Bausch & Lomb India Pvt. Ltd., Gurgaon V. DCIT, New Delhi

ITA 6778/DEL/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7116 (ITAT-DELHI)
• Duration Of Justice: 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I1
• Next Hearing Date: 03-08-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 23-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N C SWAIN
• Assessee Lawyers: SANDEEP KARHAIL
• Keywords: Transfer pricing; Opportunity of being heard; Principle of natural justice; International transaction; Wholly owned subsidiary; Commercial expediency
• Section: 92C; 143(3); 92B; 92F; 92E; 234B; 115JB; 10B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH I - 1 , NEW DELHI BEFORE SH. N. K. SAINI, A M AND SMT. BEENA PILLAI , JM ITA NO. 6778 /DEL/201 5 : ASSTT. YEAR : 2011 - 12 BAUSCH & LOMB INDIA PVT. LT D., 4 TH FLOOR, TOWER - B, UNITECH BUSINESS PARK, SOUTH CITY - 1, GURGAON - 12200 1, HARYANA VS D EPUTY C OMMISSIONER OF I NCOME T AX , CIRCLE - 4(1), NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. A A BCB3877E ASSESSEE BY : SH. SANDEEP KARHAIL , ADV. REVENUE BY : SH. N. C. SWAIN , CIT DR DATE OF HEARING : 03 .0 8 .201 6 DATE OF PRONOUNCEMENT : 23 .09 .201 6 ORDER PER N. K. SAINI, AM: THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 18.11.2015 OF THE DCIT, CIRCLE - 4(1 ), NEW DELHI PASSED U/S 143(3) R.W.S. 144C OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 2. FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED TRANSFER PRICI NG OFFICER('TPO')/AO HAS ERRED IN COMPLETING THE ASSESSMENT AT AN INCOME OF RS.42,55,58,950/ - AS AGAINST RETURNED INCOME OF RS.27,65,35,314/ - AFTER MAKING THE FOLLOWING ADDITIONS: IT A NO. 6778 /DEL /201 5 BAUSCH & LOMB INDI A PVT. LTD. 2 A) ADDITION OF RS.7,67,36,387/ - MADE BY THE TRANSFER PRICING OFFICER ('T PO') ON ACCOUNT OF ALLEGED EXCESSIVE ADVERTISING, MARKETING AND PROMOTION EXPENSES ('AMP EXPENSES') INCURRED BY THE APPELLANT, AND C) ADDITION OF RS.7,22,87,247/ - MADE BY THE TPO IN RESPECT OF SERVICES AVAILED BY THE APPELLANT FROM ITS ASSOCIATED ENTERPR ISES. TRANSFER PRICING ADJUSTMENT ON ACCOUNT OF AMP EXPENDITURE 2. IMPUGNED ORDER, TO THE EXTENT IT CONFIRMS ADJUSTMENT UNDER TRANSFER PRICING REGULATIONS WITH REFERENCE TO IMAGINARY AND NON - EXISTENT INTERNATIONAL TRANSACTIONS, IS BAD IN LAW AS IT IS N OT IN ACCORDANCE WITH PROVISIONS OF LAW. 3. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AND IN LAW, LD. AO/DRP/TPO HAVE ERRED IN HOLDING THAT THE ADVERTISEMENT, MARKETING AND PROMOTION ('AMP') EXPENDITURE INCURRED BY THE APPELLANT IN INDIA, BEING PAYME NTS MADE TO THIRD PARTIES, CAN BE CHARACTERIZED AS AN 'INTERNATIONAL TRANSACTION' AS PER THE PROVISIONS OF THE ACT. 4. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AND IN LAW, EVEN IF THE WORD 'TRANSACTION' IS GIVEN ITS WIDEST CONNOTATION, THE TPO/AO/DR P HAS FAILED TO SHOW THE EXISTENCE OF AN 'UNDERSTANDING' OR AN 'ARRANGEMENT' OR 'ACTION IN CONCERT' BETWEEN THE ASSESSEE AND ITS AE AS REGARDS AMP SPEND FOR BRAND PROMOTION; IT A NO. 6778 /DEL /201 5 BAUSCH & LOMB INDI A PVT. LTD. 3 5. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW IMPUGNED ORDER ERR ED IN RE - CHARACTERIZING AMOUNTS PAID BY THE APPELLANT TO DOMESTIC THIRD - PARTIES, FOR AVAILING SERVICES REQUIRED FOR ITS BUSINESS, AS COST BASE FOR SERVICES RENDERED TO AES. 6. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. DRP ERRED IN UPHOLDING TPO'S ACTION, ISSUED MUCH BEYOND LEGITIMATE JURISDICTION, IN QUESTIONING THE REASONABLENESS, QUANTUM, AND COMMERCIAL EXPEDIENCY OF AMP EXPENDITURE INCURRED BY THE APPELLANT. 7. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE IMPUGNED OR DER FAILED IN NOT APPRECIATING THAT THE AMP EXPENSES INCURRED BY THE APPELLANT ARE WHOLLY AND EXCLUSIVELY FOCUSED ON GENERATING DOMESTIC SALES FOR ITS MANUFACTURING AND DISTRIBUTION OPERATIONS. 8. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW , LEARNED AO/DRP/TPO HAVE ERRED IN ALLEGING THAT THE AMP EXPENSES INCURRED BY THE APPELLANT IN INDIA, WERE NOT WHOLLY AND EXCLUSIVELY FOR PURPOSES OF ITS BUSINESS AND RESULTED IN CREATION OF MARK ETING INTANGIBLES FOR THE AES. 9. THAT ON THE FACTS AND CIRC UMSTANCES OF THE CASE AND IN LAW, LEARNED AO/DRP/TPO HAVE ERRED IN NOT APPRECIATING THAT THE BENEFIT ARISING FROM THE INCURRENCE OF AMP EXPENSES BY THE APPELLANT HAS BEEN RECEIVED BY THE APPELLANT AND BENEFIT, IF ANY, RESULTING TO THE AES IS MERELY INCIDEN TAL. IT A NO. 6778 /DEL /201 5 BAUSCH & LOMB INDI A PVT. LTD. 4 10. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, LEARNED AO/DRP/TPO FAILED TO APPRECIATE THAT THE NATURE OF INDUSTRY AND BUSINESS REALITIES OF THE APPELLANT REQUIRE AND DEMAND THE INCURRENCE OF SUCH AMP EXPENDITURE FOR MAINTAINING AND E NHANCING THE SALE OF ITS PRODUCTS IN THE RELEVANT MARKET. 11. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, LEARNED AO/DRP/TPO FAILED TO APPRECIATE THAT THE APPELLANT HAS BENEFITTED BY USING B&L BRAND WITHOUT PAYING FEE FOR THE SAME. 12. TH AT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, WITHOUT PREJUDICE TO ANY OTHER GROUND, LEARNED AO/TPO WHILE SEGREGATING AMP EXPENSES AS AN INDEPENDENT INTERNATIONAL TRANSACTION - ERRED IN GIVING BENEFIT OF SET OFF OR ADJUSTMENT IN RESPECT OF PROFIT S AND GAINS AGAI N ST ANOTHER INTERNATIONAL TRANSACTION. 13. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, LEARNED AO/DRP/TPO HAVE ERRED, IN NOT APPRECIATING THAT THE APPELLANT HAD USED TRANSACTIONAL NET MARGIN METHOD ('TNMM') TO BENCHMARK ITS INTERNATIONAL TRANSACTIONS, AND THUS, NO SEPARATE ARM'S LENGTH ANALYSIS WAS REQUIRED IN RESPECT OF THE ALLEGED INTERNATIONAL TRANSACTION RELATING TO AMP. 14. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED AO/DRP/TPO HAVE ERRED, I N BENCHMARKING PRESUMED INTERNATIONAL TRANSACTION OF THE APPELLANT RELATING TO AMP, WITHOUT CONSIDERING THAT THE APPELLANT HAS BEEN FULLY COMPENSATED FOR ITS IT A NO. 6778 /DEL /201 5 BAUSCH & LOMB INDI A PVT. LTD. 5 MARKETING EFFORTS AS EVIDENT FROM THE ARM'S LENGTH MARGIN EARNED BY IT. WITHOUT PREJUDICE, THE FUR THER DIRECTION TO VERIFY AND MODIFY' THE ADJUSTMENT IS ALSO CONTRARY TO EXPRESS PROVISIONS OF LAW. 1 5. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, LEARNED AO/TPO WERE NOT JUSTIFIED IN CONSIDERING DISCOUNTS, SELLING AND PROMOTION EXPENSES, AND OTHER SUCH EXPENDITURE WHILE CALCULATING THE AMP EXPENDITURE OF THE APPELLANT. WITHOUT PREJUDICE, THE CONCLUSIONS REACHED ARE CONTRARY TO THE VERY SAME DECISIONS WHICH ARE RELIED UPON BY THE TAX AUTHORITIES. 16. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, LEARNED AO/TPO/DRP HAVE ERRED IN INCORRECTLY APPLYING THE COMPARABLE UNCONTROLLED PRICE ('CUP') METHOD FOR DETERMINATION OF THE COST BASE WHILE BENCHMARKING THE ALLEGED INTERNATIONAL TRANSACTIONS OF THE APPELLANT RELATING TO AMP. 17. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, LEARNED AO/TPO HAVE ERRED IN BENCHMARKING THE AMP EXPENDITURE INCURRED BY THE APPELLANT IN INDIA WITHOUT CORRECTLY APPLYING CUP IN THE MANNER PRESCRIBED UNDER RULE 10B OF THE RULES. 1 8 . THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, LEARNED AO/TPO HAVE ERRED IN CONSIDERING THE 'BRIGHT LINE' CONCEPT AS A TOOL WHILE APPLYING CUP METHOD. 19. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, LEARNED AO/TPO HAVE ERRED, IN SELEC TION IT A NO. 6778 /DEL /201 5 BAUSCH & LOMB INDI A PVT. LTD. 6 OF INAPPROPRIATE COMPARABLES (WRONGLY REJECTING THE COMPARABLES PROPOSED BY THE APPELLANT) FOR BENCHMARKING THE INTERNATIONAL TRANSACTION OF THE APPELLANT RELATING TO AMP. 20. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, LEARNED AO/TPO HAVE ERRED IN LEVYING A FURTHER MARK - UP ON THE AMP EXPENSES INCURRED OVER AND ABOVE THE SO - CALLED 'BRIGHT - LINE' LIMIT, FOR DETERMINATION OF THE ARM'S LENGTH PRICE OF THE ALLEGED BRAND - PROMOTION SERVICES RENDERED BY THE APPELLANT TO ITS AES. 21. THAT ON T HE FACTS AND C I RCUMSTANCES OF THE CASE AND IN LAW, LEARNED AO/DRP/TPO HAS ERRED, IN ARBITRARILY APPLYING A MARK - UP ON SUCH ALLEGED AMP SERVICES. TRANSFER PRICING ADJUSTMENT ON ACCOUNT ON INTRA - GROUP SERVICES 22. THAT THE TPO/AO/DRP ERRED ON FACTS AND IN LAW IN MAKING AN ADDITION OF RS.7,22,87,247/ - TO INCOME OF THE APPELLANT BY DETERMINING THE ARM'S LENGTH PRICE FOR INTERNATIONAL TRANSACTIONS IN RESPECT OF INTRA - GROUP SERVICES, I.E. REGIONAL SUPPORT SERVICES AVAILED BY THE APPELLANT FROM ITS ASSOCIATED EN TERPRISES ('AES') AT NIL AS AGAINST SUM OF RS. 7,22,87,247/ - DETERMINED BY THE APPELLANT. 23. THAT THE TPO HAS VIOLATED THE PRINCIPAL OF NATURAL JUSTICE BY NOT PROVIDING THE APPELLANT ADEQUATE OPPORTUNITY OF BEING HEARD AND MAKING AN ADJUSTMENT ON ACCOUNT OF INTRA - GROUP SERVICES WITHOUT COMMUNICATING THE REASONS THEREOF . IT A NO. 6778 /DEL /201 5 BAUSCH & LOMB INDI A PVT. LTD. 7 24. THAT ON FACTS AND IN LAW, THE TPO ERRED IN MAKING THE AFORESAID ADDITION WITHOUT DISCHARGING HIS STATUTORY ONUS OF ESTABLISHING THAT THE CONDITIONS SPECIFIED IN CLAUSE (A) TO (D) OF SE CTION 92C (3) OF THE ACT HAD BEEN SATISFIED BEFORE DISREGARDING THE ARM'S LENGTH PRICE DETERMINED BY THE APPELLANT AND PROCEEDING TO DETERMINE THE ARM'S LENGTH PRICE HIMSELF. 25. THAT IN MAKING THE AFORESAID ADDITION, THE TPO/AO/DRP HAVE ERRED IN ALLEGING THAT THE APPELLANT FAILED TO ESTABLISH THE ACTUAL RENDITION OR SERVICES WITHOUT APPRECIATING THE DETAILED DOCUMENTATION AND EVIDENCES SUBMITTED BY THE APPELLANT TO DEMONS TRATE THE RECEIPT OF SERVICES. 26. THAT IN MAKING THE AFORESAID ADDITION, THE TPO/AO /DRP HAVE ERRED IN HOLDING THAT THE SERVICES RENDERED BY THE AES COULD HAVE BEEN AVAILED LOCALLY BY THE APPELLANT WITHOUT APPRECIATING THAT THE DECISION FROM WHOM TO AVAIL SERVICES IS A COMMERCIAL DECISION, WHICH CANNOT BE QUESTIONED BY THE REVENUE AND, TH EREFORE, NO ADDITION COULD HAVE BEEN MADE ON THE AFORESAID GROUND. 27. THAT IN MAKING THE AFORESAID ADDITION, THE TPO/AO/DRP HAVE ERRED IN ALLEGING THAT THE APPELLANT FAILED TO ESTABLISH THE NECESSITY AND/OR BENEFIT ARISI NG TO THE APPELLANT FROM SERV ICES RENDERED BY ITS AES WITHOUT APPRECIATING THAT THE BENEFIT ACCRUING OUT OF SAID SERVICES AND THE NECESSITY FOR AVAILING SERVICES ARE BOTH, COMMERCIAL DECISIONS, WHICH CANNOT BE QUESTIONED BY THE IT A NO. 6778 /DEL /201 5 BAUSCH & LOMB INDI A PVT. LTD. 8 REVENUE AND, THEREFORE, NO ADDITION COULD HAVE BEEN MADE ON AN Y OF THE AFORESAID GROUNDS. 28. THAT THE TPO/AO/D RP FURTHER ERRED ON FACTS IN ALLEGING THAT THE INTRA - GROUP SERVICES WERE IN THE NATURE OF STEWARDSHIP/ SHAREHOLDER ACTIVITIES WITHOUT APPRECIATING THE FACT THAT THE SHAREHOLDER/STEWARDSHIP COSTS HAD ALREADY BEEN REMOVED AND NO DEDUCTION FOR SUCH EXPENDITURE HAD BEEN CLAIMED BY THE APPELLANT ON THIS ACCOUNT. 29. THAT THE TPO/AO/DRP FURTHER ERRED ON FACTS IN ALLEGING T HAT THE SERVICES RECEIVED FROM T HE A ES WERE INCIDENTAL OR DUPLICATE IN NATURE, NOT APPRECIAT ING THAT THE SERVICES WERE NOT SIMILAR TO THOSE PERFORMED IN - HOUSE AND WERE ESSENTIAL FOR APPELLANT'S BUSINESS OPERATIONS. 30. THAT THE TPO/AO/DRP FARTHER ERRED ON FACTS IN HOLDING THAT THE ABILITY OF THE AES TO RENDER SUCH SERVICES HAS NOT BEEN DEMONSTRA TED, IGNORING THE FACT THAT THE AES, HAVING SPECIALIZED KNOWLEDGE AND SKILLS AND BEING IN THE INDUSTRY/BUSINESS FOR A LONG TIME, ARE BETTER EQUIPPED TO RENDER SUCH SERVICES. 31. THAT THE TPO/AO/DRP ERRED ON FACTS AND IN LAW IN IGNORING THE TRANSACTION - BY - TRANSACTION ANALYSIS MADE BY THE APPELLANT USING TNMM FOR BENCHMARKING THE INTERNATIONAL TRANSACTIONS WITH THE OVERSEAS AES AS THE TESTED PARTY AND INSTEAD SUBSTITUTING CUP AS THE MOST APPROPRIATE METHOD AND DETERMINING THE ARM'S LENGTH PRICE AT NIL IN AN ARBITRARY MANNER. 32. THAT IN MAKING THE AFORESAID ADDITION, THE TPO/AO/DRP HAVE ERRED ON FACTS AND IN LAW BY DISREGARDING THE SELECTION OF FOREIGN AES AS TESTED IT A NO. 6778 /DEL /201 5 BAUSCH & LOMB INDI A PVT. LTD. 9 PARTIES AND SELECTION OF FOREIGN COMPARABLES BY THE APPELLANT FOR BENCHMARKING INTERNATIONAL TRANSACTION INVOLVING BUSINESS SUPPORT SERVICES AVAILED BY THE APPELLANT IN THE OBJECTIONS FILED WITH THE DRP. 33. THE TPO/AO/DRP ERRED ON FACTS AND IN LAW IN ALLEGING THAT THE APPELLANT HAS ATTEMPTED TO SHIFT PROFITS OUT OF INDIA BY MAKING PAYMENTS TO IT S AES WITHOUT APPRECIATING THAT THE SAID AES, HAVE FILED THEIR RESPECTIVE INCOME TAX RETURNS IN INDIA ON THE TAXABLE INCO ME DERIVED FROM THE APPELLANT. COMMON GROUNDS 34. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED AO HAS ERR ED IN INITIATING PENALTY PROCEEDINGS UNDER SECTION 271(L)(C) READ WITH SECTION 274 OF THE ACT. 35 . THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED AO HAS ERRED IN CONSIDERING INCORRECT TAX CREDIT AMOUNT FOR THE COMPUTATION OF THE A MOUNT OF TAX DEMAND. 36. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED AO HAS ERRED, IN CHARGING INTEREST UNDER SECTIONS 234B AND 234C OF THE ACT. THE ABOVE GROUNDS ARE INDEPENDENT AND WITHOUT PREJUDICE TO EACH OTHER. THE APPEL LANT CRAVES TO LEAVE TO ADD, WITHDRAW, ALTER, MODIFY, AMEND OR VARY THE ABOVE GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING. IT A NO. 6778 /DEL /201 5 BAUSCH & LOMB INDI A PVT. LTD. 10 3. GROUND NO. 1 IS GENERAL IN NATURE AND GROUND NO. 34 IS PRE - MATURELY RAISED, SO THESE GROUNDS DO NOT REQUIRE ANY ADJUDICA TION ON OUR PART. 4. VIDE GROUND NOS. 2 TO 21, THE GRIEVANCE OF THE ASSESSEE RELATES TO THE TRANSFER PRICING ADJUSTMENT ON ACCOUNT OF AMP EXPENSES AND VIDE GROUND NOS. 22 TO 33, THE ASSESSEE IS AGGRIEVED BY THE TRANSFER PRICING ADJUSTMENT ON ACCOUNT OF INT RA GROUP SERVICES. 5. F ACTS OF THE CASE RELATED TO THESE ISSUE S IN BRIEF ARE THAT THE ASSESSEE FILED THE RETURN OF INCOME DECLARING AN INCOME OF RS.27,65,35,314/ - UNDER NORMAL PROVISION S OF THE ACT AND AT BOOK PROFIT OF RS .23,36,90,859/ - UNDER SPECIAL PRO VISIONS U/S 115JB OF THE ACT ON 13.10.2010. THE ASSESSEE IS WHOLLY OWNED SUBSIDIARY OF BAUSCH & LOMB SOUTH ASIA INC., USA AND ENGAGED IN THE BUSINESS OF MANUFACTURING LENSE CARE SOLUTIONS, TRADING OF CONTACT SENSES AND PROTEIN REMOVAL ENZYME. THE ASSESSEE IS ALSO ENGAGED IN THE TRADING OF OPHTHALMIC AND SURGICAL EQUIPMENTS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT THE ASSESSEE ENTERED INTO INTERNATIONAL TRANSACTIONS WITH ASSOCIATED ENTERPRISES (AES) WITHIN THE MEANING OF SECTION 92B OF THE INCOME TAX ACT , 1961 (HEREINAFTER REFERRED TO AS THE ACT) . THE DETAILS OF THE SAID TRANSACTION WERE MENTIONED IN FORM NO. 3CEB FILED BY IT A NO. 6778 /DEL /201 5 BAUSCH & LOMB INDI A PVT. LTD. 11 THE ASSESSEE. THE AO, THEREFORE, REFERRED THE CASE TO THE TRANSFER PRICING OFFICER AS PER PROVISIONS OF SECTION 9 2CA(1) OF THE ACT FOR COMPUTATION OF ARM S LENGTH PRICE IN RELATION TO THE INTERNATIONAL TRANSACTION. SUBSEQUENTLY, THE TPO VIDE ORDER DATED 07.01.2015 U/S 92CA(3) OF THE ACT PROPOSED THE ADJUSTMENT OF RS.14,90,23,634/ - , WHICH COMPRISES RS.7,67,36,387/ - ON ACCOUNT OF AMP EXPENSES AND RS.7,22,87,247/ - ON ACCOUNT OF INTRA GROUP SERVICES , ATTRIBUTABLE TO DIFFERENCE IN ARM S LENGTH PRICE OF THE INTERNATIONAL TRANSACTIONS ENTERED BY THE ASSESSEE WITH THE AES BY OBSERVING AS UNDER: THE ASSESSEE FILED ITS RETURN OF INCOME WITH DCIT, CIRCLE - 2(1), NEW DELHI, THE ASSESSING OFFICER. A REFERENCE WAS RECEIVED FROM THE ASSESSING OFFICER BY THE UNDERSIGNED TO DETERMINE THE ARM S LENGTH PRICE U/S 92CA(3) IN RESPECT OF INTERNATIONAL TRANSACTIONS ENTERED INTO BY THE ASSES SEE DURING THE F.Y. 2010 - 11. IN RESPONSE TO NOTICE U/S 92CA(2), MR. TARUN BINDISH, FROM S.R. BATLIBOL & CO., THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE APPEARED FROM TIME TO TIME. THE DOCUMENTATION PRESCRIBED UNDER RULE 10B OF THE INCOME TAX RULES WAS S UBMITTED AND PLACED ON THE RECORD. S.N NATURE OF INTERNATIONAL TRANSA CTION ALP DETERMINED BY TAXPAYER (INR) ALO DETERMINED BY THE TPO (INR) ADJUSTMENT U/S 92CA (INR) 1. AMP 77,73 ,0 2 , 97 7 7 6736387 2. INTRA GROUP SERVICES 72287247 NIL 72287247 TOTAL 149023634 IT A NO. 6778 /DEL /201 5 BAUSCH & LOMB INDI A PVT. LTD. 12 THE ASSESSING OFFICER WILL ACCORDINGLY ENHANCE THE INCOME OF THE TAXPAYER BY RS.14,90,23,634/ - . THIS SHALL BE TREATED AS THE CUMULATIVE ADJUSTMENT U/S 92CA. NO ADVERSE INFERENCE IS DRAWN IN RESPECT OF THE OTHER INTERNATIONAL TRANSACTIONS UNDERTA KEN BY THE TAXPAYER DURING THE F.Y. 2010 - 11. THE TAXPAYER WAS AFFORDED REASONABLE OPPORTUNITY OF BEING HEARD, AS MENTIONED ON PAGE 1 OF THIS ORDER. IT HAS ALREADY BEEN DECIDED IN PARA 46 THAT THE AMP EXPENDITURE IS AN INTERNATIONAL TRANSACTION WITHIN THE M EANING OF SECTION 92B(1) OF THE ACT READ WITH CLAUSE (V) OF SECTION 92F OF THE ACT. BEING AN INTERNATIONAL TRANSACTION IT WAS REQUIRED TO BE REPORTED IN FORM NO. 3CEB UNDER SECTION 92E OF THE ACT. THE TAXPAYER WAS ALSO REQUIRED TO FURNISH COMPLETE DETAILS OF THESE INTERNATIONAL TRANSACTIONS AS PRESCRIBED UNDER RULE 10D OF THE IT RULES, 1962. 6. SUBSEQUENTLY , THE AO ASKED THE ASSESSEE TO SHOW - CAUSE AS TO WHY THE AFORESAID AMOUNT AS RECOMMENDED BY THE TPO SHOULD NOT BE ADDED TO THE TOTAL INCOME OF THE ASS ESSEE. THE ASSESSEE MADE THE SUBMISSIONS VIDE REPLY DATED 20.02.2015. HOWEVER, THE AO DID NOT FIND MERIT IN THE SAID SUBMISSION AND PROPOSED THE ADDITION OF RS.14,90,23,634/ - VIDE DRAFT AS SESSMENT ORDER DATED 24.02.2015. AGAINST THE DRAFT ASSESSMENT ORDER, THE ASSESSEE FILED OBJECTIONS BEFORE THE DISPUTE RESOLUTION PANEL (DRP) WHO PASSED THE ORDER U/S 144C(5) OF THE ACT DATED 06.10.2015 AND UPHELD THE FINDINGS OF THE TPO. ACCORDINGLY, THE AO MADE THE ADDITIONS ON ACCOUNT IT A NO. 6778 /DEL /201 5 BAUSCH & LOMB INDI A PVT. LTD. 13 OF AMP EXPENSES OF RS.7,67,36,387/ - AND INTRA GROUP SERVICES ADDITIONS OF RS.7,22,87,247/ - . 7. NOW THE ASSESSEE IS IN APPEAL. DURING THE COURSE OF HEARING THE LD. COUNSEL FOR THE ASSESSEE AT THE VERY OUTSET STATED THAT BOTH THE ISSUES UNDER CONSIDERATION ARE SQUARELY COVERED VIDE ORDER DATE D 23.12.2015 OF THE HON BLE JURISDICTIONAL HIGH COURT IN ASSESSEE S OWN CASE IN ITA NOS. 643/2014, 675 TO 677/2014 AND 950/2015 MOVED BY THE ASSESSEE ALONGWITH ITA NOS. 165 & 166/2015 & CM NOS. 3777 TO 3779/2015 MOVED BY THE DEPARTMENT FOR THE ASSESSMENT Y EARS 2006 - 07 TO 2011 - 12 , WHEREIN RELEVANT FINDINGS HAVE BEEN GIVEN IN PARA 67 RELATING TO AMP EXPENSES AND IN PARA 66 RELATING TO INTRA GROUP SERVICES. THE AFORESAID CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE WAS NOT CONTROVERTED BY THE LD. CIT DR WHO SUPPORTED THE IMPUGNED ORDER OF THE AO. 8. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. IT IS NOTICED THAT THE IDENTICAL ISSUE S HAVE ALREADY BEEN ADJUDICATED BY THE HON BLE JURISDI CTIONAL HIGH COURT IN ASSESSEE S OWN CASE IN THE PRECEDING ASSESSMENT YEARS 2006 - 07 TO 2011 - 12 VIDE AFORESAID REFERRED TO ORDER DATED 23.12.2015 IT A NO. 6778 /DEL /201 5 BAUSCH & LOMB INDI A PVT. LTD. 14 AND THE RELEVANT FINDINGS HAVE BEEN GIVEN IN PARAS 66 & 67 WHICH READ AS UNDER: 66. ON THE ISSUE OF THE INTRA GROUP SERVICES, THE ASSESSEE IS JUSTIFIED IN CONTENDING THAT THE RE - CHARACTERIZATION OF ITS TRANSACTION INVOLVING ITS AE FOR THE TWO YEARS WHICH HAVE BEEN FULLY DISCLOSED IN THE TP STUDY ON THE BASIS OF IT NOT BEING FOR COMMERCIAL EXPEDIENCY OF THE ASSESS EE IS CLEARLY BEYOND THE POWERS OF THE TPO AND CONTRARY TO THE LEGAL POSITION EXPLAINED IN EKL APPLIANCES (SUPRA). 67. FOR THE AFOREMENTIONED REASONS THE COURT IS SATISFIED THAT THE REVENUE HAS NOT BEEN ABLE TO SHOW THE EXISTENCE OF AN INTERNATIONAL TRAN SACTION INVOLVING AMP EXPENSES BETWEEN THE ASSESSEE AND ITS AE, B&L, USA. QUESTION (II) IS ACCORDINGLY ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 9. WE, THEREFORE, BY RESPECTFULLY FOLLOWING THE AFORESAID REFERRED TO JUDGMENT OF THE HON B LE JURISDICTIONAL HIGH COURT, SET ASIDE THE IMPUGNED ORDER AND THE ISSUES ARE DECIDED IN FAVOUR OF THE ASSESSEE. 10. AS REGARDS TO THE ISSUE RAISED IN GROUND NO. 35 RELATING TO CONSIDERATION OF THE TAX CREDIT, WE DIRECT THE AO TO VERIFY FROM THE RECORD AN D ALLOW THE CORRECT CREDIT IN ACCORDANCE WITH LAW. 11. AS REGARDS TO GROUND NO. 36 RELATING TO CHARGING OF INTEREST U/S 234B AND 234C OF THE ACT, IT WAS THE COMMON IT A NO. 6778 /DEL /201 5 BAUSCH & LOMB INDI A PVT. LTD. 15 CONTENTION OF BOTH THE PARTIES THAT IT IS CONSEQUENTIAL IN NATURE. WE ORDER ACCORDINGLY. 1 2 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED . ( ORDER PRON OUNCED IN THE COURT ON 23 /09/2016) SD/ - SD/ - ( BEENA PILLAI ) (N. K. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DAT ED: 23 /09 /2016 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR