M/s. Sony Mobile Communications India Pvt. Ltd. (Now Merged with M/s. Sony India Pvt. Ltd.), New Delhi V. Addl. CIT, New Delhi

ITA 1085/DEL/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3539 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 11 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Assessment Year: 2012-2013
• Appeal Filed On: 23-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Transfer pricing; International transaction; Commercial expediency
• Section: 271(1)(c); 143(3); 92B; 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH I-2 : NEW DELHI) BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.1085/DEL./2017 (ASSESSMENT YEAR : 2012--13) M/S. SONY MOBILE COMMUNICATION INDIA VS. ACIT, PRIVATE LIMITED, SPL. RANGE 8, (NOW MERGED WITH M/S. SONY INDIA PVT.LTD.), NEW DEL HI. A 31, MOHAN COOPERATIVE INDL. ESTATE, MATHURA ROAD, NEW DELHI 110 044. (PAN : AAKCS7996N) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI NAGESHWAR RAO, ADVOCATE REVENUE BY : SHRI H.K. CHOUDHARY, CIT DR DATE OF HEARING : 17.01.2019 DATE OF ORDER : 21.02.2019 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : THE APPELLANT, M/S. SONY MOBILE COMMUNICATION INDIA PVT.LTD. (HEREINAFTER REFERRED TO AS THE TAXPAYER ) BY FILING THE PRESENT APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORD ER DATED 30.01.2017 PASSED BY THE AO IN CONSONANCE WITH THE ORDERS PASSED BY THE LD. DRP/TPO UNDER SECTION 143 (3) READ WITH SECTION 144C ITA NO.1085/DEL/2017 2 OF THE INCOME-TAX ACT, 1961 (FOR SHORT THE ACT) Q UA THE ASSESSMENT YEAR 2012-13 ON THE GROUNDS INTER ALIA T HAT :- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CAS E AND IN LAW, ASSESSING OFFICER ('LD. AO') ERRED IN ASSESSING THE INCOME OF THE APPELLANT AT INR 1,59,60,90,0001- AS AGAINST THE RETURNED INCOME OF INR 13,58,61,680. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE FINAL ASSESSMENT ORDER PASSED UNDER SECTION 143(3) READ W ITH SECTION 144C OF THE INCOME TAX ACT, 1961 ('THE ACT') BY THE LD. AO IS B AD IN LAW AS THE SAME DOES NOT CONSIDER COMPLETE AND RELEVANT FACTS, ARE NOT IN ACCORDANCE WITH PROVISIONS OF LAW AND PRINCIPLES OF LAW AS LAID DOW N BY HON'BLE COURTS. TRANSFER PRICING GROUNDS 3. THAT THE IMPUGNED ORDER PASSED BY LD. AO/TRANSF ER PRICING OFFICER (LD. TPO) COMPUTING THE TOTAL INCOME AT INR 1,59,60 ,90,0001- IS BLATANTLY ERRONEOUS SINCE ADJUSTMENT BASED ON A PROTECTIVE AS SESSMENT HAS BEEN ADDED BY THE LD. AO IN COMPUTING THE TOTAL INCOME OF THE APPELLANT. 4. THAT ON THE FACTS AND CIRCUMSTANCES OF PRESENT CASE, THE HON'BLE DISPUTE RESOLUTION PANEL ('HON'BLE DRP') HAS ERRED IN HOLDING THAT THE APPELLANT HAS NOT CONTESTED THE USE OF THE BRIGHT L INE TEST ('BLT') FOR UNDERTAKING THE ADJUSTMENT UNDER THE PROTECTIVE ASS ESSMENT. 5. THAT ON THE FACTS AND CIRCUMSTANCES OF PRESENT CASE, THE LD. AO/LD. TPO HAVE ERRED IN DETERMINING THAT THE HON'BLE DRP DIRECTED THEM TO CONCLUDE THE ASSESSMENT BASED ON THE BLT. 6. THAT WITHOUT PREJUDICE TO THE ABOVE, IF BLT WAS TO BE APPLIED THEN THE APPELLANT SHOULD HAVE BEEN GIVEN REASONABLE OPPORTU NITY TO PRESENT ITS DETAILED OBJECTIONS AGAINST THE APPROACH FOLLOWED B Y THE LD TPO. 7. THAT ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE HON'BLE DRP ERRED IN UPHOLDING LD. TPO'S ACTION, ISSUED MUC H BEYOND LEGITIMATE JURISDICTION, IN QUESTIONING THE REASONABLENESS, QU ANTUM, AND COMMERCIAL EXPEDIENCY OF ADVERTISEMENT, MARKETING AND PROMOTIO N ('AMP') EXPENDITURE INCURRED BY THE APPELLANT. 8. THAT ON THE FACTS AND CIRCUMSTANCES OF PRESENT C ASE AND IN LAW, LD. AO/TPO AND HON'BLE DRP HAVE ERRED IN HOLDING THAT A MP EXPENDITURE INCURRED BY THE APPELLANT, IS AN 'INTERNATIONAL TRA NSACTION' U/S 92B JUSTIFYING SEPARATE BENCH MARKING UNDER CHAPTER X OF THE ACT, DISREGARDING THE FINDINGS OF THE HON'BLE DELHI HIGH COURT IN THE CAS ES OF MARUTI SUZUKI INDIA LTD., WHIRLPOOL OF INDIA LTD., BAUSCH & LOMB EYE CA RE INDIA PVT. LTD AND HONDA SIEL POWER PRODUCTS LTD. 9. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, LD. AO/TPO AND HON'BLE DRP FAILED TO APPRECIATE THAT IN CURRING OF AMP EXPENSES WAS NOT AN INTERNATIONAL TRANSACTION, GIVE N THAT THERE WAS NO MACHINERY OR COMPUTATION PROVISION IN LAW TO TEST A MP EXPENSES AND DETERMINE COMPENSATION FOR THE SAME. 10. THAT THE LD. AO/ LD. TPO/ HON'BLE DRP HAS ERRED IN NOT APPRECIATING THAT AMP EXPENSES INCURRED BY THE APPE LLANT IN THE NORMAL COURSE OF ITS BUSINESS WERE NOT FOR THE SOLE BENEFI T OF ITS ASSOCIATED ENTERPRISE AND THUS DID NOT FALL WITHIN THE PURVIEW OF AN 'INT ERNATIONAL TRANSACTION' ITA NO.1085/DEL/2017 3 PERTAINING TO RENDITION OF SERVICE, AS DEFINED IN S ECTION 92B OF THE ACT, DISTINCT FROM ITS FUNCTIONAL PROFILE AND RESPONSIBI LITY AS A DISTRIBUTOR. 11. WITHOUT PREJUDICE, EVEN IF AMP EXPENSES ARE HEL D TO BE 'NON- ROUTINE' AND 'EXCESSIVE', THE APPELLANT WAS NOT REQ UIRED TO BE REIMBURSED COMPENSATED BY ITS AE, CONSIDERING THAT THE PURPORT ED BENEFIT CAUSED TO THE AE ON ACCOUNT OF INCURRING OF AMP EXPENSES INCURRED BY THE APPELLANT WAS ONLY INCIDENTAL. 12. WITHOUT PREJUDICE, EVEN IF AMP EXPENSES ARE HEL D TO BE 'NON- ROUTINE' AND 'EXCESSIVE', THE LD. AOITPO/ HON'BLE D RP ERRED IN NOT APPRECIATING THAT THE 'LIMITED DISTRIBUTOR FUNCTION ' PERFORMED BY THE APPELLANT HAD ALREADY BEEN ADEQUATELY COMPENSATED - BY THE AE SINCE THE APPELLANT'S BUSINESS MODEL ALLOWS IT TO EARN AN ARM 'S LENGTH MARGIN ON ALL COSTS INCURRED INCLUDING AMP EXPENSES. 13. THAT THE LD. AO/ LD. TPO/ HON'BLE DRP ERRED IN NOT APPRECIATING THAT THE AMP EXPENSES WERE INCURRED BY THE APPELLAN T AS PART OF ITS DISTRIBUTION BUSINESS AND NOT FOR THE PURPOSE OF PR OVIDING SOLE BENEFIT TO ITS ASSOCIATED ENTERPRISE AND THUS COULD NOT BE CONSIDE RED TO BE A TRANSACTION UNDER SECTION 92F(V) OF THE ACT, SINCE THERE WAS NO UNDERSTANDING OR ARRANGEMENT OR ACTION IN CONCERT FOR PROVISION OF S ERVICE. 14. WITHOUT PREJUDICE TO THE OTHER GROUNDS, THE LD . TPO / HAS ERRED IN FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW BY I GNORING THE FACT THAT EVEN IF A TRANSACTION BY TRANSACTION APPROACH IS APPLIED , THE AMP FUNCTION HAS BEEN BENCHMARKED UNDER TRANSACTIONAL NET MARGIN MET HOD (TNMM) ANALYSIS CARRIED OUT BY THE TPO AND FOUND TO BE AT ARM'S LEN GTH. 15. WITHOUT PREJUDICE TO OTHER GROUNDS, THE LD. TP O/ LD. AO/HON'BLE DRP ERRED IN APPLYING THE BLT METHOD TO DETERMINE T HE EXCESSIVE/NON- ROUTINE AMP EXPENSES IN COMPLETE DISREGARD OF THE T RANSFER PRICING REGULATIONS IN INDIA, COMMERCIAL CIRCUMSTANCES OF T HE CASE AND THE PRINCIPLES AND FINDINGS LAID DOWN BY THE HON'BLE DE LHI HIGH COURT. 16. WITHOUT PREJUDICE TO OTHER GROUNDS, THE LD. AO / TPO AND HON'BLE DRP WHILE COMPUTING THE PROTECTIVE ADJUSTMENT HAVE ERRED IN QUANTIFYING EXCESSIVE AND/OR NON-ROUTINE AMP EXPENSES BY CONSID ERING REBATES AND DISCOUNTS AND CERTAIN SELLING AND DISTRIBUTION EXPE NSES AS BRAND BUILDING EXPENSES WHILE PERFORMING ARM'S LENGTH ANALYSIS WIT HOUT GIVING COGENT REASONS FOR THE PURPOSE OF BENCHMARKING ALLEGED AMP EXPENDITURE. THE BASIS ON WHICH ALL SUCH EXPENSES WERE DETERMINED TO BE NON-ROUTINE IN NATURE IS ALSO NOT SPECIFIED IN THE ORDER. THIS IS ALSO CONTRARY TO THE PRINCIPLES AND FINDINGS LAID DOWN BY THE HON'BLE HIGH COURT IN THE CASE OF APPELLANT. 17. WITHOUT PREJUDICE TO ALL OTHER GROUNDS, THE LD. TPO/LD. AO/HON'BLE DRP HAVE ERRED IN FACT AND IN LAW BY DETERMINING TH E ARM'S LENGTH LEVEL OF ROUTINE AMP EXPENSES BY CONSIDERING INAPPROPRIATE C OMPANIES. 18. WITHOUT PREJUDICE TO OTHER GROUNDS, THAT THE LD . AOITPO ERRED IN LEVYING A FURTHER MARK-UP OF SERVICE PROVIDERS ON A MP EXPENSES FOR DETERMINATION OF THE ARM'S LENGTH PRICE OF THE ALLE GED BRAND-PROMOTION SERVICES RENDERED BY THE APPELLANT TO ITS AES AND H ON'BLE DRP ERRONEOUSLY UPHELD THE APPROACH OF THE LD. TPO/AO. 19. WITHOUT PREJUDICE TO OTHER GROUNDS, THAT THE LD . AOITPO ERRED IN MAKING INAPPROPRIATE SELECTION OF COM PARABLES FOR THE MARK-UP ON ALLEGED AMP EXPENDITURE WHILE COMPUTING ADJUSTMENT IN PROTE CTIVE ASSESSMENT AND HON'BLE DRP ERRONEOUSLY UPHELD THE APPROACH OF THE LD. TPO/AO. ITA NO.1085/DEL/2017 4 20. THAT WITHOUT PREJUDICE TO THE ABOVE, IF BLT WAS TO APPLIED THEN, THE LD. TPO/LD. AO SHOULD HAVE GIVING EFFECT TO THE DIR ECTIONS OF THE HON'BLE DRP OF REGARDING THE SET OF COMPARABLE COMPANIES WH ILE COMPUTING THE PROTECTIVE ADJUSTMENT SINCE THOUGH THE SAME SET WAS APPLIED FOR THE PROTECTIVE ADJUSTMENT AS WELL AS THE SUBSTANTIVE ADJUSTMENT. 21. THAT THE LD. AO/ LD. TPO/ HON'BLE DRP FAILED TO APPRECIATE THAT ONCE THE NET OPERATING MARGINS OF THE APPELLANT HAD MET THE ARM'S LENGTH TEST, NO FURTHER ADJUSTMENT WAS REQUIRED FOR ANY NO N-ROUTINE FUNCTION OR NON-ROUTINE AMP EXPENDITURE. 22. WITHOUT PREJUDICE TO THE OTHER GROUNDS, THE LD. TPO / HON'BLE DRP HAVE ERRED IN FACTS AND CIRCUMSTANCES OF THE CASE A ND IN LAW BY IGNORING THE FACT THAT EVEN IF THE APPELLANT'S REMUNERATION MODE L IS TO BE RE-CHARACTERISED TO A SERVICE FEE FOR AMP ACTIVITIES, THE PROFIT EAR NED BY THE APPELLANT OVER AND ABOVE THE RETURN EARNED BY A DISTRIBUTOR UNDERT AKING NO OR LIMITED AMP ACTIVITIES SHOULD BE CONSIDERED AS A REMUNERATION F OR ITS AMP ACTIVITIES, IN DIRECT CONTRAVENTION TO THE PRINCIPLES LAID DOWN BY THE HON'BLE DELHI HIGH COURT. MISCELLANEOUS CONTENTIONS 23. LD. AO HAS ERRED IN INITIATING PENALTY PROCEED INGS UNDER SECTION 271(1)(C) OF THE ACT ON ACCOUNT OF AN ADJUSTMENT TH AT WAS A RESULT OF A PROTECTIVE ASSESSMENT. 24. LD.AO HAS ERRED) IN CHARGING INTEREST UNDER SE CTIONS 234A AND 234B OF THE ACT. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE CONTROVERSY AT HAND ARE : M/S. SONY MOBILE COMMUNIC ATION INDIA PVT.LTD., THE TAXPAYER IS PRIMARILY ENGAGED IN THE BUSINESS OF IMPORTING, BUYING AND SELLING AND DISTRIBUTING WIDE RANGE OF MOBILE PHONES IN INDIA AND PROVIDING RELATED POST S ALE SUPPORT SERVICES. THE YEAR UNDER ASSESSMENT IS THE FOURTH YEAR OF THE OPERATION OF THE COMPANY. THE TAXPAYER TRADES SONY ERICSSON MOBILE HANDSET IN INDIA AND PART OF ITS ACTIVITY UN DERTAKES THE PROMOTION, MARKETING AND DISTRIBUTION OF MOBILE HAN DSETS. DURING THE YEAR UNDER ASSESSMENT, THE TAXPAYER ENTERED INT O INTERNATIONAL TRANSACTIONS WITH ITS ASSOCIATED ENTERPRISES (AES) AS UNDER :- ITA NO.1085/DEL/2017 5 S.NO. DESCRIPTION OF THE TRANSACTIONS METHOD APPLIED AMOUNT (IN INR) I. IMPORT OF COMPONENTS AND TRADING GOODS TNMM 4923551053 II. BU SINESS PROMOTION EXPENSES 30910663 III. PURCHASE OF AIR TIME SLOTS 11388952 IV. REIMBURSEMENT OF EXPENSES TO AE 1260226 3. THE TAXPAYER IN ORDER TO BENCHMARK ITS INTERNATI ONAL TRANSACTION BY AGGREGATING ALL ITS INTERNATIONAL TR ANSACTIONS APPLIED TRANSACTIONAL NET MARGIN METHOD (TNMM) AS THE MOST APPROPRIATE METHOD (MAM) WITH RATIO OF NET PROFIT T O SALES AS PROFIT LEVEL INDICATOR (PLI) BY USING MULTIPLE YEAR S DATA WITH MARGIN OF COMPARABLES AT 0.83% AFTER CARRYING OUT W ORKING CAPITAL ADJUSTMENT AS AGAINST PLI OF TAXPAYER AT 2.01% AND FOUND ITS INTERNATIONAL TRANSACTIONS AT ARMS LENGTH, WHICH I S ACCEPTED BY THE TPO. 4. HOWEVER, LD. TPO BY APPLYING THE BRIGHT LINE MET HOD PROCEEDED TO BENCHMARK THE INTERNATIONAL TRANSACTIO N FOR MARKETING AND DEVELOPMENT OF MARKETING SERVICES FOR ITS AES A S UNDER :- 24.3 IN LINE WITH THE BENCHMARKING CARRIED OUT IN EARLIER YEAR, THE RATIO OF AMP EXPENDITURE TO SALES IN THE CASE OF TH E ASSESSEE IS DETERMINED AS GIVEN BELOW: PARTICULARS AMOUNT (IN RS. ADVERTISEMENT AND SALES PROMOTION 341016698 SELLING AND DISTRIBUTION EXPENSES 1160939120 TOTAL EXPENDITURE ON AMP 1501955818 VALUE OF GROSS SALES 6928209949 ITA NO.1085/DEL/2017 6 AMP /SALES OF THE ASSESSEE[%] 21.67% 24.4 THE LIST OF COMPARABLES SELECTED, AS PER THE SCN, ALONG WITH THE CALCULATION OF AMP SALES RATIO AS PER PROWESS I S AS FOLLOWS.: COMPARABLES SELLING & DISTRIBUTION EXPENSES SALES AMP/ SALES BEETEL TELETECH LTD. 98.57 1472.4 6.69% COMPUAZELNFOCOM LTD. 0 1544.4 0.00% INGRAM MICRO INDIA PVT. LTD. 8.89 9545.1 0.09% INTEX TECHNOLOGIES (INDIA) LTD. 19.3 782.47 2.47% IRIS COMPUTERS LTD. 1.85 1096.17 0.17% MUNOTH INDUSTRIES LTD. 0 11.36 0.00% OPTIEMUSLNFRACOM LTD. 64.86 1856.86 3.49% PRIYA LTD. 0.68 192.47 0.35% REDINGTON (INDIA) LTD. 26.19 9567.82 0.27% SAVEX COMPUTERS PVT. LTD. 105.89 2905.23 3.64% VIVEK LTD. 19.71 384.31 5.13% AVERAGE 2.03% 24.5 AS CONSIDERED IN EARLIER YEARS, ENTITIES CARRY ING NEGLIGIBLE MARKETING AND MARKET DEVELOPMENT FUNCTIONS ARE REMO VED AND THE FINAL COMPANIES CONSIDERED ARE AS FOLLOWS :- COMPARABLES SELLING & DISTRIBUTION EXPENSES SALES AMP/ SALES BEETEL TELETECH LTD. 98.57 1472.4 6.69% INTEX TECHNOLOGIES (INDIA) LTD. 19.3 782.47 2.47% OPTIEMUSLNFRACOM LTD. 64.86 1856.86 3.49% PRIYA LTD. 0.68 192.47 0.35% REDINGTON (INDIA) LTD. 26.19 9567.82 0.27% SAVEX COMPUTERS PVT. LTD. 105.89 2905.23 3.64% ITA NO.1085/DEL/2017 7 VIVEK LTD. 19.71 384.31 5.13% AVERAGE 3.15% 24.6 THE AMOUNT WHICH REPRESENTS THE BRIGHT -LINE A ND THE AMOUNT THAT SHOULD HAVE BEEN COMPENSATED TO THE ASSESSEE C OMPANY ARE COMPUTED HEREUNDER:- PARTICULARS VALUE (RS.) VALUE OF GROSS SALES OF ASSESSEE A 6928209949 ARITHMETIC MEAN OF AMP /SALES OF COMPARABLES B 3.15% AMOUNT THAT REPRESENTS PRICE FOR ROUTINE AMP ACTIVITIES C = B/A 218238613 TOTAL EXPENDITURE INCURRED BY ASSESSEE ON AMP D 1501955818 ARM'S LENGTH PRICE OF THE SERVICE/EXPENDITURE FOR CREATION OF MARKETING INTANGIBLE IN INDIA IN FAVOUR OF THE AE E=D-C 1283717205 MARK-UP @ 13.75% F=13.75% OF E 176511116 THE AMOUNT BY WHICH THE ASSESSEE COMPANY SHOULD HAVE BEEN REIMBURSED BY A.E, AND FOR WHICH THE ADJUSTMENT IS PROPOSED TO BE MADE G=E+F 1460228320 PRICE RECEIVED FROM THE AE FOR CREATION OF MARKETING INTANGIBLES H 0 ADJUSTMENT REQUIRED TO BE MADE FOR CREATION OF MARKETING INTANGIBLES I=G H 1430228320 24.7 THE MARKUP IS CONSIDERED AT 13.75%, BEING THE SAME AS CONSIDERATION ALTERNATIVE ANALYSIS DISCUSSED BELOW. 24.8. THUS, BASED ON THE ABOVE COMPUTATION, AN ADJU STMENT OF RS.1460228320/- TO THE TOTAL INCOME OF THE ASSESSEE ON ACCOUNT MARKETING AND MARKET DEVELOPMENT FUNCTION TARRIED, OUT FOR THE AE FOR WHICH THE ASSESSEE COMPANY WAS NOT ADEQUATELY C OMPENSATED IS REQUIRED TO BE CARRIED OUT. ITA NO.1085/DEL/2017 8 24.9 HOWEVER, THE BENCHMARKING CARRIED OUT ABOVE IS ON PROTECTIVE BASIS AND IN CASE THE ALTERNATIVE BENCHMARKING CARR IED OUT IN PARAS BELOW ARE NOT ACCEPTABLE BY THE COURTS, THE ABOVE B ENCHMARKING MAY BE ADJUDICATED UPON. 5. THE TAXPAYER CARRIED THE MATTER BEFORE THE LD. D RP BY WAY OF FILING OBJECTIONS, WHO HAS CONFIRMED THE ADJUSTM ENT MADE BY THE TPO BY APPLYING THE BRIGHT LINE TEST BUT ON PROTECT IVE BASIS. FEELING AGGRIEVED, THE TAXPAYER HAS COME UP BEFORE THE TRIBUNAL BY WAY OF FILING THE PRESENT APPEAL. 6. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 7. THE LD. AR FOR THE TAXPAYER, AT THE VERY OUTSET, CONTENDED THAT TRANSFER PRICING ADJUSTMENT MADE BY TPO/DRP/AO ON ACCOUNT OF ADVERTISEMENT, MARKETING & PROMOTION (AMP) EXPEN SES BY USING THE BRIGHT LINE METHOD ON PROTECTIVE BASIS IS NOT SUSTAINABLE IN THE EYES OF LAW AND RELIED UPON THE DECISIONS RE NDERED BY THE COORDINATE BENCH OF THE TRIBUNAL IN MSD PHARMACEUTICALS PRIVATE LTD. IN ITA NO.6565/DEL/2017, NIKON INDIA P RIVATE LIMITED IN ITA NO.4574/DEL/2017 DATED 20.09.2017 & TOSHIBA INDIA PVT. LTD. IN ITA NO.6531/DEL/2017 DATED 30.11 .2017 AND PERFETTI VAN MELLE INDIA PVT. LTD. IN ITA NO.4574/D EL/2017 . ITA NO.1085/DEL/2017 9 8. LD. DR FOR THE REVENUE, ON THE OTHER HAND, TO RE PEL THE ARGUMENTS ADDRESSED BY THE LD.AR FOR THE ASSESSEE, HAS FILED WRITTEN SUBMISSIONS ALSO WHICH ARE PART OF THE FILE AND HAS REQUESTED TO RESTORE THE FILE TO AO/TPO FOR DETERMI NATION OF ALP OF AMP EXPENSES AFRESH. 9. BY NOW, IT IS SETTLED PRINCIPLE OF LAW THAT ARM S LENGTH PRICE ADJUSTMENT OF AMP EXPENSES BY APPLYING THE BRIGHT L INE TEST ON PROTECTIVE BASIS HAS NO STATUTORY MANDATE AS HAS BE EN HELD BY HONBLE DELHI HIGH COURT IN SONY ERICSSON MOBILE COMMUNICATION INDIA (P.) LTD. VS. CIT-III (2015) 55 TAXMANN.COM 240 (DELHI) . 10. THE COORDINATE BENCH OF THE TRIBUNAL IN CASE CI TED AS PERFETTI VAN MELLE INDIA PVT. LTD. VS. DCIT IN ITA NO.1073/DEL/2017 DATED 24.05.2017 DETERMINED THE ISSUE AS TO APPLYING THE BLT FOR DETERMINING THE ALP OF AMP EXP ENSES AND OBSERVED AS UNDER :- 13. WE WANT TO CLARIFY THAT IF A SITUATION FOR DETERMINING THE ALP OF AMP EXPENSES ARISES, THEN NO TRANSFER PRICING ADJUSTMENT SHOULD BE MADE BY APPLYING THE BRIGHT LINE TEST, AS HAS BEEN DONE ON PROTECTIVE BASIS, BECAUSE OF HONBLE HIGH COURT HAS NOT APPROVED THE APPLICATION OF THE BRIGHT LINE TES T IN SEVERAL DECISIONS. ITA NO.1085/DEL/2017 10 11. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, WE AR E OF THE CONSIDERED VIEW THAT FOLLOWING THE DECISION RENDERE D BY HONBLE DELHI HIGH COURT IN CASE OF SONY ERICSSON MOBILE COMMUNICATIONS INDIA (P.) LTD. (SUPRA) AND COORDINATE BENCH OF THE TRIBUNAL IN PERFETTI VAN MELLE INDIA PVT. LTD. (SUPRA), TP ADJUSTMENT AMOUNTING TO RS.146,02,28,320/- BY APPLY ING BLT IS NOT SUSTAINABLE ON PROTECTIVE BASIS HAVING NO STATU TORY MANDATE. CONSEQUENTLY, PROTECTIVE ADJUSTMENT MADE BY THE TPO /DRP/AO QUA AMP EXPENSES BY APPLYING BRIGHT LINE TEST ON PR OTECTIVE BASIS IS NOT SUSTAINABLE IN THE EYES OF LAW HAVING NO STA TUTORY MANDATE, HENCE APPEAL FILED BY THE TAXPAYER IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THIS 21 ST DAY OF FEBRUARY, 2019. SD/- SD/- (R.K. PANDA) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 21 ST DAY OF FEBRUARY, 2019 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT (A). 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.