper book page 528, shows that no such addition on account of AMP expenses 14 ITA No.4181/Del/2024 Amway India Enterprises Private Limited vs. AO-NFAC has been made. Similar is the case for AY 2011-12 and 2012-13 and the orders of the TPO are placed at pages 524 to 527 of the paper book. Similarly, perusal of the paper book page 532 shows that for AY 2013-14, an adjustment of Rs.512,47,66,707/- was proposed in the show cause notice dated 21.10.2016 on account of AMP adjustment, but, after considering the reply of the assessee and the facts and circumstances of the matter which are identical to the facts and circumstances for the year under consideration, no addition was made in the order passed by the TPO, copy of which is placed at pages 536 to 556 of the paper book. Similarly, for AY 2014-15 also no adjustment was made after considering the submissions of the assessee. We find from the various details furnished by the assessee including the TPO appeal effect order for AY 2015-16, copy of which is placed at page 497 of the paper book, that adjustment of Rs.216,39,19,833/- was made on protective basis and adjustment of Rs.226,12,38,588/- was made on substantive basis by the TPO, copy of which is placed at page 279 of the paper book. We find, after the various submissions made by the assessee, the DRP considered the entire facts and circumstances of the matter in exhaustive details and deleted both substantive and protective addition. Copy of the DRP order is placed at page 431 of the paper book. The TPO has already passed the order giving effect to the order of the DRP and, in the final order passed by the TPO, no adjustment on account of AMP has been made, the details of which have already been reproduced in the preceding paragraph. Therefore, in view of the rule of consistency from AY 2009-10 to 2015-16 and considering the fact that the assessee had the same business model and the facts and circumstances of the matter for the impugned assessment year are the same, we set aside the order of the AO/TPO/DRP and direct the AO/TPO to delete the addition.” 15. In view of the fact that the commission paid was not AMP expenses and further looking to the past history of the assessee and by following the principle of the consistency and by respectfully following the aforesaid judgements of various Courts on this principle, we hold that AMP expenses including the amount of commission paid to distributors at Rs. 439.08 crores are not international transaction. Accordingly, we set aside the order of 15 ITA No.4181/Del/2024 Amway India Enterprises Private Limited vs. AO-NFAC TPO/AO/DRP and delete the addition made at Rs.131,72,21,192/- made by TPO/AO toward AMP adjustment. The Ground of appeal No.1 of the assessee is allowed. 16. Next ground of appeal No.2, is in relation to the deduction u/s 80G of Rs. 37,50,000/- when the said sum was not allowed being part of CSR expenses. 17. Before us ld. AR submitted that while making the disallowance, the AO has ignored the provisions of section 80G(2)(a)(iiihk) and 80G(2)(a)(iiihl) which demonstrate that wherever the parliament wanted to deny the benefit u/s 80G to CSR expenses, the same had been specifically proved u/s 80G of the Act. Ld. AR further submitted that as per Explanation 2 of section 37(1) of the Act, CSR expenses shall not be deemed to be expenditure incurred by the assessee for the purpose of business. However, no such provision is made in section 80G for disallowance of claim of deduction u/s 80G. The ld. AR finally submitted that denial of deduction u/s 80G of the amount incurred for CSR expenses tantamount to double taxation. He therefore, requested to allow the deduction u/s 80G on such donation. 18. On the other hand, ld. CIT-DR supported the order of the lower authorities and argued that the intention of the legislature was never to allow deduction for CSR expenditure as deduction u/s 80G and if the same is allowed as deduction u/s 80G, the entire purpose of excluding the CSR expenses from the allowable expenditure u/s 37(1) 16 ITA No.4181/Del/2024 Amway India Enterprises Private Limited vs. AO-NFAC would be defeated. He further submitted that donation is voluntary and CSR expenses is mandatory obligation on the part of het entity and therefore not voluntary in nature. He thus prayed for the confirmation of the disallowance of deduction u/s 80G as made by the AO. 19. We have heard the rival submissions. The dispute is whether the same can be allowed as deduction u/s 80G when it is part of CSR expenses. Section 80G(1) provides that in computing the total income of the assessee, there shall be deducted, in accordance with the provisions of this section, such sum paid by the assessee in the previous year as a donation. Further, section 80G(2) provide a list where deduction is allowed to the assessee for making donations. Section 80G falls in Chapter VIA of the Act, which comes after the computation of gross total income under various heads of income which interalia includes the disallowance of CSR expenses as per Explanation 2 of section 37(1). Thus, both section 37(1) and section 80G has different field to play. Further according to section 80G(2)(a)(iiihk) and section 80G(2)(a)(iiihl), any contributions made towards Swacha Bharat Kosh and Clean Ganga Fund, is not allowable as deduction under section 80G if the same is claimed as CSR expenses. However, section 80G(2)(a) provides deduction for ‘any sums paid by the assessee in the previous year as donations’, thus except the donations paid to the Swachh Bharat Kosh and Clean Ganga Fund, all other donation made to the eligible institutions / funds as per section80G(2) are eligible for deduction u/s 80G of the 17 ITA No.4181/Del/2024 Amway India Enterprises Private Limited vs. AO-NFAC Act. The coordinate bench of ITAT Bangalore in case of First American (India) Pvt. Ltd v. ACIT in ITA No.1762/Bang/2019 vide its order dt. 29.04.2020 has allowed the deduction under Section 80G by making following observations: “15. In our view, expenditure incurred under section 30 to 36 are claimed while computing income under the head, 'Income form Business and Profession\", whereas monies spent under section 80G are claimed while computing \"Total Taxable income\" in the hands of assessee. The point of claim under these provisions are different. 16. Further, intention of legislature is very clear and unambiguous, since expenditure incurred under section 30 to 36 are excluded from Explanation 2 to section 37(1) of the Act, they are specifically excluded in clarification issued. There is no restriction on an expenditure being claimed under above sections to be exempt, as long as it satisfies necessary conditions under section 30 to 36 of the Act, for computing income under the head, \"Income from Business and Profession\". 17. For claiming benefit under section 80G, deductions are considered at the stage of computing \"Total taxable income\". Even if any payments under section 80G forms part of CSR payments (keeping in mind ineligible deduction expressly provided u/s.80G), the same would already stand excluded while computing, Income under the head, \"Income form Business and Profession\". The effect of such disallowance would lead to increase in Business income. Thereafter benefit accruing to assessee under Chapter VIA for computing \"Total Taxable Income\" cannot be denied to assessee, subject to fulfilment of necessary conditions therein. 18. We therefore do not agree with arguments advanced by Ld. Sr. DR. 19. In present facts of case, Ld.AR submitted that all payments forming part of CSR does not form part of profit and loss account for computing Income under the head, \"Income from Business and Profession\". It has been submitted that some payments forming part of CSR were claimed as deduction under section 80G of the Act, for computing \"Total taxable income\", which has been disallowed by authorities below. In our view, assessee cannot be denied the benefit of claim under Chapter VI A, which is considered for computing 'Total Taxable Income\". If assessee is denied this benefit, merely because such payment forms part of CSR, would lead to double disallowance, which is not the intention of Legislature. 18 ITA No.4181/Del/2024 Amway India Enterprises Private Limited vs. AO-NFAC 20. On the basis of above discussion, in our view, authorities below have erred in denying claim of assessee under section 80G of the Act. We also note that authorities below have not verified nature of payments qualifying exemption under section 80G of the Act and quantum of eligibility as per section 80G(1) of the Act.” 20. The coordinate bench of Tribunal, Delhi bench in following case has also expressed the same view: - Honda Motorcycle and Scooter India Pvt Ltd vs ACIT in ITA No.1523/Del/2022 (ITAT, Delhi ) - Teradata India Pvt Ltd vs. DCIT in ITA 1248/Del/2022 (ITAT, Delhi) 21. As per the above discussion and also by respectfully following the aforesaid judgements of various benches of Tribunal, we are of the considered view that Explanation 2 inserted in Section 37 to deny the deduction for CSR expenses incurred by companies as normal business expenditure and the same applies only to the extent of computing business income under Chapter IV-D. The said Explanation cannot be extended or imported to CSR contributions which are otherwise eligible for deduction under any other provision or Chapter, to say donations made by a charitable trust registered under Section 80G and if the same denied merely because such payment forms part of CSR, it would lead to double disallowance, which is not the intention of Legislature. Accordingly, we allow the deduction of Rs. 37.50 lacs as claimed by the assessee u/s 80G of the Act. This ground of appeal of the assessee is allowed. 19 ITA No.4181/Del/2024 Amway India Enterprises Private Limited vs. AO-NFAC 22. Next ground of appeal No.3 is with regard to disallowance of deduction of Rs. 12,50,000/- claimed u/s 80G of the Act. From the perusal of the orders of the lower authorities, we find that the AO has disallowed the claim of the assessee for the sole reason that assessee has field to produce the receipts of the donation of Rs. 25.00 lacs made to Prayas Society, Hamirpur, Himachal Pradesh. During the course of hearing ld.AR requested that the matter may be sent back to the AO for submission of the receipts which was misplaced earlier and now is available. 23. Under such circumstances, we are remitting this issue back to the file of AO for making verification of the fact whether the conditions necessary to claim deduction under section 80G of the Act are fulfilled or not after obtaining the receipt of donation from the assessee. Assessee is directed to file all requisite details in order to substantiate its claim before AO who is directed to grant deduction to the extent of eligibility. This ground of appeal is partly allowed as per the direction given. 24. As a result appeal of the assessee is partly allowed Order pronounced on 23/4/2025. Sd/- Sd/- (MAHAVIR SINGH) (MANISH AGARWAL) VICE PRESIDENT ACCOUNTANT MEMBER Dated: 23/04/2025 PK/Sr. Ps 20 ITA No.4181/Del/2024 Amway India Enterprises Private Limited vs. AO-NFAC Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI "