Valvoline Cummins Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 527/DEL/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1723 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I1
• Next Hearing Date: 27-06-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 02-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJAY I BARA
• Assessee Lawyers: RAMIT KATYAL CAS
• Keywords: Transfer pricing; Business expenditure; International transaction; Commercial expediency
• Section: 92C; 144; 92

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH I-1 : NEW DELHI) BEFORE HONBLE VICE PRESIDENT, SHRI G.D. AGRAWAL AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.527/DEL./2016 (ASSESSMENT YEAR : 2011-12) M/S. VALVOLINE CUMMINS PVT. LTD., VS. DCIT, CIRCLE 26 (1), 50/8, 1 ST FLOOR, TOLSTOY LANE, NEW DELHI. JANPATH, NEW DELHI 110 001. (PAN : AAACW0287A) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI AJAY VOHRA, SENIOR ADVOCATE SHRI NEERAJ JAIN, ADVOCATE S/SHRI ABHISHEK AGARWAL & RAMIT KATYAL, CAS REVENUE BY : SHRI SANJAY I. BARA, CIT DR DATE OF HEARING : 12.11.2018 DATE OF ORDER : 26.11.2018 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : THE APPELLANT, M/S. VALVOLINE CUMMINS PVT. LTD. (HEREINAFTER REFERRED TO AS THE TAXPAYER) BY FILI NG THE PRESENT APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 30.12.2015 PASSED BY THE AO IN CONSONANCE WITH THE ORDERS PASS ED BY THE LD. DRP/TPO UNDER SECTION 143 (3) READ WITH SECTION 144 C OF THE ITA NO.527/DEL/2016 2 INCOME-TAX ACT, 1961 (FOR SHORT THE ACT) QUA THE ASSESSMENT YEAR 2011-12 ON THE GROUNDS INTER ALIA THAT :- 1. THAT THE ASSESSING OFFICER ERRED ON FACTS AND IN LAW IN DETERMINING INCOME OF THE APPELLANT AT RS.1,300,133 ,746 AGAINST RETURNED TOTAL INCOME OF RS.1,080,299,471. 2. THAT THE ASSESSING OFFICER (AO) I DISPUTE RESOLU TION PANEL (DRP) ERRED ON FACTS AND IN LAW IN MAKING ADD ITION ON ACCOUNT OF TRANSFER PRICING ADJUSTMENT AMOUNTING TO RS.219,834,275 ALLEGEDLY IN RESPECT OF ADVERTISEMEN T, MARKETING AND SALES PROMOTION EXPENSES (HEREINAFTER REFERRED TO AS 'THE AMP EXPENSES') INCURRED BY THE APPELLANT. 2.1 THAT THE AOIDRP ERRED ON FACTS AND IN LAW IN N OT APPRECIATING THAT THE ONLY TRANSFER PRICING ADJUSTM ENT PERMITTED BY CHAPTER X OF THE ACT WAS IN RESPECT OF THE DIFFERENCE BETWEEN THE ARM'S LENGTH PRICE (ALP) AND THE CONTRACT OR DECLARED PRICE, BUT THE SAID PROVISION COULD NOT BE INVOKED TO DETERMINE THE 'QUANTUM' I EXTENT OF B USINESS EXPENDITURE. 2.2 THAT THE AOIDRP ERRED ON FACTS AND IN LAW IN N OT APPRECIATING THAT THE AMP EXPENSES, ETC., UNILATERA LLY INCURRED BY THE APPELLANT IN INDIA COULD NOT DE CHARACTERIZED AS AN INTERNATIONAL TRANSACTION AS PE R SECTION 928, IN THE ABSENCE OF ANY PROVED UNDERSTANDING / ARRANGEMENT BETWEEN THE APPELLANT AND THE ASSOCIATE D ENTERPRISE, SO AS TO INVOKE THE PROVISIONS OF SECTI ON 92 OF THE ACT. 2.3 THAT THE DRP ERRED ON FACTS AND IN LAW IN CONCLUDING THAT UNILATERAL INCURRING OF AMP EXPENDI TURE BY THE APPELLANT IS AN INTERNATIONAL TRANSACTION AS PE R THE FINDINGS OF THE ORDER OF THE HON'BLE HIGH COURT IN THE CASE OF SONY ERICSSON MOBILE COMMUNICATIONS INDIA PVT. L TD. VS. CIT [2015] 55 TAXMANN.COM 240 (DELHI). 2.4 THAT THE AO/DRP ERRED ON FACTS AND IN LAW IN N OT APPRECIATING THAT THE AMP EXPENDITURE WERE INCURRED BY THE APPELLANT IN RELATION TO THE PRODUCT MANUFACTURED I N INDIA AND IN ABSENCE OF ANY UNDERSTANDING, ARRANGEMENT, E TC., DID NOT GIVE RISE TO AN INTERNATIONAL TRANSACTION. ITA NO.527/DEL/2016 3 2.5 THE DRP/TPO ERRED ON FACTS AND IN LAW IN NOT APPRECIATING THAT MERELY BECAUSE THE INDIAN COMPANY HAD INCURRED EXPENDITURE ON PRODUCT ADVERTISEMENTS INCL UDING THE FOREIGN BRAND AND THE AMP EXPENSES INCURRED BY THE APPELLANT, WERE PROPORTIONATELY HIGHER THAN THOSE I NCURRED BY COMPARABLE CASES TAKEN BY THE TPO, THE SAME DID NOT LEAD TO THE, INFERENCE OF 'TRANSACTION' BETWEEN THE APPELLANT AND THE FOREIGN AE FOR CREATING MARKETING INTANGIBLES ON BEHALF OF THE LATER. 2.6 THAT THE DRP/TPO ERRED ON FACTS AND IN LAW IN RE- CHARACTERIZING THE APPELLANT, A LICENSED MANUFACTUR ER, AS A LIMITED RISK SERVICE PROVIDER ENTITLED TO COST PLUS REMUNERATION FOR ITS MARKETING EFFORTS. 2.7 THE DRP/TPO ERRED ON FACTS AND IN LAW IN HOLDI NG THAT EXPENDITURE INCURRED BY THE APPELLANT WHICH INCIDENTALLY, IF AT ALL, RESULTED IN BRAND BUILDING FOR THE FOREIGN AE, WAS A TRANSACTION OF CREATING AND IMPRO VING MARKETING INTANGIBLES FOR AND ON BEHALF OF ITS FORE IGN AE AND FURTHER THAT SUCH A TRANSACTION WAS IN THE NATU RE OF PROVISION OF A SERVICE BY THE APPELLANT TO THE AE. 2.8 THAT THE DRP/TPO ERRED ON FACTS AND IN LAW BY QUESTIONING THE COMMERCIAL EXPEDIENCY OF AMP EXPEND ITURE INCURRED BY THE APPELLANT AND ASSUMING THAT BENEFIT HAS ACCRUED TO AE ON ACCOUNT OF AMP EXPENSES INCURRED B Y THE APPELLANT IN INDIA. 2.9 THAT THE DRP/TPO ERRED ON FACTS AND IN LAW IN NOT APPRECIATING THAT EVEN IF MARKETING INTANGIBLE HAS BEEN CREATED THEN THE APPELLANT IS THE ECONOMIC OWNER OF SUCH INTANGIBLE. 2.10 THAT THE DRP/TPO ERRED ON FACTS AND IN LAW IN NOT APPRECIATING THAT NO ADJUSTMENT ON ACCOUNT OF ALLEG EDLY EXCESS AMP EXPENDITURE IS WARRANTED IN THE CASE OF THE APPELLANT AS SUCH EXPENSE HAVE BEEN FOUND TO CONSTI TUTE BONAFIDE AND DEDUCTIBLE BUSINESS EXPENDITURE. 2.11 THE DRP/TPO ERRED ON FACTS AND IN LAW IN NOT APPRECIATING THAT SUCH A TRANSFER PRICING ADJUSTMEN T CANNOT AT ALL BE MADE IN LAW WITHOUT DETERMINING TH E ARM'S LENGTH PRICE ('ALP') BY APPLYING ONE OF THE METHODS SPECIFIED IN SECTION 92C OF THE ACT. ITA NO.527/DEL/2016 4 2.12 WITHOUT PREJUDICE, THAT THE DRP/TPO ERRED ON FACTS AND IN LAW IN NOT APPRECIATING THAT SINCE THE OPERA TING PROFIT MARGINS OF THE APPELLANT WERE HIGHER THAN MARGINS O F THE COMPARABLE COMPANIES, THE APPELLANT WAS ADEQUATELY COMPENSATED FOR THE ALLEGEDLY EXCESS AMP EXPENSES INCURRED BY THE APPELLANT. 2.13 WITHOUT PREJUDICE, THAT THE DRP ERRED ON FACT S AND IN LAW IN DIRECTING THE TPO TO APPLY SEGREGATED APPROA CH FOR BENCHMARKING THE ALLEGED TRANSACTION OF AMP EXPENSE , WITHOUT PROVIDING ANY BASIS OR REASON FOR SUCH SEGR EGATION, IN TERMS OF DECISION OF HON'BLE HIGH COURT IN THE C ASE OF SONY ERICSSON. 2.14 WITHOUT PREJUDICE, THAT THE TPO ERRED ON FACT S AND IN LAW IN NOT EXCLUDING ENTIRE EXPENDITURE INCURRED BY THE APPELLANT ON ACCOUNT OF SALES PROMOTION, BEING IN T HE NATURE OF ROUTINE SELLING AND DISTRIBUTION EXPENSES, FROM THE AMBIT OF AMP EXPENDITURE FOR THE PURPOSE OF THE BENCHMARK ING ANALYSIS. 2.15 WITHOUT PREJUDICE, THAT THE TPO ERRED ON FACT S AND IN LAW IN CONSIDERING A SUM OF RS.20,85,84,445 BEING 5 0% OF THE SELLING AND DISTRIBUTION EXPENSES OF RS.41,71,6 8,890, ON AD-HOC BASIS, AS NON-ROUTINE EXPENDITURE INCURRED F OR CREATING MARKETING INTANGIBLE ON BEHALF OF THE AE F OR THE PURPOSE OF UNDERTAKING BENCHMARKING ANALYSIS. 2.16 WITHOUT PREJUDICE, THAT THE DRP/ TPO ERRED ON FACTS AND IN LAW IN APPLYING A MARKUP OF 49.05%, BEING TH E GROSS PROFIT TO SALES RATIO OF THE APPELLANT, ON THE ALLE GED EXCESS AMP EXPENDITURE INCURRED BY THE APPELLANT, WHILE COMPUTING THE VALUE OF COMPENSATION TO BE RECEIVED BY THE APPELLANT ON ACCOUNT OF PROMOTION OF 'VALVOLINE' BR AND. 2.17 WITHOUT PREJUDICE, THAT THE DRP/ TPO ERRED ON FACTS AND IN LAW IN APPLYING A MARKUP OF 49.05% ON THE AL LEGED EXCESS AMP EXPENDITURE INCURRED BY THE APPELLANT, W HILE COMPUTING THE VALUE OF COMPENSATION TO BE RECEIVED BY THE APPELLANT ON ACCOUNT OF PROMOTION OF 'VALVOLINE' BR AND. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE CONTROVERSY AT HAND ARE : M/S. VALVOLINE CUMMINS LI MITED, THE ITA NO.527/DEL/2016 5 TAXPAYER, A PART OF ASHLAND INC., OPERATES IN MORE THAN 100 COUNTRIES AND IS A LEADING MARKETER, DISTRIBUTOR AN D PRODUCER OF QUALITY BRANDED AUTOMOTIVE AND INDUSTRIAL PRODUCTS AND SERVICES, WHICH INCLUDES AUTOMOTIVE LUBRICANTS, TRANSMISSION FLUIDS, GEAR OILS, HYDRAULIC LUBRICANTS, AUTOMOTIVE CHEMICALS, S PECIALTY PRODUCTS, GREASES AND COOLING SYSTEM PRODUCTS. THE TAXPAYER ALSO OFFERS EAGLE ONE CAR CARE PRODUCTS FOR AUTOMOTIVE C LEANING AND MAINTENANCE. THE TAXPAYER CLAIMS THAT ITS PRODUCTS ARE AVAILABLE IN 25,000 RETAIL COUNTERS IN INDIA. THE TAXPAYER HAS TWO PRIMARY BUSINESS SEGMENTS MANUFACTURING AND TRADING. 3. DURING THE YEAR UNDER ASSESSMENT, THE TAXPAYER E NTERED INTO INTERNATIONAL TRANSACTIONS WITH ITS ASSOCIATED ENTE RPRISES (AE) AS UNDER :- NO. NATURE OF TRANSACTION METHOD USED BY ASSESSEE AMOUNT (RS.) (IN CRORES) 1. IMPORT OF TRADING GOODS TNMM 1,50,49,694 2. EXPORT OF FINISHED GOODS TNMM 3,08,21,892 3. PROVISION OF SUPPORT SERVICES TNMM 30,52,362 4. PAYMENT OF ROYALTY TNMM 8,28,08,115 5. ALLOCATION OF ADVERTISEMENT EXPENSES TNMM 27,72,000 6. REIMBURSEMENT OF EXPENSES TNMM 9,24,491 TOTAL 13,54,27,555 4. THE TPO OBSERVED THAT DURING THE YEAR UNDER ASSE SSMENT, THE TAXPAYER INCURRED 4.94% OF THE INCOME ON AMP EX PENDITURE ON THE SALES OF RS.703,63,72,162/- AS COMPARED TO AMP EXPENDITURE ITA NO.527/DEL/2016 6 TO SALES RATIO OF 0.28% IN THE CASE OF COMPARABLES FINALLY SELECTED BY THE TPO AND THEREBY PROCEEDED TO CONCLUDE THAT T HE TAXPAYER HAS INCURRED HUGE NON-ROUTINE EXPENDITURE TO PROMOT E THE BRAND OF AE AND TO DEVELOP MARKETING INTANGIBLES FOR THE AE. SO, FOR INCURRING NON-ROUTINE AMP EXPENDITURE, THE TAXPAYER SHOULD HAVE BEEN REIMBURSED. TPO, IN ORDER TO BENCHMARK THE AM P EXPENDITURE, USED BRIGHT LINE TEST (BLT) AND PROPOS ED THAT ANY EXPENDITURE IN EXCESS OF THE BLT IS FOR THE DEVELOP MENT OF MARKETING INTANGIBLES, OWNED BY THE AE, WHICH NEEDS TO BE SUITABLY COMPENSATED BY THE AE. DECLINING THE CONT ENTIONS RAISED BY THE TAXPAYER, TPO PROCEEDED TO PROPOSE THE ARMS LENGTH PRICE (ALP) OF VALUE OF REMUNERATION FOR AMP EXPENSES AT RS.36,34,86,455/- AS AGAINST NIL RECEIPT SHOWN BY T HE TAXPAYER. 5. THE TAXPAYER CARRIED THE MATTER BEFORE THE LD. D RP BY FILING OBJECTIONS WHO HAS DISPOSED OF THE OBJECTIONS. FEE LING 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. ITA NO.527/DEL/2016 7 7. IT IS THE CASE OF THE TAXPAYER THAT AMP EXPENDIT URE IS A DOMESTIC TRANSACTION AND NOT AN INTERNATIONAL TRANS ACTION. HOWEVER, THE TPO BY RELYING UPON THE DECISION RENDE RED BY ITAT, SPECIAL BENCH IN LG ELECTRONICS INDIA PVT. LIMITED VS. ACIT (2013) 22 ITR (TRIB.) 1 OBSERVED THAT THE TAXPAYER HAS INCURRED AMP EXPENDITURE MUCH HIGHER THAN THE COMPARABLE AND ON BRANDS NOT OWNED BY IT AND PREFERRED TO BENCHMARK ON TRANS ACTION BY TRANSACTION BASIS. SO, THE TPO HELD THE SAME AS IN TERNATIONAL TRANSACTION AND PROPOSED THE AMP EXPENSES IN EXCESS OF BLT INCURRED BY THE TAXPAYER FOR ENHANCING THE BRAND NA ME OF ITS AE REQUIRED TO BE COMPENSATED BY THE AE. 8. THE TAXPAYER, IN ITS TP STUDY, HAS SELECTED 6 CO MPARABLES FOR BENCHMARKING OF TRANSACTION OF EXPORT OF FINISHED G OODS OUT OF WHICH THE TPO HAS REJECTED 2 COMPARABLES. THE FINA L COMPANIES TAKEN AS COMPARABLES FOR DETERMINING THE BLT ARE TA BULATED AS UNDER :- COMPANY NAME SALES AMP AMP% B G H EXIM PVT. LTD. 646.13 0.88 0.14 CHANDRA PRABHU INTL. LTD. 65.96 0.3 0.45 DAGA GLOBAL CHEMICALS PVT. LTD. 204.8 1.11 0.54 TAXIMENS SERVICES LTD. 100.13 0 0.00 AVERAGE 0.28 9. IT IS ALSO THE CASE OF THE TAXPAYER THAT IT DOES NOT UNDERTAKE ANY AGGRESSIVE ADVERTISING BECAUSE IT LEVERAGES ON THE IMMENSE ITA NO.527/DEL/2016 8 BRAND VALUE I.E. IN BUILDING THE ALREADY ESTABLISHE D VALVOLINE BRAND NAME. 10. THE TPO OBSERVED THAT THE DIRECT AND INDIRECT C OSTS OF PROVIDING THE AMP EXPENSES IS THE ACTUAL AMOUNT OF AMP EXPENSES DEBITED IN THE P&L ACCOUNT. TPO BY TAKING INTO ACCOUNT THE INDIRECT EXPENSES MADE BY THE TAXPAYER ADDED AD DITIONAL MARK- UP OF AT LEAST 3.00% ON THE AMP SPENT AMOUNT AND HA S COMPUTED TOTAL MARK-UP OF 10.84% ON AMP SPENT. SO, THE TPO COMPUTED THE PERCENTAGE AMP TO SALES AS PER DETERMINATION OF BRIGHT LINE LIMIT BY MAKING ADJUSTMENT OF RS.36,34,86,455/-. 11. THE LD. AR FOR THE TAXPAYER BY RELYING UPON THE DECISION RENDERED BY HONBLE DELHI HIGH COURT IN ITS OWN CASE FOR AY 2010-11 IN ITA 158/2016 ORDER DATED 31.07.2017 CONTENDED THAT THERE WAS NO INTERNATIONAL TRANSACTION BETWEEN THE TAXPAYER AND ITS AE WITH REGARD TO AMP EXPENSES AND THAT A BRIGHT LI NE TEST HAS NO STATUTORY MANDATE AND TREATING THE EXCESS EXPEND ITURE BEYOND THE BRIGHT LINE LIMIT AS AN INTERNATIONAL TRANSACTI ONS ARE NOT SUSTAINABLE. 12. HONBLE HIGH COURT IN THE JUDGMENT IN TAXPAYERS OWN CASE FOR AY 2010-11 (SUPRA) FORMULATED THE QUESTION FOR DETERMINATION AS UNDER :- ITA NO.527/DEL/2016 9 WHETHER IN LIGHT OF THE DECISION IN MARUTI SUZUKI LTD. V. CIT (2016) 381 ITR 117 (DEL) THE ITAT WAS JUSTIF IED IN HOLDING THAT THERE WAS AN INTERNATIONAL TRANSACT ION BETWEEN THE ASSESSEE AND ITS ASSOCIATED ENTERPRISE WITH REGARD TO ADVERTISING, MARKETING AND PUBLICITY (AMP ) EXPENSES AND IN REMANDING THE MATTER TO THE ASSESSI NG OFFICER/TRANSFER PRICING OFFICER FOR DETERMINING TH E ARMS LENGTH PRICE OF SUCH TRANSACTION FOR THE PURPO SES OF TRANSFER PRICING ADJUSTMENT? 13. HONBLE HIGH COURT OF DELHI ANSWERED THE AFORES AID QUESTION AGAINST THE REVENUE AND IN FAVOUR OF THE T AXPAYER THAT FOR DETERMINING THE ALP OF ALLEGED INTERNATIONAL TRANSA CTIONS QUA AMP EXPENSES, THE REVENUE HAS FAILED TO PROVE IF TH ERE IS ANY INTERNATIONAL TRANSACTION BETWEEN THE TAXPAYER AND ITS AE BY RETURNING FOLLOWING FINDINGS :- 9. THE ASSESSEE DREW THE ATTENTION OF THE ITAT TO THE DECISION OF THIS COURT IN SONY ERICSSON INDIA PVT. LTD. V. CIT (2015) 374 ITR 118 (DEL) WHEREBY THE COURT HAD DECLARED THAT THE BLT HAD NO STATUTORY MANDATE AND CONSIDERING THE EXCESS EXPENDITURE BEYOND THE BRIGH T LINE AS AN INTERNATIONAL TRANSACTION WAS UNWARRANTED. 10. IN PARA 5 OF THE IMPUGNED ORDER, THE ITAT NOTE D AS UNDER: 5. ON ENQUIRY FROM THE BENCH, LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THE FACTS AND FIGURES REQUI RED FOR COMING TO THE CONCLUSION PLEADED BY HIM WERE NO T AVAILABLE ON RECORD AND AN OPPORTUNITY MAY BE GIVEN TO HIM TO PRESENT THE SAME BEFORE THE TPO. HE FURTHER SUBMITTED THAT THE REVENUE IS ALSO REQUIRED TO VERIFY THE FRESH DATA TO BE SUBMITTED BY THE ASSESS EE. 11. ULTIMATELY, THE ITAT STATED THAT IT HAD, IN VIE W OF THE SUBMISSIONS OF THE COUNSEL OF BOTH SIDES, NO OTHER OPTION, BUT TO SET ASIDE THE ISSUE IN DISPUTE TO THE FILE O F THE AO/TPO ITA NO.527/DEL/2016 10 ON THE ABOVE ISSUE. FURTHER, THE AO/TPO WAS DIREC TED TO FOLLOW THE BINDING JUDGMENT OF THIS COURT. 12. IT IS THE SUBMISSION OF MR. VOHRA THAT, AS EXPL AINED BY THIS COURT IN SONY ERICSSON INDIA PVT. LTD.(SUPR A) AND LATER IN MARUTI SUZUKI INDIA LIMITED V. CIT(2016) 3 28 ITR 210 (DEL), A BASIC REQUIREMENT HAD TO BE FULFILLED PRIOR TO COMMENCING THE EXERCISE OF DETERMINING THE ALP OF A N INTERNATIONAL TRANSACTION. THE REVENUE HAD TO DISCH ARGE ITS ONUS OF SHOWING THAT THERE WAS AN INTERNATIONAL TRA NSACTION INVOLVING THE ASSESSEE AND ITS AE WITH REGARD TO TH E AMP EXPENSES. IF THE REVENUE FAILED TO DISCHARGE THIS O NUS THEN THE QUESTION OF THE FURTHER STEP OF DETERMINING THE ALP OF SUCH AMP EXPENSES DOES NOT ARISE. 13. MR VOHRA SUBMITTED THAT THERE WAS IN FACT NO CONCESSION MADE BY THE ASSESSEE ON THIS SCORE. HE SUBMITTED THAT THE ITAT OUGHT NOT TO HAVE REMANDED THE MATTER TO THE TPO AS THE MATERIAL ON RECORD BEFORE THE ITAT WAS SUFFICIENT TO ARRIVE AT A CONCLUSION ON THIS IS SUE. 14. MR. SANJAY KUMAR, ON THE OTHER HAND, SUBMITTED THAT IT WAS THE ASSESSEES OWN CASE BEFORE THE ITAT THAT IN THE ABSENCE OF FACTS AND FIGURES THE MATTER SHOULD BE S ENT BACK TO THE TPO FOR A FRESH DETERMINATION. HE FURTHER S UBMITTED THAT WHEN THE TPO DECIDED THE ISSUE IN THE PRESENT CASE, HE DID NOT HAVE THE BENEFIT OF THE DECISION OF THIS CO URT IN SONY ERICSSON INDIA PVT. LTD.(SUPRA). HE ALSO SUBMITTED THAT IF THE MATTER WENT BACK TO THE TPO HE WOULD HAVE TO EX AMINE THE ISSUE AFRESH, DE HORS THE BLT, AND THIS WAS THE REASON WHY THE ENTIRE MATTER, AND NOT JUST THE ISSUE REGAR DING DETERMINATION OF ALP, OUGHT TO BE SENT BACK TO THE TPO. MR. SANJAY KUMAR ALSO PLACED RELIANCE ON THIS DECIS ION OF THIS COURT IN LE PASSAGE TO INDIA TOUR & TRAVELS (P ) LTD. V. THE DEPUTY COMMISSIONER OF INCOME TAX (2017) 391 IT R 207. 15. THE DECISION IN LE PASSAGE TO INDIA TOUR & TRA VELS (P) LTD.(SUPRA) TURNED ON THE FACT THAT THERE WAS N O DETERMINATION BY THE TPO IN THE FIRST PLACE WHETHER THERE WAS AN INTERNATIONAL TRANSACTION. IN THE PRESENT CA SE, HOWEVER, THE TPO DID APPLY HIS MIND TO THE EXISTENC E OF AN INTERNATIONAL TRANSACTION INVOLVING AMP EXPENSE. TH E ONLY GROUND ON WHICH THE CONCLUSION WAS REACHED BY THE T PO WAS THAT THE AMP EXPENDITURE INCURRED BY THE ASSESS EE WAS IN EXCESS OF THAT INCURRED BY THE COMPARABLES. HIS ITA NO.527/DEL/2016 11 CONCLUSION WAS NOT BASED ON ANY OTHER FACTOR. IN OT HER WORDS, IT WAS NOT AS IF THE CONCLUSION ARRIVED BY T HE TPO WAS BASED ON TWO OR THREE GROUNDS, ONE OF WHICH WAS THE BLT. 16. THIS COURT IN SONY ERICSSON INDIA PVT. LTD.(SUP RA) 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 ITAT IN L.G. ELECTRONICS INDIA PVT. LTD. V. ACIT (2 013) 22 ITR (TRIB.) 1 WHICH SOUGHT TO MAKE BLT THE BASIS WA S SET ASIDE BY THIS COURT. 17. ONCE THE BLT HAS BEEN DECLARED BY THIS COURT IN SONY ERICSSON INDIA PVT. LTD.(SUPRA) TO NO LONGER B E A VALID BASIS FOR DETERMINING THE EXISTENCE OF OR THE ALP O F AN INTERNATIONAL TRANSACTION INVOLVING AMP EXPENSES, T HE ORDER OF THE TPO WAS UNSUSTAINABLE IN LAW. THE MERE FACT THAT THE ASSESSEE WAS PERMITTED TO USE THE BRAND NA ME VALVOLINE WILL NOT AUTOMATICALLY LEAD TO AN INFER ENCE THAT ANY EXPENSE THAT THE ASSESSEE INCURRED TOWARDS AMP WAS ONLY TO ENHANCE THE BRAND VALVOLINE. THE ONUS WAS ON THE REVENUE TO SHOW THE EXISTENCE OF ANY ARRANGEMENT OR AGREEMENT ON THE BASIS OF WHICH IT COULD BE INFERRE D THAT THE AMP EXPENSE INCURRED BY THE ASSESSEE WAS NOT FOR IT S OWN BENEFIT BUT FOR THE BENEFIT OF ITS AE. THAT FACTUAL FOUNDATION HAS BEEN UNABLE TO BE LAID BY THE REVENUE IN THE PR ESENT CASE. ON THE BASIS OF THE EXISTING RECORD, THE TPO HAS FOUND NO BASIS OTHER THAN BY APPLYING THE BLT, TO DISCERN THE EXISTENCE OF INTERNATIONAL TRANSACTION. THEREFORE, NO PURPOSE WILL BE SERVED IF THE MATTER IS REMANDED TO THE TPO, OR EVEN THE ITAT, FOR THIS PURPOSE. 18. THIS COURT HAS IN SIMILAR CIRCUMSTANCES IN A SE RIES OF DECISIONS INCLUDING MARUTI SUZUKI LTD.(SUPRA); BAUS CH & LOMB EYECARE (INDIA) PVT. LTD. V. ADDITIONAL CIT (2 016) 381 ITR 227 (DEL) AND HONDA SIEL POWER PRODUCTS LTD . V. DY.CIT (2016) 237 TAXMAN 304 EMPHASIZED THE IMPORTA NCE OF THE REVENUE HAVING TO FIRST DISCHARGE THE INITIA L BURDEN UPON IT WITH REGARD TO SHOWING THE EXISTENCE OF AN INTERNATIONAL TRANSACTION BETWEEN THE ASSESSEE AND THE AE. ITA NO.527/DEL/2016 12 19. FOR THE AFOREMENTIONED REASONS, THIS COURT IS O F THE VIEW THAT THE ITAT WAS NOT JUSTIFIED IN REMANDING T HE MATTER TO THE AO/TPO FOR DETERMINING THE ALP OF THE ALLEGED INTERNATIONAL TRANSACTION INVOLVING AMP EXP ENSES, WHEN IN FACT, THE REVENUE WAS UNABLE TO SHOW THAT T HERE EXISTED AN INTERNATIONAL TRANSACTION BETWEEN THE AS SESSEE AND ITS AE IN THE FIRST PLACE. 14. IN THE FACE OF THE UNDISPUTED FACT THAT THERE I S NO CHANGE IN THE BUSINESS MODEL OF THE TAXPAYER DURING THE YEAR UNDER ASSESSMENT QUA THE AMP EXPENSES INCURRED BY THE TAX PAYER. IT IS ALSO NOT IN DISPUTE THAT THE TAXPAYER HAS TRANSACTE D WITH ITS AE ON THE SAME TERMS AND CONDITIONS; THAT AE PERFORMED MA RKETING SUPPORT ACTIVITIES FOR TAXPAYER BY PLANNING AND DEV ELOPING ADVERTISING FORMATS AND DETERMINES MEDIA TO BE USED , SUCH AS MAGAZINES, NEWSPAPERS, ETC. FOR NEW PRODUCTS, IF I NTRODUCED, THE AES SEND RELEVANT BROCHURE AND MATERIALS TO THE TAX PAYER FOR THEIR DOMESTIC MARKETING AND THE AE ALSO PROVIDED ONLINE TRAINING, IF REQUIRED. THE MARKETING STRATEGY RELATING TO POSIT IONING OF NEW SERVICES OR SOLUTIONS, LAUNCHING A NEW SERVICE LINE OR SOLUTION, DEVELOPING PLANS TO CAPTURE A CERTAIN SEGMENT OF TH E MARKET, ETC. ARE ALL DEVELOPMENT BY THE AES, AND AS SUCH, THIS C ASE IS SQUARELY COVERED BY THE TAXPAYERS OWN CASE DECIDED BY HONB LE DELHI HIGH COURT FOR AY 2010-11. ITA NO.527/DEL/2016 13 15. LEARNED DR FOR THE REVENUE, ALTHOUGH ADMITTED T HE 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 CONSIDERED VIEW THAT SINCE IT IS A STAY GRANTED MAT TER AND THE PROCEEDINGS BEFORE THE SECOND APPELLATE AUTHORITY H AVE NOT BEEN STAYED BY ANY HIGHER FORUM, THE SAME CANNOT BE KEPT PENDING. 16. 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 E XPENSES, 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 SUBMISSION OF THE LEARNED DR THAT THE MATTER IS PENDING BEFORE HO N'BLE APEX COURT AND THE DECISION OF HON'BLE APEX COURT WOULD BE BINDING UPON ALL THE AUTHORITIES. IN VIEW OF THE ABOVE, WE SET ASIDE THE ORDERS OF AUTHORITIES BELOW AND RESTORE THE MATTER TO THE FILE 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 THI S ORDER, 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 ITA NO.527/DEL/2016 14 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. RESULTANTLY, THE APPEAL FILED BY THE ASSESSEE I S ALLOWED PRO TANTO. ORDER PRONOUNCED IN OPEN COURT ON THIS 26 TH DAY OF NOVEMBER, 2018. SD/- SD/- (G.D. AGRAWAL) (KULDIP SINGH) VICE PRESIDENT JUDICIAL MEMBER DATED THE 26 TH DAY OF NOVEMBER, 2018 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT (A). 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.