Appeal details
Counselvise Citation
[2018] 119 COUNSELVISE.COM (IT) 5127 (ITAT-DELHI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
8 month(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
23-10-2018
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
I2
Assessment Year
2010-2011
Appeal Filed On
23-02-2018
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH I - 2 , NEW DELHI BEFORE S H. R.K. PAND , ACCOUNTANT MEMBER AND SH. K. N. CHARY, JUDICI A L MEMBER ITA NO. 1 3 1 9 /DEL/201 8 ASSESSMENT YEAR: 20 1 0 - 1 1 M/S. PERFETTI VAN MELLE INDIA PRIVATE LIMITED , 47 TH MILESTONE, DELHI, JAIPUR HIGHWAY , MANESR, GURGAON - 122002 (HARYANA) PAN AAACP2626A VS DEPUTY COMMISSIONER OF INCOME T A X CIRCLE 3, GURG A ON (APPELLANT) (RESPONDENT) APPELLANT BY S H . NAGESHWAR R AO , ADVOCATE RESPONDENT BY SH. H. K. CHOUDHARY, CI T DR DATE OF HEARING: 0 1 /0 8 /2018 DATE OF PRONOUNCEMENT: 23 / 1 0 /2018 ORDER PER R.K. PANDA, AM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 29. 0 1.2018 P A SSED U/S 143 (3) R . W .S 144 C OF THE IT A CT, 1961 RELATING TO A. Y. 20 10 - 1 1 . 2 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER : - THE FOLLOWING GROUNDS OF APPEAL ARE MUTUALLY EXCLUSIVE OF AND WITHOUT PREJUDICE TO EACH OTHER. 1 . THAT ASSESSING OFFICER ( LD. AO ) / TRANSFER PRICING OFFICER ( LD. TPO )/ DISPUTE RESOLUTION PANEL ( LD. DRP ) ERRED IN ASSESSING THE INCOME OF THE APPELLANT AT INR 201,59,93,450/ - AS AGAINST RETURNED INCOME AS NIL . 2 . THE LD. DRP/LD. TPO/LD. AO ERRED IN MAKING AN ADJUSTMENT OF INR 120,82,90,731/ - UNDER SECTION 92CA(3) OF THE ACT IN RESPECT OF THE ADVERTISING AND MARKETING EXPENSES ( AMP EXPENSES ) INCURRED BY THE APPELLANT FOR ITS OWN BUSINESS PURPOSES. 3 . THAT THE IMPUGNED ORDER PASSED BY LD. AO DATED 29.01.2018 IS BARRED BY LIMITATION AS PER PROVISIONS OF SECTION 153 OF THE ACT AND THUS SHOULD B E TREATED AS INVALID. 4 . THAT THE LD. DRP/ LD. TPO/ LD. AO HAVE ERRED IN TREATING EXPENSES INCURRED BY APPELLANT TOWARDS AMP AS AN INTERNATIONAL TRANSACTION ON FOLLOWING BASIS: A . THAT ON THE PRETEXT OF FOLLOWING REMAND DIRECTIONS OF HON BLE TRIBUNAL DATED 0 2.06.2015, LD. DRP/ LD. TPO/ LD. AO HAVE GROSSLY ERRED IN MAKING ADJUSTMENT ON ACCOUNT OF AMP AFRESH AND RAISING IMPUGNED DEMAND IN TOTAL DISREGARD TO OVERRIDING FINDINGS OF THE HON BLE DELHI HIGH COURT IN THE CASES WHICH DEALT WITH SIMILAR FACTS IN CASE O F MANUFACTURERS. B . THAT THE LD. DRP HAS GROSSLY ERRED IN MISINTERPRETING THE TERMS OF THE LICENSE AGREEMENT BY CONCLUDING THAT AE IS RESPONSIBLE FOR COMPENSATING ALL ADVERTISEMENT EXPENSES INCURRED BY THE APPELLANT. 5 . WITHOUT PREJUDICE TO THE ABOVE, THE LD. DRP/ LD. TPO/ LD. AO HAVE GROSSLY ERRED IN NOT EVEN APPLYING DECISION OF HON BLE HIGH COURT IN CASE OF SONY ERICSSON MOBILE COMMUNICATIONS PRIVATE LIMITED IN ENTIRETY, THUS COMPLETELY DISREGARDING DIRECTIONS OF HON BLE TRIBUNAL DATED 02.06.2015 WHILE REMAN DING THE MATTER TO DECIDE AFRESH. 6 . THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE LD. DRP I LD. TPO / LD. AO ERRED IN FAILING TO APPRECIATE THAT AMP WAS BENCHMARKED AS FUNCTION BY APPELLANT BEING CLOSELY LINKED TO OVERALL BUSINESS ACTIVITIES AND IT WOULD BE UNJUSTIFIED TO SEGREGATE THE SAME, WITHOUT PREJUDICE IMPUGNED ORDER COMPLETELY MISINTERPRETED THE DECISIONS OF HON BLE COURTS / TRIBUNAL. 7 . THAT ON THE PRETEXT OF FOLLOWING DIRECTIONS ON LD. DRP DATED 20.12.2017, LD. TPO FOR APPLYING MARK - UP OVER ALLEGED AMP SERVICES HAS GROSSLY ERRED IN: A . CONDUCTING A FRESH SEARCH OF COMPANIES WITHOUT PROVIDING ANY OPPORTUNITY TO THE APPELLANT. B . APPLYING ADDITIONAL MARK - UP OF 6 PERCENT AS NOMINAL INTEREST RATE OVER AND ABOVE THE MARGIN EARNED BY COMPARABLE COMPANIES IDENT IFIED IN FRESH SEARCH, WITHOUT CONDUCTING ANY ARM S LENGTH ANALYSIS IN ACCORDANCE WITH THE PROVISIONS OF THE ACT. 3 8. THAT ON FACTS OF THE CASE AND IN LAW, THE LD. AO ERRED IN INITIATING PENALTY PROCEEDINGS UNDER SECTION 274 READ WITH SECTION 271 OF THE ACT . 3. FACTS OF THE CASE , IN BRIEF , ARE THAT THE ASSESSEE IS WHOLLY OWNED SUBSIDIARY OF THE PERFETTI VAN MELLE SPA, ITALY AND IS ENGAGED IN MANUFACTURING OF VARIETY OF CONFECTIONARY PRODUCT FROM ITS FACTORIES IN TAMIL NADU, HARYANA AND UTTARAKHAND. IT FILED ITS RETURN OF INCOME ON 08.10.2010 . A REFERENCE UNDER SECTION 92 CA (1) OF THE I.T. ACT, 1961 WAS MADE TO THE TRANSFER PRICING OFFICER, NEW DELHI FOR DETERMINING THE ARM'S LENGTH PRICE UNDER SECTION 92CA(3)OF THE I.T. ACT 1961 IN RESPECT OF THE INTERNATI ONAL TRANSACTIONS ENTERED INTO BY THE ASSESSEE COMPANY WITH ITS ASSOCIATED ENTERPRISES DURING THE FINANCIAL YEAR 2009 - 10 RELEVANT TO THE ASSESSMENT YEAR 2010 - 11. ACCORDINGLY, THE TPO MADE ADDITION OF RS. 180,63,50,055/ - ON ACCOUNT OF AMP EXPENSES. THE ASSE SSEE FILED AN APPEAL BEFORE THE DRP - 3, NEW DELHI CONSEQUEN T TO WHICH THE DRP PASSED AN ORDER DATED 16.12.2014. THE ASSESSEE FILED FURTHER APPEAL BEFORE THE TRIBUNAL WHO PASSED THE ORDER ON 02.06.2015 WITH CERTAIN DIRECTIONS. ACCORDINGLY, AN ORDER U/S 92CA (3) OF THE I.T. ACT, 1961 WAS PASSED BY THE TPO DATED 30.03.2017. THE A.O. PASSED A DRAFT ASSESSMENT ORDER DATED 30.03.2017 AND MADE AN ADDITION OF RS. 223,92,35,163/ - . T HE ASSESSEE FILED OBJECTIONS U/S 144C(2) BEFORE THE DRP - 1, NEW DELHI AGAINST THE DRAFT ASSESSMENT ORDER. THE DRP ISSUED THE DIRECTIONS U/S 144C(5) OF THE IT ACT, 1961 VIDE ORDER 20.12.2017 IN THE SAID CASE. ACCORDINGLY, THE TPO PASSED AN ORDER VIDE ORDER DATED 29.01.2018 GIVING EFFECT TO THE DIRECTIONS OF DRP - 1, NEW DELHI. PRESENT APPEAL IS DIRECTED AGAINST THE TRANSFER PRICING ADJUSTMENT OF RS. 1 , 20 , 82 , 90 , 731/ - TOWARDS AMP EXPENDITURE ON SUBSTANTIVE BASIS, PURSUANT TO TH E TRIBUNAL DECISION DATED 2.6.2015 IN ITA NO 407/DEL/2015 . 4. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT I N PURSUANCE OF THE 4 ORDER OF THE TRIBUNAL. THE TPO PASSED AN ORDER DATED 30 MARCH 2017 . IN THE DETAILED OBJECTIONS FILE D BEFORE DRP A SSESSEE INTER ALIA OBJECTED TO ORDER OF TPO AS BEING V I OLATIVE OF PRINCIPLES OF NATURAL JUSTICE, CONTRARY TO DECISIONS OF HON'BLE HIGH CO URT AND WITHOUT APPRECIATING RELEVANT AND BASIC FACTS OF THE CASE. REFERRING TO VARIOUS PAGES OF THE PAPER BOOK HE SUBMITTED THAT THE ENTIRE AMOUNT OF EXPENDITURE INCURRED TOWARDS AMP IS CONSIDERED AS COST FOR PURPOSES OF TESTED PARTY MARGIN WORKING. REFER RING TO PARA 4.1.5 OF PAGE 8 OF THE DRP S ORDER HE SUBMITTED THAT THE DRP S DIRECTIONS DATED 20.12.2017 FURTHER COMPOUNDED ERRORS AS EVEN WHILE ACCEPTING TPO'S ORDER TO BE INFESTED WITH SEVERAL DEFECTS DRP ATTEMPTS TO CURE THEM . HE SUBMITTED THAT THE DRP P ROCEED ED TO UPHOLD TPO'S ACTION OF TREATING AMP EXPENDITURE A S AN INTERNATIONAL TRANSACTION BY MISINTERPRETING DECISIONS OF HON'BLE HIGH COURT . IN THIS WAY INSTEAD OF DISCHARGING THE ONUS TO ESTABLISH THE EXISTENCE OF AN INTERNATIONAL TRANSACTION OF AMP BO TH TPO & DRP PROCEED ED ON AN INCORRECT NOTION THAT AMP IS INTERNATIONAL TRANSACTION IN VIEW OF LAWS LAID DOWN BY HON'BLE HIGH COURT. IN THIS PROCESS DRP'S INTERPRETATION OF LICENCE AGREEMENT ESPECIALLY CONTRARY TO CLAUSE 10 THEREOF , IS ALSO CONTRARY TO LAW LAID DOWN BY HON'BLE HIGH COURT AND HON'BLE TRIBUNAL . HE SUBMITTED THAT THE DRP COMPLETELY IGNORED SUBSEQUENT DECISIONS OF HON'BLE HIGH COURT IN MARUTI SUZUKI (381 ITR 117), BAUSCH AND LOMB (381 ITR 227 ) AS ALSO DECISIONS OF HON'BLE TRIBUNAL IN GOODYEAR 7 0 TAXMAN.COM 67 , L'OREAL ([2016] 49 ITR(T) 473), WIDEX [2017] 78 TAXMANN.COM 348 (CHANDIGARH - TRIB.)ETC., WHEREIN LAW LAID DOWN IN SONY ERICSSON DECISION OF 16 TH MARCH 2015 IS EXPLAINED AND APPLIED. MOREOVER, DRP'S DIRECTIONS TO CARRY OUT FURTHER INQUIRIE S IS DIRECTLY CONTRARY TO SECTION 144C (8). HE SUBMITTED THAT DETAILED WORKINGS WERE FILED BEFORE DRP IN SUPPORT OF ALTERNATIVE CONTENTION THAT EVEN IF ONE WERE TO ASSUME EXISTENCE OF INTERNATIONAL TRANSACTION OF AMP FOR SAKE OF ARGUMENT THE MARGIN EARNED BY ASSESSEE COMPENSATES FOR ALL FUNCTIONS UNDERTAKEN AND /OR FURTHER ALTERNATIVELY IF TRANSACTIONS ARE TO BE SEGREGATED THERE IS NO BASIS FOR TP ADJUSTMENT AFTER ALLOWING SET OFF . INJUSTICE CAUSED T O ASSESSEE 5 WOULD BECOME MORE GLARING WHEN ONE CONSIDERS TH E FACT THAT DRP SOUGHT REMAND REPORT FROM AO ON THESE WORKING WHEREIN [ AT PARA 2 ON PAGE 239 OF PAPER BOOK ] TPO CONFIRMED THE CORRECTNESS OF WORKING FILED BEFORE HIM. STRANGELY DRP PREFERS TO IGNORE THE REMAND REPORT AFTER CALLING FOR IT. 5. HE SUBMITTED THAT T AKING ADVANTAGE OF AUTHORITY TO FURTHER INQUIRE TPO PASSED AN ORDER DATED 19.1.2018, G IVING EFFECT TO DRP DIRECTIONS CARRYING OUT FURTHER SEARCH AND MARKED UP THE SAME BY ANOTHER 6 % THEREBY DETERMINING ADJUSTMENT OF RS. 120,82,90,731/ - . RELYING ON VA RIOUS DECISIONS HE SUBMITTED THAT THE DISPUTED TRANSFER PRICING ADJUSTMENTS DESERVES TO BE COMPLETELY DELETED . 6 . LD. DR ON THE OTHER HAND SUBMITTED THAT T HE ASSESSEE HAS INCURRED AMP EXPENSES AMOUNTING TO RS. 183,73,82,000/ - WHICH HAS BEEN TREATED AS IN TERNATIONAL TRANSACTION BY TPO. THE ASSESSEE IS CHALLENGING THAT AMP EXPENSE IS NOT AN INTERNATIONAL TRANSACTION. THE LD. DR WHILE ARGUING THAT THE AMP EXPENSE IS AN INTERNATIONAL TRANSACTION DREW THE ATTENTION OF THE BENCH TO THE FOLLOWING CLAUSES OF THE ROYALTY AGREEMENT DATED 01.07.2005 RELATING TO ADVERTISEMENT EXPENSE AND BRAND OWNERSHIP : - 3). PERFETTI VAN MELLE S.P.A., IS ALSO THE LICENSED OWNER OF THE RIGHT TO USE THE TRADEMARKS MENTOS, MELLER, FRU1TTELLA AND MARBELS REGISTERED IN THE NAME OF PERFET TI VAN MELLE BENELUX B, V. IN INDIA (COPY OF THE LICENCE AGREEMENT BENVEEN PERFETTI VAN MELLE S.P. A. AND PERFETTI VAN MELLE BENELUX B. V. IS HEREWITH ATTACHED AS ANNEX B). THE LIST OF THE TRADEMARKS REGISTERED IN INDIA IN THE NAME OF PERFETTI VAN MELLE BE NELUX B. V. AND SUBJECT OF THE PRESENT LICENCE FROM PERFETTI VAN MELLE S.P. A. TO THE LICENSEE IS HERE ATTACHED AS ANNEX C. (PAGE NO. 244 OF PAPER BOOK) 10 ) . THE LICENSEE WILL ACTIVELY ADVERTISE AND SELL IN THE TERRITORY THE PRODUCTS MANUFACTURED BY THEM. NO COMPENSATION ON BEHALF OF THE LICENSEE REGARDING THE ADVERTISING EXPENSES IS PROVIDED IN THE CASE OF TERMINATION OF THIS AGREEMENT, (PAGE NO. 247 OF PAPER BOOK) 6 . THE COPYRIGHT IN ANY ADVERTISING MATERIAL AND LITERATURE ACQUIRED BY OR COMING INTO THE POSSE SSION OF THE LICENSER OR ANY ADVERTISING AGENT OF OTHER AGENT OR EMPLOYEE OF THE LICENSEE DESIGNED OR AND THE LICENCE WILL ACCORDINGLY RESERVE SUCH OWNERSHIP IN ANY WRITTEN FOR THE PURPOSE OF THE PROMOTION AND SALE OF THE PRODUCTS IS AND WILL BE IN ALL CIR CUMSTANCES PROPERTY OF PVM WITHOUT PAYMENT AUTHORITY OR ORDER WHICH IT MAY GIVE OR WHICH MAY BE GIVEN BY ITS DIRECTION FOR THE P RE PARATION OF SUCH ADVERTISING MATERIAL OR BE READ AS COPYRIGHT AND DESIGNS WHEN THESE ARE RELATED TO MATERIAL THAT WILL BE EXCL USIVELY DEDICATED AND USED IN INDIA. IT IS AGREED THAT THE LICENSEE WILL SUBMIT TO PVM THE MATERIAL FOR WHICH IT WANTS TO ASK FOR COPYRIGHT AND DESIGNS REGISTRATIONS AND WILL WEIGHT FOR PVM AUTHORIZATION BEFORE FILING THE CORRESPONDENT APPLICATION IN ITS O WN NAME, (PAGE NO. 247 OF PAPER BOOK) HE SUBMITTED THAT A PERUSAL OF THE ABOVE CLAUSES REVEALS THAT THE BRANDS IN INDIA MANUFACTURED BY THE ASSESSEE ARE OWNED BY AE. THE ASSESSEE IS RESPONSIBLE FOR ACTIVELY ADVERTIS ING THE PRODUCT AND NOT DEBARRED FROM GET TING COMPENSATION ON ACCOUNT OF AMP EXPENSES. FURTHER ENTIRE' ADVERTISING MATERIAL AND LITERATURE IN INDIA IS OWNED BY AE. THE ADVERTISING MATERIAL IN INDIA MAY BE APPROVED BY AE AS PER CLAUSE 11 OF THE AGREEMENT. THEREFORE, THERE IS AN ACTION IN CONCERT A S PER CLAUSE (V) OF 92F TO PROVE THAT AMP EXPENDITURE FOR BRAND BUILDING IS AN INTERNATIONAL TRANSACTION. HE SUBMITTED THAT BENCH MAKING OF AMP AS INTERNATIONAL TRANSACTION HAS TO BE DONE IN ACCORDANCE OF HON BLE DELHI HIGH COURT IN THE CASE OF SONY ERICSO N MOBILE COMMUNICATIONS INDIA (P) LTD. VS. C I T [2015] 231 TAX M AN 113/55 TAXMANN.COM 240 (DELHI). 7 . WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL IS REGARDING THE T. P. ADJUSTMENT ON ACCOUNT OF AMP EXPENSES. WE FIND AN IDENTICAL ISSUE HAD COME UP BEFORE THE TRIBUNAL IN ASSESSEE S OWN CASE IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR. WE FIND THE TRIBUNAL IN ITA NO.655/DEL/2014 ORDER DATED 1 5.04.2014 HAS RESTORED THE ISSUE TO THE FILE OF THE ASSESSING OFFICER/TPO BY OBSERVING AS UNDER : - 7 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS NOTICED THAT THE SPECIAL BENCH OF THE TRIBUNAL IN LG ELECTRONICS IN DIA PVT. LTD. VS. ACIT 2013 152 TTJ (DEL) (SB) 273, BY MAJORITY DECISION, HAS DECIDED THIS VERY ISSUE BY INTER ALIA HOLDING THAT INCURRING OF AMP EXPENSES TOWARDS PROMOTION OF BRAND, LEGALLY OWNED BY THE FOREIGN AE, FIRSTLY CONSTITUTES A TRANSACTION AND THEN AN 'INTERNATIONAL TRANSACTION . THE CONTENTION THAT NO DISALLOWANCE CAN BE MADE OUT OF AMP EXPENSES BY BENCHMARKING THEM SEPARATELY WHEN THE OVERALL NET PROFIT RATE DECLARED BY THE ASSESSEE IS HIGHER THAN OTHER COMPARABLE CASES CAME TO BE SPECIFICALLY JETTISONED BY THE SPECIAL BENCH. RESULTANTLY, THE TRANSFER PRICING ADJUSTMENT IN RELATION TO SUCH AMP EXPENSES HAS BEEN HELD TO BE SUSTAINABLE IN PRINCIPLE. IN THE EVENTUAL ORDER, THE SPECIAL BENCH RESTORED THE MATTER TO THE FILE OF THE AO/TPO FOR FRESH D ETERMINATION OF TRANSFER PRICING ADJUSTMENT IN RELATION TO AMP EXPENSES. IN ORDER TO ENABLE THE DETERMINATION OF CORRECT ALP OF AMP EXPENSES, THE TRIBUNAL LISTED OUT 14 PARAMETERS AT PARA 17.4 OF ITS ORDER WHICH SHOULD BE EXAMINED BY THE AO/TPO BEFORE REAC HING THE FINAL CONCLUSION ABOUT THE WARRANT FOR A TP ADJUSTMENT ON THIS SCORE. IT IS RELEVANT TO NOTE THAT THERE WERE 22 INTERVENERS IN THIS CASE, SOME OF WHICH WERE DISTRIBUTORS, WHILE OTHERS WERE LICENSED MANUFACTURERS. WHILE SETTING OUT 14 PARAMETERS, T HE SPECIAL BENCH HAS HELD VIDE FIRST PARAMETER THAT THE AO/TPO SHOULD ASCERTAIN AS TO WHETHER THE INDIAN AE IS SIMPLY A DISTRIBUTOR OR IS HOLDING A MANUFACTURING LICENSE FROM ITS FOREIGN AE. THE SECOND PARAMETER TALKS OF EXAMINING AS TO WHETHER OR NOT THE INDIAN AE IS A FULL FLEDGED MANUFACTURER AND WHETHER IT IS SELLING THE GOODS PURCHASED FROM THE FOREIGN AE AS SUCH OR IS MAKING SOME VALUE ADDITION TO THE GOODS PURCHASED FROM ITS FOREIGN AE BEFORE SELLING IT TO CUSTOMERS. THUS THERE IS NOT EVEN A SLIGHTES T DOUBT THAT THE SPECIAL BENCH ORDER NOT ONLY APPLIES TO A 'MANUFACTURER , BUT ALSO EXTENDS TO A DISTRIBUTOR, WHETHER HE IS A BEARING FULL RISK OR LEAST RISK. THUS, SUCH TESTS ARE APPLICABLE WITH FULL VIGOR TO THE EXTENT APPLICABLE, TO THE DISTRIBUTORS. TH ERE IS NOTHING IN THE SPECIAL BENCH ORDER WHICH RESTRICTS ITS OPERATION ONLY TO THE 'MANUFACTURERS . THOUGH THERE IS A SPECIFIC GROUND FOR THE RELIEF IN THE LIGHT OF THE ORDER BY THE DELHI TRIBUNAL IN THE CASE OF BMW INDIA PRIVATE LIMITED, BUT THE ID. AR W AS FAIR ENOUGH NOT TO PRESS THIS GROUND BY ADMITTING THE MATTER BE DECIDED AS PER THE MANDATE OF THE SPECIAL BENCH ORDER IN THE CASE OF LG ELECTRONICS (SUPRA) . 4 . THE ID. AR ARGUED THAT THE AUTHORITIES BELOW ERRED IN INCLUDING SELLING 8 COMMISSION AND DISCOUNT ETC. WITHIN THE AMBIT OF AMP EXPENSES. IT WAS SUBMITTED THAT SUCH EXPENSES SHOULD BE EXCLUDED AT THE VERY OUTSET FROM CONSIDERATION UNDER THE BROADER SCOPE OF AMP EXPENSES. IT WAS FAIRLY ACCEPTED THAT THE DETAILS OF SUCH DISCOUNT AND COMMISSION ETC. PAID TO THE DISTRIBUTORS ETC. WAS NOT READILY AVAILABLE ON RECORD INASMUCH AS THERE IS ONLY ONE CONSOLIDATED FIGURE WHICH HAS BEEN REPORTED, CONSIDERED AND ACTED UPON BY THE AUTHORITIES. IT WAS HOWEVER, SUBMITTED THAT THE AMOUNT OF SALES SPECIFIC EXPENSES INCLU DED IN THESE AMP EXPENSES SHOULD FIRST BE EXCLUDED AND THEREAFTER THE REMAINING AMOUNT OF EXPENSES SHOULD BE PROCESSED FOR THE PURPOSE OF TP ADJUSTMENT, IF ANY. IN THE OPPOSITION, THE ID. DR RELIED ON THE IMPUGNED ORDER ON THIS SCORE. 5 . WE AGREE IN PRINCIPL E WITH THE CONTENTION THAT THE EXPENSES DIRECTLY CONNECTED WITH SALES SHOULD BE EXCLUDED. THE SPECIAL BENCH IN LG ELECTRONICS (SUPRA) HAS SPECIFICALLY DEALT WITH THIS ISSUE IN PARA 318 OF ITS ORDER AND HELD THAT THE DEALERS COMMISSION AND SALES COMMISSION ETC. ARE IN THE NATURE OF THE EXPENSES DIRECTLY CONNECTED WITH SALES AND HENCE SHOULD NOT BE INCLUDED WITHIN THE OVERALL AMP EXPENSES FOR PROCESSING THEM U/S 92 OF THE ACT. SINCE, SUCH DETAIL IS NOT AVAILABLE ON RECORD, WE DIRECT THE A.O/TPO TO EXAMINE THE DETAIL OF TOTAL AMP EXPENSES AND EXCLUDE SUCH SALES SPECIFIC EXPENSES IN LINE WITH THE DECISION OF LG ELECTRONICS FOR WORKING OUT THE REMAINING AMOUNT TO BE CONSIDERED FOR PROCEEDING WITH THE AMP EXPENSES UNDER THE TP PROVISIONS. 6 . WE THEREFORE, SET ASIDE THE IMPUGNED ORDER AND REMIT THE MATTER TO THE FILE OF THE AO / TPO TO DECIDE THIS ISSUE AFRESH IN CONFORMITY WITH THE SPECIAL BENCH DECISION IN THE CASE OF LG ELECTRONICS (SUPRA). NEEDLESS TO SAY, THE 9 ASSESSEE WILL BE ALLOWED A REASONABLE OPPORTUNITY OF B EING HEARD BY THE AO/T PO IN SUCH FRESH PROCEEDINGS. 8 . SINCE THE ORDER FOR THE PRECEDING YEAR HAS GOT RELEVANCE FOR DECIDING THE ISSUE FOR THE SUCCEEDING ASSESSMENT YEAR AS FACTS ARE SIMILAR, THEREFORE, CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE AND IN THE INTEREST OF JUSTICE WE DEEM IT PROPER TO RESTORE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER/ TPO TO ADJUDICATE THE ISSUE AFRESH IN THE LIGHT OF THE DECISION OF THE TRIBUNAL FOR A. Y . 2009 - 10 IN ASSESSEE S OWN CASE. THE GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. 9 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 23 .10.2018 . SD/ - SD/ - (K. NAR A SIMHA CHARY) ( R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER *NEHA* DATE: - 23 .1 0.2018 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(APPEALS) 5 . DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 10 DATE OF DICTATION 05.10.2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/ PS 23.10.2018 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 24.10.2018 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH FILE GOES TO THE HEAD CLERK. THE DATE ON WHICH FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER 11
