Xerox India Ltd., Gurgaon V. DCIT, New Delhi

ITA 1088/DEL/2016

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 4631 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 7 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-10-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Assessment Year: 2011-2012
• Appeal Filed On: 02-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Depreciation; Transfer pricing; International transaction; Tangible material; Onus to prove; TDS; Set aside
• Section: 92B; 92F; 191; 207; 64; 13; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: I-2, NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER ITA NO.1088/DEL./2016 ASSESSMENT YEAR: 2011-12 M/S. XEROX INDIA LTD., 5 TH FLOOR, VATIKA BUSINESS PARK, SECTOR-49, SOHNA ROAD, GURGAON VS. DCIT, CIRCLE-27(2), NEW DELHI PAN :AAACM8634R (APPELLANT) (RESPONDENT) AND ITA NO.1053/DEL./2016 ASSESSMENT YEAR: 2011-12 ACIT, CIRCLE-27(2), NEW DELHI VS. M/S. XEROX INDIA LTD., 5 TH FLOOR, VATIKA BUSINESS PARK, SECTOR-49, SOHNA ROAD, GURGAON PAN :AAACM8634R (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI TARANDEEP SINGH, ADV. DEPARTMENT BY SHRI SURENDRA PAL, CIT(DR) DATE OF HEARING 07.10.2020 DATE OF PRONOUNCEMENT 19.10.2020 2 ITA NOS.1088/DEL./2016 & 1053/DEL./2016 ORDER PER O.P. KANT, AM: THESE CROSS APPEALS BY THE ASSESSEE AND THE REVENU E ARE DIRECTED AGAINST FINAL ASSESSMENT ORDER DATED 30.12 .2015 PASSED BY THE LEARNED DEPUTY COMMISSIONER OF INCOME TAX, C IRCLE-27(2), NEW DELHI (IN SHORT THE ASSESSING OFFICER) PURSUA NT TO THE DIRECTION OF THE LEARNED DISPUTE RESOLUTION PANEL ( IN SHORT LEARNED DRP) DATED 18.11.2015. THE GROUNDS RAISED BY THE ASSESSEE AND THE REVENUE ARE REPRODUCED AS UNDER: GROUNDS OF APPEAL RAISED BY THE ASSESSEE: 1. THAT ON FACTS AND IN LAW THE ORDERS PASSED BY TH E ASSESSING OFFICER [HEREINAFTER REFERRED AS THE AO] / DISPUT E RESOLUTION PANEL [HEREINAFTER REFERRED AS THE DRP] / TRANSFE R PRICING OFFICER [HEREINAFTER REFERRED AS THE TPO] ARE BAD IN LAW AND VOID AB- INITIO. 2. THAT ON FACTS AND IN LAW THE AO/TPO/DRP ERRED I N MAKING/PROPOSING/UPHOLDING TRANSFER PRICING ADJUSTM ENT OF RS. 3,98,97,000/- ON ACCOUNT OF ADVERTISEMENT, MARKETIN G AND PROMOTION (AMP) EXPENSES. 2.1 THAT ON FACTS AND IN LAW THE TPO/DRP ERRED IN NOT APPRECIATING THAT IN ABSENCE OF A TRANSACTION AS ENVISAGED UND ER SECTION 92F OF THE ACT BETWEEN APPELLANT AND ITS AE FOR BRAND P ROMOTION OR FOR ESTABLISHING A MARKETING INTANGIBLE THE TPO HAD NO JURISDICTION TO PROPOSE AN ADJUSTMENT ON ACCOUNT AMP EXPENSES. 2.2 THAT ON FACTS AND IN LAW THE TPO ERRED IN HOLD ING AND THE DRP INTER ALIA ERRED IN UPHOLDING/OBSERVING THAT THE: (I) APPELLANT HAD INCURRED AMP EXPENDITURE OF RS. 2 88.69 LAKHS ON DEVELOPMENT OF MARKETING INTANGIBLES FOR THE BENEFI T OF AE. (II) AMP EXPENDITURE OF RS. 288.69 LAKHS INCURRED B Y THE APPELLANT IS AN INTERNATIONAL TRANSACTION U/S 92B OF THE AC T. (III) AE IS DIRECTLY BENEFITED BY ANY EXPENDITURE I NCURRED BY ASSESSE ON AMP (IV) ALLEGED TRANSACTIONS OF AMP EXPENDITURE IS TO BENCHMARKED IN A SEGREGATED MANNER. 2.3 THAT ON FACTS AND IN LAW, THE AO/TPO WHILE GIVI NG EFFECT TO DRP DIRECTIONS ERRED IN HOLDING THAT FOLLOWING EXPENSES SHALL BE INCLUDED WITHIN THE AMBIT OF AMP FOR BENCHMARKING P URPOSES: 3 ITA NOS.1088/DEL./2016 & 1053/DEL./2016 (A) MARKETING AND SALES PROMOTION EXPENSES RS 91,87,589 (B) MARKET RESEARCH AND DEVELOPMENT RS 10,21,520 (C) PRINTING AND STATIONARY RS 16,06,016 (D) SELLING EXPENSES RS 33,82,252 (E) PARTNER TRAINING AND MEETING RS 18,19,001 (F) CRS EXPENSE RS 11,51,784 (G) MEMBERSHIP AND SUBSCRIPTION RS 57,59,079 3. THAT ON FACTS AND IN LAW THE TPO/ AO/ DRP HAS ERRED IN REJECTING TNMM AS THE MOST APPROPRIATE METHOD AND APPLYING TH E RATIO OF AMP/GROSS PROFIT (GP) RATIO TO DETERMINE ALP OF THE ALLEGED TRANSACTION OF AMP. 4. WITHOUT PREJUDICE, THAT ON FACTS AND IN LAW THE AO/TPO/DRP ERRED IN NOT APPRECIATING THAT THE ALLEGED TRANSACT IONS OF AMP WERE CLOSELY LINKED WITH THE MAIN ACTIVITY OF DIS TRIBUTORSHIP CARRIED ON BY THE APPELLANT AND HENCE IT CANNOT BE SEGREGATED AND BENCHMARKED ON A STAND-ALONE BASIS. 5. WITHOUT PREJUDICE, THAT ON FACTS AND IN LAW THE AO/TPO WHILE GIVING EFFECT TO DRP DIRECTIONS ERRED IN COMPUTING / HOLDING: (I) GROSS PROFIT RATIO FOR THE APPELLANT AT 19.59 % (II) AMP EXPENSE TO SALES RATIO FOR THE APPELLANT AT 1.93% (III) AMP TO GP RATIO FOR THE APPELLANT AT 9.85% (IV) THAT AMP TO SALES RATIO OF THE APPELLANT IS EXCESSIVE BY 8.52% 6. WITHOUT PREJUDICE, THAT ON FACTS AND IN LAW THE COMPARABLE SET ADOPTED BY THE AO/DRP/TPO FOR THE PURPOSE OF BENCHM ARKING AMP TRANSACTIONS IS NOT PROPER AND AKIN TO THE FAR OF THE APPELLANT. 7. WITHOUT PREJUDICE, THAT ON FACTS AND IN LAW THE TPO/DRP ERRED IN MAKING/UPHOLDING THE APPLICABILITY OF A MA RKUP OF 38.20% ON THE ALLEGED EXCESSIVE AMP EXPENSES INCURR ED BY THE APPELLANT ON BEHALF OF THE ASSOCIATED ENTERPRISE. 8. THAT ON FACTS AND IN LAW THE AO/DRP ERRED IN MAK ING/UPHOLDING A DISALLOWANCE OF RS.26,09,863/- BEING DEPRECIATION ALLOWANCE ON CAPITAL ASSETS CONVERTED INTO STOCK IN TRADE. 8.1 THAT ON FACTS AND IN LAW THE AO/DRP ERRED IN NO T FOLLOWING THE DECISION OF HONBLE ITAT / HIGH COURT IN APPELLANT S OWN CASE IN AY 2007-08 ON IDENTICAL ISSUE 9. THAT ON FACTS AND IN LAW WHILE COMPUTING THE FIN AL TAX LIABILITY THE AO ERRED INNOT GRANTING CREDITS FOR TDS CERTIFICATE S OF RS.8,40,136/- . 4 ITA NOS.1088/DEL./2016 & 1053/DEL./2016 THAT THE APPELLANT PRAYS FOR LEAVE TO ADD, ALTER, AMEND AND/OR VARY THE GROUND(S) OF APPEAL AT OR BEFORE THE TIME OF HEARING. GROUNDS OF APPEAL RAISED BY THE REVENUE: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE DRP-2 ERRED IN DIRECTING AO TO COMPLETE THE ASSESSMENT AS PER OBSERVATIONS MADE BY DRP IN THE ORDER WHICH RESULTI NG IN REDUCING THE ADDITION TO RS.3,98,97,000/- IN PLACE OF ORIGINAL RECOMMENDED ALP OF RS. 14,46,58,620/- FOR THE INTER NATIONAL TRANSACTIONS UNDERTAKEN THE ASSESSEE COMPANY WITH I TS ASSOCIATE/PARENT ENTERPRISE'. 2. WHETHER THE DRP WAS JUSTIFIED IN NOT APPRECIATI NG THE FACT THAT BRIGHT LINE IS A MERE STEP [OF THE MOST APPROPRIATE METHOD FOR BENCHMARKING THE AMP SERVICES] CARRIED OUT TO ESTIM ATE AND BIFURCATE EXPENDITURE PERTAINING TO THE TAXPAYER FO R ITS OWN ROUTINE DISTRIBUTION FUNCTION AND THE EXPENDITURE I NCURRED ON AMP SERVICE PROVIDED TO THE AE IN A SITUATION WHERE THE ASSESSEE HAS NOT REPORTED THE INTERNATIONAL TRANSACTION PERTAINI NG TO MARKETING FUNCTION. 3. WHETHER UNDER THE FACTS AND CIRCUMSTANCES OF TH E CASE AND IN LAW THE HON'BLE DRP WAS CORRECT IN HOLDING THAT PLR CANNOT BE THE BASIS FOR COMPUTING MARKUP ON AMP EXPENSES WITH OUT APPRECIATING THE REVENUES CASE WHEREIN THE PLR OF BANKS HAS BEEN USED AS AN UNCONTROLLED COMPARABLE TO BENCHMAR K THE OPPORTUNITY COST OF MONEY INVOLVED AND LOCKED UP IN AMP EXPENSE? 4. WHETHER IN THE FACTS AND CIRCUMSTANCE OF THE C ASE AND IN LAW THE HON'BLE DRP WAS JUSTIFIED IN STATING THAT ROUTINE S ELLING AND DISTRIBUTION EXPENSES WOULD NOT FORM PART OF AMP EX PENSES) DISREGARDING THAT FACT THAT THESE EXPENSES CONTRIBU TE TO CREATION OF MARKETING INTANGIBLE) EVEN WHILE THE SAME IS A FACT OR FOR COMPARABILITY ANALYSIS AS DIFFERENT ENTITIES ACCOUN T FOR SUCH EXPENDITURE UNDER DIFFERENT HEADS ? 5. THE APPELLANT CRAVES, LEAVE OR RESERVING THE RI GHT TO AMEND MODIFY, ALTER, ADD OR FOREGO ANY GROUND(S) OF APPEA L AT ANY TIME BEFORE OR DURING THE HEARING OF THIS APPEAL.' 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSES SEE COMPANY WAS INCORPORATED UNDER THE LAW OF INDIA AND IS ENGAGED IN THE BUSINESS OF TRADING OF XEROGRAPHIC EQUIPMENT S, PRINTERS, SCANNERS, FAXES, MULTI-FUNCTIONAL DEVISES, HIGH-END PRINTING EQUIPMENT ETC. THE ASSESSEE FILED RETURN OF INCOME ON 5 ITA NOS.1088/DEL./2016 & 1053/DEL./2016 24.11.2011, DECLARING TOTAL INCOME OF RS.7,36,28,53 1/-, WHICH WAS REVISED ON 29.03.2013. HOWEVER, THE REVISED INC OME REMAINED THE SAME AT RS.7,36,28,531/-. THE RETURN O F INCOME FILED BY THE ASSESSEE WAS SELECTED FOR SCRUTINY ASS ESSMENT AND STATUTORY NOTICES WERE ISSUED AND COMPLIED WITH BY THE ASSESSEE. THE ASSESSING OFFICER NOTICED VARIOUS INTERNATIONAL TRANSACTIONS CARRIED OUT BY THE ASSESSEE AND REFERRED THE MATTER FOR DETERMINATION OF THE ARMS LENGTH PRICE OF THE TRAN SACTIONS TO THE TRANSFER PRICING OFFICER (IN SHORT THE TPO). THE LEARNED TPO THOUGH DID NOT MAKE ANY ADJUSTMENT TO THE AMOUNT O F THE INTERNATIONAL TRANSACTIONS REPORTED BY THE ASSESSEE , HOWEVER, PROPOSED AN ADJUSTMENT ON ACCOUNT OF INTERNATIONAL TRANSACTION, NAMELY, CREATION OF MARKETING INTANGIBLE IN FAVOUR OF THE AE ARISING OUT OF THE ADVERTISEMENT AND MARKETING PROM OTION (AMP). THE TPO DETERMINED THE ADJUSTMENT OF RS.14,46,58,62 0/- IN HIS ORDER DATED 29.01.2015. CONSEQUENTLY, THE ASSESSING OFFICER IN THE DRAFT ASSESSMENT ORDER ISSUED TO THE ASSESSEE I NCLUDED TRANSFER PRICING ADJUSTMENT OF RS.14,46,58,620/-. AGAINST THE SAID DRAFT ASSESSMENT ORDER, THE ASSESSEE FILED OBJ ECTION BEFORE THE LEARNED DRP ON 20 TH APRIL, 2015. THE LEARNED DRP VIDE ITS ORDER DATED 18.11.2015, DIRECTED THE TPO TO RE-COMP UTE THE MARGIN OF TRANSFER PRICING ADJUSTMENT. IN COMPLIANC E TO THE DIRECTION OF THE LEARNED DRP, THE LEARNED TPO GAVE EFFECT AND COMPUTED TRANSFER PRICING ADJUSTMENT ON ACCOUNT OF AMP TRANSACTION TO RS.3,98,97,000/-. THE LEARNED ASSESS ING OFFICER ACCORDINGLY IN THE FINAL ASSESSMENT ORDER MADE ADJU STMENT OF RS. 3,98,97,0000/- ON ACCOUNT OF ALLEGED AMP TRANSACTIO NS. 6 ITA NOS.1088/DEL./2016 & 1053/DEL./2016 2.1 AGGRIEVED WITH THE FINAL ASSESSMENT ORDER OF THE A SSESSING OFFICER, BOTH THE ASSESSEE AS WELL AS THE DEPARTMEN T ARE IN APPEAL RAISING THEIR RESPECTIVE GROUNDS AS REPRODUCED ABOV E. 3. BEFORE US, BOTH THE PARTIES APPEARED THROUGH VIDEO- CONFERENCING AND FILED DOCUMENTS/PAPER-BOOKS ELECTR ONICALLY. 4. THE LEARNED COUNSEL FOR THE ASSESSEE REFERRED TO P ARA 8 OF THE TPO AND VARIOUS PARAS OF THE ORDER OF THE LEARNED D RP. THE LEARNED COUNSEL SUBMITTED THAT NO INTERNATIONAL TRA NSACTION EXIST IN THE CASE OF THE ASSESSEE AND THE TRIBUNAL IN ITA NO. 5528/DEL./2012 FOR AY 2008-09 AND ITA NO. 2060/DEL./2015 FOR AY 2010-11 HAS GIVEN A FINDING THAT NO INTERNATIONA L TRANSACTION OF AMP EXIST IN THE CASE OF THE ASSESSEE AND ACCORD INGLY ADJUSTMENT HAS BEEN DELETED IN THE CASE OF THE ASSE SSEE. HE SUBMITTED THAT FOLLOWING THE ABOVE PRECEDENTS IN TH E CASE OF THE ASSESSEE, THE TRANSFER PRICING ADJUSTMENT MADE IN T HE YEAR UNDER CONSIDERATION ALSO NEEDS TO BE DELETED. WITH REGARD TO THE APPEAL OF THE REVENUE, HE SUBMITTED THAT AS EXISTENCE OF T HE INTERNATIONAL TRANSACTION OF THE AMP HAS BEEN REJEC TED, THE GROUNDS OF THE REVENUE MAY BE RENDERED INFRUCTUOUS. 5. ON THE OTHER HAND, THE LEARNED DR RELIED ON THE O RDERS OF THE LOWER AUTHORITIES AND SUBMITTED THAT THE ISSUE OF EXISTENCE OF THE INTERNATIONAL TRANSACTION ON AMP IS PENDING BEF ORE THE HONBLE SUPREME COURT. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES AND PERUSED THE RELEVANT MATERIAL ON RECORD. IN THE YEA R UNDER CONSIDERATION, THE FINDINGS OF LEARNED TPO REGARDIN G AMP ADJUSTMENT CAN BE SUMMARIZED AS UNDER: 7 ITA NOS.1088/DEL./2016 & 1053/DEL./2016 (A) THE BRAND XEROX IS OWNED BY ASSOCIATED ENTERP RISES (AES), BUT THE ASSESSEE IS INCURRING AMP EXPENDITURE ON PR OMOTION OF BRAND, WHICH RESULT IN BRAND BUILDING TO THE ADVANT AGE TO AES. THERE EXISTS AN 'INTERNATIONAL TRANSACTION' FO R BRAND PROMOTION BECAUSE OF ALLEGED EXCESSIVE AMP SPENT, I N VIEW OF THE DEFINITION OF TRANSACTION IN TERMS OF SECTION 9 2F(V) OF THE ACT, ACCORDING TO WHICH, THE TRANSACTION INCLUDES A N ARRANGEMENT, UNDERSTANDING OR ACTION IN CONCERT, WH ETHER OR NOT SUCH ARRANGEMENT, UNDERSTANDING OR ACTION IS FO RMAL OR IN WRITING AND WELL ESTABLISHED PRINCIPLE OF SUBSTANCE OVER FORM. DECISION OF SPECIAL BENCH IN CASE OF LG ELECTRONICS REPORTED IN 150 ITD 94(DEL)(SB) HAS BEEN FOLLOWED. (B) SELLING EXPENSES LIKE REBATE, COMMISSION, DISC OUNT SHOULD BE INCLUDED WITHIN THE AMBIT OF AMP. (C) ASSESSEE COMPANY DOES NOT OWN ANY TRADEMARK OR BRAND AND HAD PERFORMED SIGNIFICANT FUNCTIONS LIKE BRAND DEVE LOPMENT, MARKET DEVELOPMENT, ETC. ON BEHALF OF AE IN LNDIA A ND HENCE, THE AMOUNT OF EXPENSES SHOULD BE REIMBURSED (D) BRIGHT LINE TEST HAS BEEN APPLIED AS THE METHO D FOR BENCHMARKING ALLEGED AMP TRANSACTION. 6.1 WE FIND THAT IN THE YEAR UNDER CONSIDERATION THE LEARNED DRP HAS ISSUED FOLLOWING DIRECTIONS RELYING UPON TH E DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF SONY ERICSSON MOBILE COMMUNICATIONS INDIA PVT. LTD. V COMMISSIONER OF IN COME TAX [(2015) 374 ITR 118] : (A) THE ASSESSEE HAS EXECUTED AN 'INTERNATIONAL TR ANSACTION' FOR INCURRING AMP EXPENSES ON BEHALF OF ITS AE. (B) ROUTINE SELLING AND DISTRIBUTION EXPENSES SHAL L BE EXCLUDED SUBJECT TO THE VERIFICATION BY TPO. (C) THE TPO TO FOLLOW DECISION IN CASE OF SONY ER ICSSON MOBILE (SUPRA) AND HELD THAT SEGREGATED APPROACH IS TO BE APPLIED FOR SEPARATING ROUTINE SELLING AND DISTRIBUTION EXPENSES FROM AMP EXPENSES CONSIDERING COMPARABLE COMPANIES AND TPO TO APPLY C OST PLUS METHOD INSTEAD OF TNMM. (D) USE OF BRIGHT LINE METHOD HAS BEEN REJECTED AN D DIRECTIONS HAVE BEEN ISSUED TO TPO TO BENCHMARK ALLEGED TRANSACTION ALTERNATIVELY 6.2 FURTHER, WE FIND THAT IDENTICAL ISSUE OF EXISTENCE OF INTERNATIONAL TRANSACTION IN THE CASE OF ASSESSEE C AME UP FOR CONSIDERATION BEFORE THE TRIBUNAL FOR ASSESSMENT YE AR 2008-09 IN 8 ITA NOS.1088/DEL./2016 & 1053/DEL./2016 ITA NO. 5528/DEL/2012. THE RELEVANT FINDING OF THE TRIBUNAL IS REPRODUCED AS: 15. HONBLE DELHI HIGH COURT IN SUBSEQUENT DECISIO NS VIZ. BAUSCH & LOMB EYE CARE (INDIA) PVT. LTD. V. ADDITIONAL CIT ( 2016) 381ITR 227 (DEL.) AND HONDA SIEL POWER PRODUCTS LTD. V. DY. CI T (2016) 237 TAXMAN 304 HELD THAT IT IS FOR THE REVENUE TO FIRST LY DISCHARGE THE ONUS TO PROVE THE EXISTENCE OF AN INTERNATIONAL TRA NSACTION BETWEEN THE TAXPAYER AND ITS AE AND ONLY THEREAFTER ALP OF INTERNATIONAL TRANSACTIONS INVOLVING AMP CAN BE COMPUTED. 16. LD. AR FOR THE TAXPAYER VEHEMENTLY CONTENDED TH AT AMP EXPENDITURE IS NOT AN INTERNATIONAL TRANSACTION NOR ANY OBJECTIVE FINDINGS HAVE BEEN RETURNED BY THE LD. TPO. WHEN WE PERUSE THE FINDINGS OF LD. TPO IN PARAS 3.5 & 3.6, THE TPO IN ORDER TO FIND OUT WHETHER AMP IS AN INTERNATIONAL TRANSACTION RELIED UPON SECTION 92F(V) WHICH DEFINES TRANSACTION AS UNDER:- (V) TRANSACTION' INCLUDESAN ARRANGEMENT, UNDERSTA NDING OR ACTION IN CONCERT,- (A) WHETHER OR NOT SUCH ARRANGEMENT, UNDERSTANDING OR ACTION IS FORMAL OR IN WRITING; OR (B) WHETHER OR NOT SUCH ARRANGEMENT, UNDERSTANDING OR ACTION IS INTENDED TO BEENFORCEABLE BY LEGAL PROCEEDING. 17. LD. TPO BY RELYING UPON SECTION 92F (V) OF THE ACT RETURNED THE FINDINGS DECLARING AMP EXPENDITURE AS AN INTERNATIO NAL TRANSACTION AS UNDER :- THE ISSUE OF AMP EXPENDITURE FALLS SQUARELY WITHIN THE DEFINITION OF TRANSACTION AS PER SEC. 92F(V). HE NCE, THERE IS NO INFIRMITY WITH THE ACTION OF THIS OFFICE. 18. THE LD. AR FOR THE TAXPAYER FURTHER CONTENDED T HAT CONTINUOUS GROWING SALES PATTERN OF THE TAXPAYER SUBSTANTIATES THE FACT THAT THE BENEFIT OF AMP ACTIVITIES ACCRUES TO THE TAXPAYER O NLY AND NOT TO ANY OTHER ENTITY. HOWEVER, THE LD. TPO DISMISSED THIS A RGUMENT OF TAXPAYER BY OBSERVING THAT GROWTH IN SALES IS ACTUA LLY INCIDENTAL BENEFIT AND IT IS ONLY THE ENHANCEMENT OF BRAND VAL UE I.E. ACTUAL OBJECTIVE OF THIS EXERCISE. 19. LD. TPO ALSO OBSERVED THAT AMP EXPENDITURE OF T HE TAXPAYER ARE MORE THAN THE NORMAL RANGE OF EXPENDITURE INCURRED BY THE ROUTINE DISTRIBUTOR AND SUCH HIGH LEVEL OF AMP EXPENSES IS NOT INCURRED ONLY FOR INCREASING ITS SALES BUT TO PROMOTE THE BRAND W HICH IS EVIDENT FROM THE FACT THAT AMP/ SALES RATIO OF TAXPAYER IS 6.93% VIS-A-VIS 1.18% THE AMP/SALES RATIO OF ROUTINE DISTRIBUTORS. WE ARE OF THE CONSIDERED VIEW THAT ALL THESE FINDINGS ARE GENERAL IN NATURE AND ARE 9 ITA NOS.1088/DEL./2016 & 1053/DEL./2016 NOT FACTUAL OBJECTIVE FINDINGS BASED UPON ANY EVIDE NCE. MERELY BECAUSE OF THE FACT THAT AMP EXPENSES OF THE TAXPAY ER ARE ON HIGHER SIDE, THE SAME CANNOT BE TREATED TO PROMOTE THE BRA ND AND CREATE INTANGIBLES FOR ITS AE. 20. LD. AR FOR THE TAXPAYER FURTHER CONTENDED THAT NO DIRECT BENEFIT ACCRUES TO ANY OTHER XEROX ENTERPRISE OR HOLDING CO MPANY (XEROX US) AS A RESULT OF MARKETING ACTIVITIES UNDERTAKEN BY I T. HOWEVER, DISMISSING THE CONTENTIONS RAISED BY THE TAXPAYER, LD. TPO MADE OUT THE CASE THAT, BY INCURRING THESE EXPENSES, THE TA XPAYER HAS ENHANCED THE VALUE OF INTANGIBLES OWNED BY THE PARE NT COMPANY. 21. LD. AR FOR THE TAXPAYER FURTHER CONTENDED THAT TO IMPROVE ITS BUSINESS MARKET, IT IS THE SOLE RESPONSIBILITY OF T HE TAXPAYER AND AS SUCH, THE AMP EXPENDITURE HAS DIRECT NEXUS WITH ITS EARNING OF THE INCOME. THE TAXPAYER ALSO RELIED UPON PARA 7.13 OF THE OECD GUIDELINES WHICH STATE INTER ALIA THAT, AN AE SHOU LD NOT BE CONSIDERED TO RECEIVE AN INTRA-GROUP SERVICE WHEN I T OBTAINS INCIDENTAL BENEFITS ATTRIBUTABLE SOLELY TO ITS BEIN G PART OF A LARGER CONCERN AND NOT TO A SPECIFIC ACTIVITY BEING PERFOR MED. 22. LD. AR FOR THE TAXPAYER FURTHER CONTENDED THAT USE OF ANY LOGO ACROSS THE GLOBE IS NOT CONSIDERED EQUIVALENT TO EN HANCING A BRAND. HOWEVER, LD. TPO PROCEEDED TO OBSERVE ON THE BASIS OF GENERAL OBSERVATION THAT THE MANDATORY USE OF BRAND NAME OR LOGO OF THE OVERSEAS PARENT COMPANY WILL LEAD TO THE CREATION O F A MARKETING INTANGIBLES IN FAVOUR OF THE TAXPAYER. HOWEVER, WHE N WE EXAMINE THE FACTS OF THIS CASE IN ENTIRETY, NO DOUBT TAXPAY ER USES XEROX LOGO BUT ALL THE INFORMATION IN RELATION TO CONTRAC T ADDRESS, BRAND AMBASSADOR, PRODUCT, MARKET AND OTHER SIMILAR DETAI LS IN THE ADVERTISEMENT IS CONFINED TO INDIA ONLY. SO, IT CAN NOT BE SAID TO PROMOTE THE XEROX BRAND WORLD-WIDE. MOREOVER, WHEN IT IS UNDISPUTED FACT THAT THE TAXPAYER HAS NOT PAID ANY ROYALTY FOR USE OF XEROX BRAND NAME, INCIDENTAL BENEFITS, IF ANY, TO O VERSEAS ENTITY DOES NOT CALL FOR ANY COMPENSATION FOR THE TAXPAYER . 23. IN CASE OF VALVOLINE CUMMINS (P.) LTD. VS. DCIT (2017) 84 TAXMANN.COM 191 (DELHI), HONBLE DELHI HIGH COURT H ELD THAT MERE USE OF BRAND NAME OR LOGO OWNED BY THE AES BY THE T AXPAYER WILL NOT AUTOMATICALLY LEAD TO INFLUENCE THAT ANY EXPENS ES THAT THE TAXPAYER INCURRED TOWARDS AMP WAS ONLY TO ENHANCE T HE BRAND BY RETURNING FOLLOWING FINDINGS:- 17. ONCE THE BLT HAS BEEN DECLARED BY THIS COURT I N SONY ERICSSON INDIA PVT. LTD. (SUPRA) TO NO LONGER BE A VALID BASIS FOR DETERMINING THE EXISTENCE OF OR THE ALP OF AN I NTERNATIONAL TRANSACTION INVOLVING AMP EXPENSES, THE ORDER OF TH E TPO WAS UNSUSTAINABLE IN LAW. THE MERE FACT THAT THE ASSESS EE WAS 10 ITA NOS.1088/DEL./2016 & 1053/DEL./2016 PERMITTED TO USE THE BRAND NAME VALVOLINE WILL NO T AUTOMATICALLY LEAD TO AN INFERENCE THAT ANY EXPENSE THAT THE ASSESSEE INCURRED TOWARDS AMP WAS ONLY TO ENHANCE T HE BRAND VALVOLINE. THE ONUS WAS ON THE REVENUE TO S HOW THE EXISTENCE OF ANY ARRANGEMENT OR AGREEMENT ON THE BA SIS OF WHICH IT COULD BE INFERRED THAT THE AMP EXPENSE INC URRED BY THE ASSESSEE WAS NOT FOR ITS OWN BENEFIT BUT FOR TH E BENEFIT OF ITS AE. THAT FACTUAL FOUNDATION HAS BEEN UNABLE TO BE LAID BY THE REVENUE IN THE PRESENT CASE. ON THE BASIS OF TH E EXISTING RECORD, THE TPO HAS FOUND NO BASIS OTHER THAN BY AP PLYING THE BLT, TO DISCERN THE EXISTENCE OF INTERNATIONAL TRAN SACTION. THEREFORE, NO PURPOSE WILL BE SERVED IF THE MATTER IS REMANDED TO THE TPO, OR EVEN THE IT AT, FOR THIS PURPOSE. 24. WHEN ALL THESE OBJECTIONS WERE RAISED BY THE TA XPAYER BEFORE THE LD. DRP, SAME HAS BEEN DISMISSED BY USING SAME RATIO APPLIED BY THE TPO FIRSTLY TO DECLARE THE AMP EXPENDITURE A S AN INTERNATIONAL TRANSACTION AND THEN TO TREAT THE AMP EXPENDITURE I NCURRED BY THE TAXPAYER IN EXCESS OF ROUTINE EXPENDITURE TO PROMOT E THE BRAND AND CREATING INTANGIBLES FOR ITS AE BY USING THE BLT, A S IS EVIDENT FORM PARA 5.3 OF THE LD. DRP ORDER. IN PARA 5.8, LD. DRP AGAIN APPLIED THE BLT TO BENCHMARK THE INTERNATIONAL TRANSACTION QUA AMP EXPENDITURE BY RETURNING FOLLOWING FINDINGS:- 5.8 WE HAVE ALSO CONSIDERED THE ASSESSEE'S OBJECTI ON ABOUT REJECTION OF CERTAIN COMPARABLES BY THE TPO. TWO OF THEM, NAMELY, MIS RICOH INDIA LTD. AND MIS SPICE MOBILE L TD. ARE ENGAGED IN THE DISTRIBUTION OF BRANDED GOODS. WE HA VE ALREADY MENTIONED THAT THE TPO HAS CONSIDERED THE DISTRIBUTORS OF ONLY THE SIMILAR UNBRANDED GOODS TO DETERMINE THE ROUTINE MARKETING AND DISTRIBUTION EXPENDITURE BY THEM. THE AMP EXPENDITURE INCURRED BY THE DISTRIBUTORS OF THE BRANDED GOODS WOULD INCLUDE CERTAIN AMOUNT OF BRAND PROMOTION EXPENSES. THAT IS WHY SUCH DISTRIBUTORS H AVE NOT BEEN CONSIDERED AS COMPARABLES BECAUSE O~ AIM IS TO DETERMINE THE ROUTINE MARKETING AND DISTRIBUTION EX PENSES TO FIX THE 'BRIGHTLINE' AND ASCERTAIN THE EXPENDITURE INCURRED BY THE ASSESSEE WHICH IS ATTRIBUTABLE TO BRAND PROMOTI ON. ONLY ROUTINE DISTRIBUTORS ARE TO BE TAKEN WHO ARE NOR EN GAGED IN ANY BRAND BUILDING EXERCISE. THE PURPOSE OF BRIGHT LINE IS TO ASCERTAIN AS TO HOW MUCH AMP EXPENSES WOULD NORMALL Y BE INCURRED BY A MANUFACTURER DISTRIBUTOR FOR CARRYING ON ITS ROUTINE DISTRIBUTION ACTIVITY. FOR THIS IT IS NECES SARY TO SELECT COMPARABLES WHICH ARE NOT ENGAGED IN CREATION OF BR AND NAME. IN RESPECT OF THE THIRD COMPANY, M/S. RATHI G RAPHICS LTD., THE TPO HAS OBSERVED IN THE ORDER THAT IT WAS CARRYING OUT AMP ACTIVITIES ON BEHALF OF ITS SUBSIDIARIES AL SO. THE ASSESSEE HAS NOT GIVEN ANY ARGUMENTS TO REBUT THE C ONTENTION 11 ITA NOS.1088/DEL./2016 & 1053/DEL./2016 OF THE AO. THEREFORE, THE ASSESSEE'S OBJECTION REGA RDING REJECTION OF ALL THE THREE COMPARABLES IS TURNED DO WN BY THE PANEL. THE ASSESSEE HAS ALSO GIVEN A LIST OF ITS OW N COMPARABLES FOR DETERMINING THE 'BRIGHTLINEHOWEVER, ALL THE COMPARABLES PROPOSED BY THE ASSESSEE ARE DISTRIBUTO RS OF BRANDED GOODS AND, THEREFORE, FOR THE REASONS MENTI ONED ABOVE, SUCH COMPARABLES CANNOT BE ACCEPTED. HOWEVER , THE PANEL, ON ITS OWN, HAS CAREFULLY EXAMINED THE FUNCT IONAL PROFILE AS WELL AS THE FINANCIALS OF ALL THE COMPAR ABLES USED BY THE TPO. IT HAS BEEN NOTED THAT MORE THAN 50% OF TU RNOVER OF M/S DHOOT INDUSTRIAL FINANCE LTD. IS FROM SALE OF S HARES. THE PANEL IS, THEREFORE, OF THE VIEW THAT IT SHOULD HAV E NOT BEEN CONSIDERED AS A COMPARABLE. 25. BY NOW, IT IS SETTLED PRINCIPLE OF LAW THAT BLT IS NOT A VALID METHOD FOR DETERMINING THE EXISTENCE OF INTERNATION AL TRANSACTION OR FOR DETERMINATION OF ALP OF SUCH TRANSACTIONS. 22. HONBLE DELHI HIGH COURT IN CASE OF CIT VS. WHI RLPOOL OF INDIA LTD. (2016) 381 ITR 154 (DELHI) DECIDED THE I DENTICAL ISSUE BY RETURNING FOLLOWING FINDINGS: 34. THE TP ADJUSTMENT IS NOT EXPECTED TO BE MADE B Y DEDUCING FROM THE DIFFERENCE BETWEEN THE 'EXCESSIVE ' AMP EXPENDITURE INCURRED BY THE ASSESSEE AND THE AMP EXPENDITURE OF A COMPARABLE ENTITY THAT AN INTERNAT IONAL TRANSACTION EXISTS AND THEN PROCEED TO MAKE THE ADJ USTMENT OF THE DIFFERENCE IN ORDER TO DETERMINE THE VALUE OF S UCH AMP EXPENDITURE INCURRED FOR THE AE. 35. IT IS FOR THE ABOVE REASON THAT THE BLT HAS BEE N REJECTED AS A VALID METHOD FOR EITHER DETERMINING THE EXISTE NCE OF INTERNATIONAL TRANSACTION OR FOR THE DETERMINATION OF ALP OF SUCH TRANSACTION. ALTHOUGH, UNDER SECTION 92B READ WITH SECTION 92F(V), AN INTERNATIONAL TRANSACTION COULD INCLUDE AN ARRANGEMENT, UNDERSTANDING OR ACTION IN CONCERT, TH IS CANNOT BE A MATTER OF INFERENCE. THERE HAS TO BE SOME TANG IBLE EVIDENCE ON RECORD TO SHOW THAT TWO PARTIES HAVE A CTED IN CONCERN. 37. THE PROVISIONS UNDER CHAPTER X DO ENVISAGE A S EPARATE ENTITY CONCEPT. IN OTHER WORDS, THERE CANNOT BE A PRESUMPTION THAT IN THE PRESENT CASE SINCE WOIL IS A SUBSIDIARY OF WHIRLPOOL USA, ALL THE ACTIVITIES OF WOIL ARE IN FA CT DICTATED BY WHIRLPOOL USA. MERELY BECAUSE WHIRLPOOL USA HAS A F INANCIAL INTEREST, IT CANNOT BE PRESUMED THAT AMP EXPENSE IN CURRED BY THE WOIL ARE AT THE INSTANCE OR ON BEHALF OF WHIRLP OOL USA. 12 ITA NOS.1088/DEL./2016 & 1053/DEL./2016 THERE IS MERIT IN THE CONTENTION OF THE ASSESSEE TH AT THE INITIAL ONUS IS ON THE REVENUE TO DEMONSTRATE THROUGH SOME TANGIBLE MATERIAL THAT THE TWO PARTIES ACTED IN CONCERT AND FURTHER THAT THERE WAS AN AGREEMENT TO ENTER INTO AN INTERNATION AL TRANSACTION CONCERNING AMP EXPENSES. .. 47. FOR THE AFOREMENTIONED REASONS, THE COURT IS OF THE VIEW THAT AS FAR AS THE PRESENT APPEALS ARE CONCERNED, T HE REVENUE HAS BEEN UNABLE TO DEMONSTRATE BY SOME TANGIBLE MAT ERIAL THAT THERE IS AN INTERNATIONAL TRANSACTION INVOLVIN G AMP EXPENSES BETWEEN WOIL AND WHIRLPOOL USA. IN THE ABS ENCE OF THAT FIRST STEP, THE QUESTION OF DETERMINING THE AL P OF SUCH A TRANSACTION DOES NOT ARISE. IN ANY EVENT, IN THE AB SENCE OF A MACHINERY PROVISION IT WOULD BE HAZARDOUS FOR ANY T PO TO PROCEED TO DETERMINE THE ALP OF SUCH A TRANSACTION SINCE BLT HAS BEEN NEGATIVED BY THIS COURT AS A VALID METHOD OF DETERMINING THE EXISTENCE OF AN INTERNATIONAL TRANS ACTION AND THEREAFTER ITS ALP. 26. HONBLE DELHI HIGH COURT IN CASE OF MARUTI SUZU KI INDIA LTD. VS. CIT (2015) 64 TAXMANN.COM 150 (DELHI) ALSO DECI DED AS TO HOW THE INTERNATIONAL TRANSACTION QUA AMP EXPENDITURE I S TO BE DETERMINED AND AS TO HOW THE PRICE OF INTERNATIONAL TRANSACTION QUA AMP EXPENDITURE IS TO BE DETERMINED BY RETURNING FO LLOWING FINDINGS:- 68. THE ABOVE SUBMISSIONS PROCEED PURELY ON SURMIS ES AND CONJECTURES AND IF ACCEPTED AS SUCH WILL LEAD TO SE NDING THE TAX AUTHORITIES THEMSELVES ON A WILD-GOOSE CHASE OF WHAT CAN AT BEST BE DESCRIBED AS A 'MIRAGE'. FIRST OF ALL, T HERE HAS TO BE A CLEAR STATUTORY MANDATE FOR SUCH AN EXERCISE. THE COURT IS UNABLE TO FIND ONE. TO THE QUESTION WHETHER THERE I S ANY 'MACHINERY' PROVISION FOR DETERMINING THE EXISTENCE OF AN INTERNATIONAL TRANSACTION INVOLVING AMP EXPENSES, M R. SRIVASTAVA ONLY REFERRED TO SECTION 92F (II) WHICH DEFINES ALP TO MEAN A PRICE 'WHICH IS APPLIED OR PROPOSED TO B E APPLIED IN A TRANSACTION BETWEEN PERSONS OTHER THAN AES IN UNC ONTROLLED CONDITIONS'. SINCE THE REFERENCE IS TO PRICE AND TO UNCONTROLLED CONDITIONS IT IMPLICITLY BRINGS INTO PLAY THE BLT. IN OTHER WORDS, IT EMPHASISES THAT WHERE THE PRICE IS SOMETHING OTHER THAN WHAT WOULD BE PAID OR CHARGED BY ONE ENTITY FROM ANOTHER IN UNCONTROLLED SITUATIONS THEN THAT WOULD BE THE ALP. THE COURT DOES NOT SEE THIS AS A MACHIN ERY PROVISION PARTICULARLY IN LIGHT OF THE FACT THAT TH E BLT HAS BEEN EXPRESSLY NEGATIVE BY THE COURT IN SONY ERICSSON. T HEREFORE, THE EXISTENCE OF AN INTERNATIONAL TRANSACTION WILL HAVE TO BE ESTABLISHED DE HORS THE BLT. 13 ITA NOS.1088/DEL./2016 & 1053/DEL./2016 70. WHAT IS CLEAR IS THAT IT IS THE 'PRICE' OF AN I NTERNATIONAL TRANSACTION WHICH IS REQUIRED TO BE ADJUSTED. THE V ERY EXISTENCE OF AN INTERNATIONAL TRANSACTION CANNOT BE PRESUMED BY ASSIGNING SOME PRICE TO IT AND THEN DEDUCING THA T SINCE IT IS NOT AN ALP, AN 'ADJUSTMENT' HAS TO BE MADE. THE BUR DEN IS ON THE REVENUE TO FIRST SHOW THE EXISTENCE OF AN INTER NATIONAL TRANSACTION. NEXT, TO ASCERTAIN THE DISCLOSED 'PRIC E' OF SUCH TRANSACTION AND THEREAFTER ASK WHETHER IT IS AN ALP . IF THE ANSWER TO THAT IS IN THE NEGATIVE THE TP ADJUSTMENT SHOULD FOLLOW. THE OBJECTIVE OF CHAPTER X IS TO MAKE ADJUS TMENTS TO THE PRICE OF AN INTERNATIONAL TRANSACTION WHICH THE AES INVOLVED MAY SEEK TO SHIFT FROM ONE JURISDICTION TO ANOTHER. AN 'ASSUMED' PRICE CANNOT FORM THE REASON FOR MAKING A N ALP ADJUSTMENT. .. 74. THE PROBLEM WITH THE REVENUE'S APPROACH IS THAT IT WANTS EVERY INSTANCE OF AN AMP SPEND BY AN INDIAN ENTITY WHICH HAPPENS TO USE THE BRAND OF A FOREIGN AE TO BE PRES UMED TO INVOLVE AN INTERNATIONAL TRANSACTION. AND THIS, NOTWITHSTANDING THAT THIS IS NOT ONE OF THE DEEMED INTERNATIONAL TRANSACTIONS LISTED UNDER THE EXPLANA TION TO SECTION 92BOF THE ACT. THE PROBLEM DOES NOT STOP HE RE. EVEN IF A TRANSACTION INVOLVING AN AMP SPEND FOR A FOREIGN AE IS ABLE TO BE LOCATED IN SOME AGREEMENT, WRITTEN (FOR E.G., THE SAMPLE AGREEMENTS PRODUCED BEFORE THE COURT BY THE REVENUE )OR OTHERWISE, HOW SHOULD A TPO PROCEED TO BENCHMARK TH E PORTION OF SUCH AMP SPEND THAT THE INDIAN ENTITY SH OULD BE COMPENSATED FOR? 27. IN CASE OF HONDA SIEL POWER PRODUCTS LTD. VS. D CIT (2015) 64 TAXMANN.COM 328 (DELHI), HONBLE DELHI HIGH COURT H ELD THAT:- 25. IF THE BLT IS KEPT ASIDE AS A VALID MEANS OF D ETERMINING THE EXISTENCE OF AN INTERNATIONAL TRANSACTION CONCE RNING AMP EXPENSES, THE REVENUE WOULD HAVE TO MAKE OUT ITS CA SE ON THE BASIS OF THE OTHER TANGIBLE MATERIAL WHICH MIGHT SH OW THE EXISTENCE OF ANY ARRANGEMENT OR 'UNDERSTANDING' O R ANY CONDUCT OF EITHER PARTY TO SHOW THAT THEY WERE ACT ING IN CONCERT AS FAR AS THE ASSESSEE HAVING TO PROMOTE T HE BRAND OF THE FOREIGN AE IS CONCERNED. 28. IN CASE OF LE PASSAGE TO INDIA TOUR & TRAVELS ( P.) LTD. (2017) 391 ITR 207 (DELHI), HONBLE DELHI HIGH COURT AGAIN HELD THAT ALL TRANSACTIONS REPORTING AMP CANNOT BE TREATED AS INT ERNATIONAL TRANSACTION AND THE FACT OF EACH CASE WOULD HAVE TO BE EXAMINED INDEPENDENTLY BY RETURNING FOLLOWING FINDINGS:- 14 ITA NOS.1088/DEL./2016 & 1053/DEL./2016 4. THIS COURT IS OF THE VIEW THAT WHILST L.G. ELEC TRONICS INDIA PVT. LTD. (SUPRA) INDICATED THAT AMPS WERE OR DID C ONSTITUTE THE BASIS FOR AN INQUIRY INTO THE INTERNATIONAL TRA NSACTION AND INDICATED A BRIGHT LINE TEST FOR IT, SONY ERICSSO N MOBILE COMMUNICATIONS INDIA PVT. LTD.(SUPRA) OVERRULED THA T DECISION. THIS PER SE DOES NOT MEAN THAT EVERY ENDEAVOUR WILL BE TO CONCLUDE THAT ALL TRANSACTIONS REPORTING AMPS ARE T O BE TREATED AS INTERNATIONAL TRANSACTIONS, THE FACTS OF EACH CA SE WOULD HAVE TO BE EXAMINED FOR SOME DELIBERATIONS. WHILST THE TPO AND THE DRP UNDOUBTEDLY HELD THAT THE INTERNATIONAL TRANSACTIONS EXISTED - THAT UNDERSTANDING APPARENTL Y WAS PASSED UPON THE PRE-EXISTING REGIME, PROPOUNDED IN L.G. ELECTRONICS INDIA PVT. LTD.(SUPRA) WITH GREATER CLA RITY ON ACCOUNT OF THIS COURTS DECISION IN SONY ERICSSON M OBILE COMMUNICATIONS INDIA PVT. LTD.(SUPRA). THE I.T.A.T. IN OUR OPINION, SHOULD HAVE FIRST DECIDED WHETHER IN THE CIRCUMSTANCES OF THIS CASE, THE NATURE OF THE AMP R EPORTED, COULD LEAD TO THE CONCLUSION THAT THERE WAS AN INTE RNATIONAL TRANSACTION. WHEN DOING SO, IT SHOULD HAVE REMITTED THE MATTER BACK FOR EXAMINATION TO THE A.O. IN THIS CASE. ACCO RDINGLY, FOLLOWING THE DECISION OF SONY ERICSSON MOBILE COMMUNICATIONS INDIA PVT. LTD.(SUPRA) AND A SUBSEQU ENT DECISION IN DAIKIN AIRCONDITIONING INDIA PVT. LIMIT ED V. ASSISTANT COMMISSIONER OF INCOME TAX IN ITA 269/201 6, DECIDED ON 27.07.2016, THIS COURT HEREBY REMITS THE MATTER FOR A COMPREHENSIVE DECISION BY THE I.T.A.T. IN OTH ER WORDS, THE I.T.A.T. WILL DECIDE WHETHER THE REPORTING OF T HE AMP IN REGARD TO THE OUTBOUND BUSINESS CONSTITUTES AN INTE RNATIONAL TRANSACTION FOR WHICH ALP DETERMINATION WAS NECESSA RY AND IF SO, THE EFFECT THEREOF. THE PARTIES ARE DIRECTED TO APPEAR BEFORE THE I.T.A.T. ON 01.02.2017. THE APPEAL IS PARTLY AL LOWED IN THE ABOVE TERMS. 29. HONBLE DELHI HIGH COURT IN VALVOLINE CUMMINS ( P.) LTD. VS. DCIT (SUPRA) FURTHER DECIDED THE ISSUE IN FAVOUR OF THE TAXPAYER THAT MERELY BECAUSE OF THE FACT THAT AMP EXPENDITURE INC URRED BY THE TAXPAYER WAS IN EXCESS, EXISTENCE OF INTERNATIONAL TRANSACTION CANNOT BE INFERRED. OPERATIVE PART OF THE FINDINGS IS EXTRACTED AS UNDER 15. THE DECISION IN LE PASSAGE TO INDIA TOUR & TRA VELS (P) LTD.(SUPRA) TURNED ON THE FACT THAT THERE WAS NO DE TERMINATION BY THE TPO IN THE FIRST PLACE WHETHER THERE WAS AN INTERNATIONAL TRANSACTION. IN THE PRESENT CASE, HOW EVER, THE TPO DID APPLY HIS MIND TO THE EXISTENCE OF AN INTER NATIONAL TRANSACTION INVOLVING AMP EXPENSE. THE ONLY GROUND ON WHICH THE CONCLUSION WAS REACHED BY THE TPO WAS THAT THE AMP EXPENDITURE INCURRED BY THE ASSESSEE WAS IN EXCESS OF THAT 15 ITA NOS.1088/DEL./2016 & 1053/DEL./2016 INCURRED BY THE COMPARABLES. HIS CONCLUSION WAS NOT BASED ON ANY OTHER FACTOR. IN OTHER WORDS, IT WAS NOT AS IF THE CONCLUSION ARRIVED BY THE TPO WAS BASED ON TWO OR T HREE GROUNDS, ONE OF WHICH WAS THE BLT. 16. THIS COURT IN SONY ERICSSON INDIA PVT. LTD. (SU PRA) CATEGORICALLY FOUND THAT THE BLT WAS NOT AN APPROPR IATE YARDSTICK FOR DETERMINING THE EXISTENCE OF AN INTER NATIONAL TRANSACTION OR FOR THAT MATTER FOR CALCULATING THE ALP OF SUCH TRANSACTION. THE DECISION OF THE FULL BENCH OF THE IT AT IN L.G. ELECTRONICS INDIA PVT. LTD. V. AC IT (2013) 22 ITR (TRIB.) 1 WHICH SOUGHT TO MAKE BLT THE BASIS WAS SET ASIDE BY THIS COURT. 30. IN THE INSTANT CASE, THERE IS NOT AN IOTA OF MA TERIAL ON THE FILE APART FROM RELYING UPON THE FACT THAT BY INCURRING HUGE AMP EXPENSES TO THE TUNE OF 6.93%, TAXPAYER HAS ENHANCE D BRAND VALUE AND CREATED INTANGIBLES IN FAVOUR OF ITS AE, NO COG ENT MATERIAL IS THERE TO TREAT THE INCURRING OF AMP EXPENSES AS INT ERNATIONAL TRANSACTIONS. TPO HAS ALSO NOT RETURNED THE FINDING THAT HOW THE BENEFIT OF AMP EXPENDITURE INCURRED BY THE TAXPAYER HAVE BENEFITED AE, NO CALCULATION HAS COME ON RECORD, SO IN THESE CIRCUMSTANCES WHEN WE DISCARDED THE BLT THE ENTIRE CASE OF LD. TP O/DRP FELL FLAT. 31. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE AND FO LLOWING THE DECISIONS RENDERED BY HONBLE HIGH COURT DISCUSSED IN THE PRECEDING PARAS, WE ARE OF THE CONSIDERED VIEW THAT FIRSTLY, THERE IS NOT AN IOTA OF MATERIAL WITH LD. TPO TO PROVE THE E XISTENCE OF AN INTERNATIONAL TRANSACTIONS INVOLVING AMP EXPENSES B Y THE TAXPAYER. TPO RATHER PROCEEDED ON THE PREMISE THAT THE AMP EX PENDITURE INCURRED BY THE TAXPAYER WERE FAR EXCESS OF AMP EXP ENSES INCURRED BY THE COMPARABLES. 32. TPO HAS ALSO APPLIED THE BLT WHICH HAS BEEN DIS CARDED BY THE HONBLE HIGH COURT IN A NUMBER OF JUDGMENTS. EVEN O THERWISE, IN THE ABSENCE OF ANY AGREEMENT, ARRANGEMENT OR UNDERSTAND ING BETWEEN THE TAXPAYER AND ITS AE, EXPRESSED OR IMPLIED, THAT AMP SPENT OF THE TAXPAYER WOULD ALSO BE BENEFICIAL TO THE AE OR IT W OULD ENHANCE THE BRAND VALUE OF THE AE IN ANY MANNER, NO INTERNATION AL TRANSACTION CAN BE INFERRED. 33. MOREOVER, ON THE OTHER HAND, THE TAXPAYER HAS C OME UP WITH SPECIFIC PLEADING THAT IT HAS ANALYSED A PRINCIPAL TO PRINCIPAL RELATIONSHIP WITH ITS AE AND AT NO POINT, IT HAS AC TED AS AGENT OF THE AE. IF THIS IS SO, AMP EXPENSES WHICH THE TAXPAYER HAS INCURRED TO BOOST UP ITS SALES CANNOT BE TREATED TO ENHANCE THE BRAND VALUE AND TO CREATE INTANGIBLES IN FAVOUR OF THE AE. ALL THES E FACTS STAND PROVED FROM THE GROWING SALE PATTERN OF THE TAXPAYER WHICH SHOWS THAT 16 ITA NOS.1088/DEL./2016 & 1053/DEL./2016 BENEFIT OF AMP ACTIVITIES ACCRUED IN FAVOUR OF THE TAXPAYER. MOREOVER WHEN TPO HAS FAILED TO PROVE THAT THERE IS AN EXIST ENCE OF INTERNATIONAL TRANSACTION BETWEEN TAXPAYER AND AE, THE ADDITION ON ACCOUNT OF AMP EXPENSES CANNOT BE MADE ON THE BASIS OF THE FACT THAT AMP EXPENSES OF THE TAXPAYER ARE FAR EXCESS TH AN THE AMP EXPENSES OF COMPARABLES. 34. EVEN OTHERWISE, THE MERE USE OF LOGO OF AE IS P ER SE NOT INTERNATIONAL TRANSACTION. CONSEQUENTLY, WE ARE OF THE CONSIDERED VIEW THAT AO/DRP/TPO HAVE ERRED IN MAKING ADDITION OF RS.36,41,27,428/- WHICH IS NOT SUSTAINABLE IN THE E YES OF LAW, HENCE ORDERED TO BE DELETED. HENCE, GROUNDS NO.3 TO 25 ARE DETERMINED IN FAVOUR OF THE TAXPAYER. 35. BEFORE PARTING WITH THIS ORDER, WE WOULD LIKE T O BRING ON RECORD THE FACT THAT LD. DR FOR THE REVENUE, ALTHOUGH ADMI TTED THE LEGAL POSITION ENUNCIATED IN THE PRECEDING PARAGRAPHS, BU T HE CONTENDED THAT SINCE ALL THE AFORESAID DECISIONS ARE LYING CH ALLENGED BEFORE THE HON'BLE APEX COURT, THE MATTER MAY BE KEPT PENDING TILL THE DECISION BY HON'BLE APEX COURT. HOWEVER, WE ARE OF THE CONSI DERED VIEW THAT SINCE IT IS A STAY GRANTED MATTER AND THE PROCEEDIN GS BEFORE THE SECOND APPELLATE AUTHORITY HAVE NOT BEEN STAYED BY ANY HIGHER FORUM, THE SAME CANNOT BE KEPT PENDING. 36. AFTER CONSIDERING THE LEGAL POSITION AS DISCUSS ED IN THE PRECEDING PARAGRAPHS, WE ARE OF THE CONSIDERED OPIN ION THAT THE ALP OF AN INTERNATIONAL TRANSACTION INVOLVING AMP EXPEN SES, THE ADJUSTMENT MADE BY THE TPO/DRP/AO IS NOT SUSTAINABL E IN THE EYES OF LAW. AT THE SAME TIME, WE CANNOT IGNORE THE SUBM ISSION OF THE LEARNED DR THAT THE MATTER IS PENDING BEFORE HON'BL E APEX COURT AND THE DECISION OF HON'BLE APEX COURT WOULD BE BIN DING UPON ALL THE AUTHORITIES. IN VIEW OF THE ABOVE, WE SET ASIDE THE ORDERS OF AUTHORITIES BELOW AND RESTORE THE MATTER TO THE FIL E OF THE ASSESSING OFFICER. WE HOLD THAT AS PER THE FACTS OF THE CASE AND THE LEGAL POSITION AS OF NOW AND DISCUSSED ABOVE IN THIS ORDE R, THE ADJUSTMENT MADE BY THE TPO/DRP/AO IN RESPECT OF AMP EXPENSES IS NOT SUSTAINABLE. HOWEVER, IF THE ABOVE DECISIONS OF HON'BLE JURISDICTIONAL HIGH COURT WHICH IS UNDER CONSIDERAT ION BEFORE THE HON'BLE APEX COURT IS MODIFIED OR REVERSED BY THE H ON'BLE APEX COURT, THEN THE ASSESSING OFFICER WOULD PASS THE OR DER AFRESH CONSIDERING THE DECISION OF HON'BLE APEX COURT. IN THOSE CIRCUMSTANCES, HE WILL ALSO ALLOW OPPORTUNITY OF BE ING HEARD TO THE ASSESSEE. 17 ITA NOS.1088/DEL./2016 & 1053/DEL./2016 6.3 FURTHER, THE TRIBUNAL IN THE CASE OF THE ASSESSEE IN ITA NO. 2060/DEL./2015 FOR AY 2010-11 FOLLOWING THE FINDING S OF THE TRIBUNAL IN THE ASSESSMENT YEAR 2008-09 HAS REJECTE D THE BLT APPROACH AND DELETED THE ADJUSTMENT MADE ON ACCOUNT OF AMP EXPENSES. 6.4 BEFORE US, THE LEARNED COUNSEL OF THE ASSESSEE SUB MITTED THAT IN ASSESSMENT YEAR 2008-09, THE TRIBUNAL RESTO RED THE MATTER TO THE ASSESSING OFFICER TO PASS ORDER AFRES H AFTER CONSIDERING THE DECISION OF THE HONBLE SUPREME COU RT, WHICH WAS NOT YET DELIVERED. HE FURTHER SUBMITTED THAT IN ASSESSMENT YEAR 2010-11, THE TRIBUNAL HAS MODIFIED THE ORDER A ND DELETED THE ADJUSTMENT. HE, THEREFORE, SUBMITTED THAT IN THE YE AR UNDER CONSIDERATION ALSO, THE ADJUSTMENT SHOULD BE DELETE D WITHOUT RESTORING THE MATTER TO THE ASSESSING OFFICER. WE H AVE PERUSED THE RELEVANT FINDING OF THE TRIBUNAL IN ASSESSMENT YEAR S 2008-09 AND 2010-11. THE FINDING OF THE TRIBUNAL IN PARA 7.1 FO R ASSESSMENT YEAR 2010-11 IS REPRODUCED AS UNDER: 'PARA 7.1. WE ARE OF THE CONSIDERED OPINION THAT IS SUES RAISED BY THE LEARNED DR HAVE ALREADY BEEN CONSIDERED IN THE DECI SION OF THE HON'BLE HIGH COURT'S CITED IN THE ORDER OF THE TRIB UNAL (SUPRA). IN VIEW OF THE BINDING PRECEDENT, FOLLOWING THE DECISI ON OF THE TRIBUNAL, WE HEREBY DIRECT TO DELETE ADJUSTMENT MADE ON ACCOU NT OF AMP TRANSACTIONS. THE CORRESPONDING GROUNDS RAISED ARE ACCORDINGLY ALLOWED.'. 6.5 AS QUESTION OF EXISTENCE OF INTERNATIONAL TRANSACT ION OF AMP AND ADJUSTMENT ON ACCOUNT OF THE SAME IN THE CASE O F ASSESSEE HAVE BEEN DELETED IN THE ASSESSMENT YEAR 2008-09 AN D 2010-11, THUS, RESPECTFULLY FOLLOWING THE FINDING OF THE TRI BUNAL (SUPRA), WE HOLD THAT NO INTERNATIONAL TRANSACTION OF AMP EXIST IN THE CASE OF ASSESSEE. HENCE, WE DELETE THE ADJUSTMENT MADE ON A CCOUNT OF 18 ITA NOS.1088/DEL./2016 & 1053/DEL./2016 THE AMP TRANSACTION. CORRESPONDING GROUNDS RAISED B Y THE ASSESSEE ARE ACCORDINGLY ALLOWED. ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS ALLOWED. 6.6 AS FAR AS THE GROUNDS RAISED BY THE REVENUE ARE CO NCERNED, IN ABSENCE OF ANY INTERNATIONAL TRANSACTION OF AMP, THE ISSUES RAISED BY THE REVENUE BECOME INFRUCTUOUS. ACCORDING LY, THE APPEAL OF THE REVENUE IS DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOW ED, WHEREAS THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH OCTOBER, 2020. SD/- SD/- (AMIT SHUKLA) (O.P. KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 19 TH OCTOBER, 2020. RK/- COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI