Amadeus India Pvt. Ltd., New Delhi V. ACIT, Circle- 2(2), New Delhi

ITA 7691/DEL/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3021 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I1
• Assessment Year: 2013-2014
• Appeal Filed On: 22-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJAY I BARA; SANDEEP KR MISHRA
• Assessee Lawyers: TARUNDEEP SINGH; TARUN SINGH
• Keywords: Transfer pricing; Double taxation relief; Opportunity of being heard; International transaction; Rule of consistency; Earning of tax free income; Application of stay; Retrospective amendment; Permanent establishment; Question of law; Tangible material; Fair market value; Avoidance of tax; Competent authority; Notional interest; Tax effect
• Section: 92D; 92B; 92F; 10AA; 234B; 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: I NEW DELHI BEFORE SHRI N.S. SAINI, ACCOUNTANT ME MBER & SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER STAY APPLICATION NO. 475-476/DEL/2018 (ARISING OUT OF ITA NO. 1811 & 7691/DEL/2017) ( ASSESSMENT YEAR: 2012-13, 2013-14) AMADEUS INDIA PVT. LTD. E-9, CONNAUGHT HOUSE, CONNAUGHT PLACE, NEW DELHI PAN : AAACA0364L VS . ACIT, NEW DELHI APPELLANT RESPONDENT ASSESSEE BY : SH. TARUNDEEP SINGH & TARUN S INGH, ADV. REVENUE BY : SHRI SANJAY I.BARA, CIT-DR & SH. SANDEEP KR. MISHRA, SR. DR ITA NO. 1662/DEL/2016 ASSESSMENT YEAR : 2011-12 AMADEUS INDIA PVT. LTD. E-9, CONNAUGHT HOUSE, CONNAUGHT PLACE, NEW DELHI PAN : AAACA0364L VS . ACIT, NEW DELHI APPELLANT RESPONDENT ASSESSEE BY : SH. TARUNDEEP SINGH, ADV. REVENUE BY : SHRI SANJAY I.BARA, CIT-DR DATE OF HEARING 3 0 .0 1 .201 9 DATE OF PRONOUNCEMENT 27 . 0 2 .201 9 2 STAY N O. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) ORDER PER SUDHANSHU SRIVASTAVA, J.M. : THESE APPEALS HAVE BEEN FILED CHALLENGING ADDITIONS / DISALLOWANCES MADE BY THE ASSESSING OFFICER (AO) IN THE FINAL ORDER OF ASSESSMENT PASSED U/S 144C/143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED THE ACT) FOR ASSESSMENT YEARS 2011-12 TO 2013- 14. SINCE, BOTH THE PARTIES AGREE THAT FACTS FOR AL L THE YEARS ARE COMMON WE FIRST TAKE UP FOR CONSIDERATION APPEAL IN ITA NO.1662/DEL/2016 FOR AY 2011-12. 2.0 THIS APPEAL HAS BEEN FILED BY ASSESSEE BEIN G AGGRIEVED AGAINST FINAL ORDER OF ASSESSMENT DATED 30 TH JANUARY, 2016 PASSED BY THE DY. COMMISSIONER OF INCOME TAX, CIRCLE 2(2), NEW DELHI. THE IMPUGNED ORDER HAS BEEN PASSED BY THE AO IN CONFORMITY WITH THE DIRECTIONS ISSUED BY LD. DISPUTES RESOLUTION PANEL (DRP) VIDE ORDER DATED 31 ST DECEMBER, 2015. 2.1 FOLLOWING GROUNDS OF APPEAL HAVE BEEN RAISE D:- 1. THAT ON FACTS AND IN LAW THE ORDERS PASSED BY T HE ASSESSING OFFICER (HEREINAFTER REFERRED AS THE AO) / DISPUT E RESOLUTION PANEL (HEREINAFTER REFERRED AS THE DRP) / TRANSFER PRICING OFFICER (HEREINAFTER REFERRED AS THE TPO) ARE BAD IN LAW AND VOID AB- INITIO. DATE OF HEARING 29.01.2019 DATE OF PRONOUNCEMENT 27.02.2019 3 STAY N O. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) 1.1 WITHOUT PREJUDICE, ON FACTS AND IN LAW, THE TPO /DRP ERRED IN NOT GRANTING A PROPER OPPORTUNITY OF BEING HEARD AN D THEREBY VIOLATING THE SETTLED PRINCIPALS OF AUDI ALTERAM PA RTEM. 2. THAT ON FACTS AND IN LAW THE AO/TPO/DRP ERRED IN MAKING / PROPOSING/UPHOLDING AN ADDITION TO TOTAL INCOME OF RS.114,98,39,926/- UNDER CHAPTER X OF THE INCOME TA X ACT, 1961 (HEREINAFTER REFERRED AS THE ACT). 3. THAT ON FACTS AND IN LAW THE AO/TPO/DRP ERRED IN MAKING / PROPOSING/UPHOLDING TRANSFER PRICING ADJUSTMENT OF RS.114,98,39,926/- ON ACCOUNT OF ADVERTISEMENT, MAR KETING AND SALES PROMOTION EXPENSES 3.1.THAT ON FACTS AND IN LAW THE AO/TPO/DRP ERRED I N NOT APPRECIATING THAT IN ABSENCE OF A TRANSACTION AS ENVISAGED UNDER SECTION 92F OF THE ACT BETWEEN APPELLANT AND ITS AE FOR BRAND PROMOTION OR FOR ESTABLISHING A MARKETING INT ANGIBLE THE TPO HAD NO JURISDICTION TO PROPOSE ADJUSTMENT ON AC COUNT AMP EXPENSES. 3.2.THAT ON FACTS AND IN LAW THE TPO ERRED IN HOLDI NG AND THE DRP INTER ALIA ERRED IN UPHOLDING / OBSERVING THAT THE : (I) APPELLANT HAD INCURRED AMP EXPENDITURE TOTALING TO RS.94,31,24,844/- ON PROMOTION OF PROPRIETARY MARKS AND FOR DEVELOPMENT OF MARKETING INTANGIBLE FOR THE BENEFIT OF AE. (II) AMP EXPENDITURE OF RS. 94,31,24,844/- INCURRED BY T HE ASSESSEE IS AN INTERNATIONAL TRANSACTION U/S 92B OF THE ACT. 4 STAY N O. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) (III) AMP TRANSACTION IS BEING MADE AT THE BEHEST AND UND ER CONTROL OF THE AE. (IV) AE IS DIRECTLY BENEFITED BY ANY EXPENDITURE INCURRE D BY ASSESSEE ON AMP. (V) LEGAL OWNERSHIP OF THE MARKETING INTANGIBLE WOULD G ET TRANSFERRED TO THE AE WITHOUT ANY CONSIDERATION ON TERMINATION OF THE DISTRIBUTION AGREEMENT. (VI) APPLYING TRANSACTION-BY-TRANSACTION APPROACH AMP TRANSACTION IS TO BENCHMARKED IN A SEGREGATED MANNE R. (VII) INTERNATIONAL TRANSACTION ON ACCOUNT OF AMP EXPEN SES CANNOT BE BENCHMARKED APPLYING TNMM AS THE MOST APPROPRIATE METHOD. 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 CARRIE D ON BY THE APPELLANT AND HENCE IT CANNOT BE SEGREGATED AND BEN CHMARKED ON A STAND-ALONE BASIS. 5. THAT ON FACTS AND IN LAW THE TPO ERRED IN MAKING TP ADJUSTMENT OF RS. 114,89,41,243/- DISREGARDING FOLL OWING DIRECTIONS ISSUED BY DRP ; (A) REJECTING USE OF BRIGHT LINE METHOD FOR BENC HMARKING AMP EXPENSES (B) EXCLUDING SELLING EXPENSES FROM THE AMBIT OF AM P. 5.1 THAT ON FACTS AND IN LAW THE TPO ERRED IN MAKIN G TP ADJUSTMENT ON ACCOUNT OF AMP EXPENSES INVOKING BRI GHT LINE METHOD. 5 STAY N O. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) 5.2 THAT ON FACTS AND IN LAW THE TPO ERRED IN TREAT ING EXPENDITURE OF RS.89,50,72,373/- INCURRED BY THE AS SESSEE AS INCENTIVES AKIN TO AMP EXPENDITURE. 6. THAT WITHOUT PREJUDICE ON FACTS AND IN LAW THE T PO/DRP ERRED IN MAKING / UPHOLDING THE APPLICABILITY OF A MARKUP OF 26.42% ON THE ALLEGED EXCESSIVE AMP EXPENSES INCURR ED BY THE APPELLANT ON BEHALF OF THE ASSOCIATED ENTERPRISE. 7. THAT ON FACTS AND IN LAW THE TPO/AO/DRP ERRED IN PROPOSING/MAKING/UPHOLDING AN ADJUSTMENT OF RS.8,98 ,683/- ON ACCOUNT OF ALLEGED TRANSACTION FOR NOTIONAL INTER EST ATTRIBUTABLE TO DELAYED PAYMENTS RECEIVABLE FROM THE AE. 7.1 WITHOUT PREJUDICE, THAT ON FACTS AND IN LAW THE TPO/DRP ERRED IN NOT APPRECIATING THAT ONCE THE INTERNATIO NAL TRANSACTIONS EXECUTED BY THE APPELLANT UNDER THE DISTRIBUTION AG REEMENT WITH AMADEUS SPAIN HAVE BEEN ACCEPTED TO BE AT ALP APPLY ING TNMM AS THE MOST APPROPRIATE METHOD THEN NO FURTHER ADJU STMENT ON ACCOUNT OF ADVERTISING, MARKETING AND PROMOTIONAL E XPENDITURE (HEREINAFTER REFERRED TO AS AMP) OR NOTIONAL INTE REST ATTRIBUTABLE TO DELAYED PAYMENTS RECEIVABLE FROM THE AE WAS CALL ED FOR. 8. WITHOUT PREJUDICE, THAT ON FACTS AND IN LAW THE AO/TPO/DRP ERRED IN NOT APPRECIATING THAT THE ALLEGED TRANSACT IONS OF AMP AND NOTIONAL INTEREST ARE CLOSELY LINKED WITH THE MAI N ACTIVITIES CARRIED OUT UNDER THE DISTRIBUTION AGREEMENT AND HE NCE THEY CANNOT BE SEGREGATED AND BENCHMARKED ON A STAND-ALO NE BASIS. 9. THAT ON FACTS AND IN LAW THE AO/ DRP ERRED IN RE STRICTING ALLOWANCE FOR DEDUCTION U/S 10A OF THE ACT TO RS.59 ,39,683/- AS 6 STAY N O. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) AGAINST A DEDUCTION OF RS.17,70,80,634/- CLAIMED BY THE APPELLATE IN ITS RETURN OF INCOME. 9.1 THAT ON FACTS AND IN LAW THE AO/DRP ERRED IN HO LDING / UPHOLDING THAT DATA PROCESSING RECEIPTS PERTAINING TO UNIT-II ARE NOT ELIGIBLE FOR CLAIMING BENEFIT OF DEDUCTION U/S 10A OF THE ACT. 9.2 THAT ON FACTS AND IN LAW THE AO/DRP ERRED IN DE NYING BENEFIT OF DEDUCTION U/S 10A OF THE ACT AS CLAIMED IN THE RETURN BY ERRONEOUSLY BEING INFLUENCED BY THE FINDINGS RECORD ED BY APPELLATE COURTS IN CASES RELATING TO THE AE. 9.3 THAT ON FACTS AND IN LAW THE AO/DRP ERRED IN HO LDING THAT THE APPELLANT HAS NOT BEEN ABLE TO ESTABLISH WITH E VIDENCE THAT IT HAS RENDERED DATA PROCESSING SERVICES WHICH ARE ELI GIBLE FOR CLAIM OF DEDUCTION U/S 10A OF THE ACT. 10. THAT ON FACTS AND IN LAW THE AO/DRP ERRED IN CHARGING/UPHOLDING LEVY OF INTEREST U/S 234A, 234B & 234C OF THE ACT. 11. THAT ON FACTS AND IN LAW, THE ASSUMPTION OF JUR ISDICTION BY THE AO/TPO TO DETERMINE ARMS LENGTH PRICE IS BAD I N LAW AND VOID AB-INITIO. 2.2 THUS, IN CRUX, THE ASSESSEE IS AGGRIEVED BY TH E FOLLOWING ADDITIONS/DISALLOWANCES MADE BY THE AO IN THE INSTA NT CASE:- (A) TRANSFER PRICING ADJUSTMENT ON ACCOUNT OF ALLEG ED EXCESSIVE ADVERTISING MARKETING AND PROMOTION (AMP) EXPENDITU RE OF RS.114.89 CRORES. 7 STAY N O. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) (B) TRANSFER PRICING ADJUSTMENT OF RS.8,98,683/- ON ACCOUNT OF ALLEGED TRANSACTION FOR NOTIONAL INTEREST ON RECEIV ABLES. (C) DISALLOWANCE U/S 10A OF THE ACT 2.3 THE FIRST ISSUE IN DISPUTE ARISING OUT OF GR OUNDS 2 TO 6 OF APPEAL PERTAINS TO TRANSFER PRICING ADJUSTMENT ON A CCOUNT OF EXCESSIVE AMP EXPENDITURE OF RS.114.89 CRORES. BRI EFLY STATED, THE RELEVANT FACTS IN THIS REGARD ARE THAT THE ASSESSEE M/S AMADEUS INDIA PVT. LTD. IS AN INDIAN COMPANY WHOSE SHARE HOLDING IS AS UNDER:- M SHAREHOLDING 95% 5% SHAREHOLDING MRS. RADHA BHATIA AND FAMILY (ALL INDIAN NATIONALS) BIRD TRAVELS PRIVATE LIMITED (100% OWNERSHIP WITH MRS. RADHA BHATIA AND FAMILY) AMADEUS INDIA PRIVATE LIMITED BOARD OF DIRECTORS MRS. RADHA BHATIA MR. ANKUR BHATIA MR. VIJAY BHATIA 8 STAY N O. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) 2.4 AS PER THE DEEMING PROVISIONS OF SECTION 92 A (2)(G) OF THE ACT, THE ASSOCIATED ENTERPRISE (AE) OF THE ASSESSEE I.E. , M/S AMADEUS IT GROUP SA {ALSO KNOWN AS AMADEUS SPAIN} HAS DEVELO PED A FULLY AUTOMATED RESERVATION AND DISTRIBUTION SYSTEM I.E., COMPUTERIZED RESERVATION SYSTEM (CRS) WITH AN ABILITY TO PERFORM COMPREHENSIVE INFORMATION, COMMUNICATIONS, RESERVATIONS, TICKETIN G AND RELATED FUNCTION ON WORLD-WIDE BASIS. UNDISPUTEDLY, THE DEE MED AE HAS NO OWNERSHIP, CONTROL OR ANY SHARE-HOLDING IN THE ASSE SSEE COMPANY AND NEITHER DOES IT PARTICIPATE IN MANAGEMENT OF THE AS SESSEE. THE AE RELATIONSHIP IS OWING TO THE DEEMING PROVISIONS OF SECTION 92A(2)(G). THE SAID CRS SYSTEM IS USED BY AIRLINES, HOTELS, TO UR OPERATORS, CAR RENTAL COMPANIES AND OTHERS TO MARKET OR DISTRIBUTE THEIR SERVICE PRODUCTS FOR OTHER INFORMATION. 2.5 THE ASSESSEE ENTERED INTO AN AGREEMENT WITH M/S AMADEUS SPAIN ON 1 ST OCTOBER, 2004. THE MAIN ACTIVITY OF THE ASSESSEE I S TO PROVIDE CONNECTIVITY TO THE SUBSCRIBERS IN INDIA TO THE HOST THE CRS SYSTEM BY CREATION/MODIFICATION/UP-GRADATION OF COM PUTER PROGRAMMES ONLINE. THE ASSESSEE HAS A DATA PROCESSI NG CENTRE, WHICH PROVIDES THE ABOVE SERVICES TO THE DEEMED AE. IN TH E TRANSFER PRICING (TP) STUDY, THE ASSESSEE HAS DECLARED THE FOLLOWING INTERNATIONAL TRANSACTIONS WITH ITS DEEMED AE: 9 STAY N O. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) NATURE OF TRANSACTION METHOD VALUE (RS) PROVISION OF INFORMATION TECHNOLOGY ENABLED SERVICES (ITES) TNMM 231,71,32,514 RECEIPT OF DATA PROCESSING SERVICES 9,40,17,116 2.6 IN THE TRANSFER PRICING STUDY, THE ASSESSEE HAD FOLLOWED THE TRANSACTION NET MARGIN METHOD (TNMM) TO SUBSTANTIAT E THE ARMS LENGTH PRICE (ALP) OF ABOVE DISCLOSED INTERNATIONAL TRANSACTION/S PERTAINING TO PROVISION OF ITES SERVICES WITH ITS D EEMED AE AND ACCORDINGLY IT COMPARED THE NET OPERATING PROFIT/TO TAL COST (OP/TC) EARNED BY IT WITH THE MEAN OP/TC OF THE COMPARABLE COMPANIES SELECTED BY IT AND CONCLUDED THAT SINCE THE OP/TC O F THE ASSESSEE IS HIGHER THAN THE MEAN OP/TC OF COMPARABLE COMPANIES, THE DISCLOSED INTERNATIONAL TRANSACTION ARE AT ARMS LENGTH PRICE . IN ORDER TO VERIFY THIS, THE AO MADE A REFERENCE TO THE TRANSFER PRICI NG OFFICER (TPO). THE TPO HAS ACCEPTED THE BENCHMARKING OF THE ABOVE DECLARED INTERNATIONAL TRANSACTIONS. IN THIS REGARD AFTER A DETAILED BENCHMARKING OF THE DISCLOSED INTERNATIONAL TRANSAC TION/S, THE TPO HAS, AT PAGE 69 OF ORDER DATED 20 TH JANUARY, 2015, HELD THAT FROM ABOVE IT CAN BE SEEN THAT THE INTERNATIONAL TRANSAC TION OF TAXPAYER IN RESPECT OF ITES IS WITHIN + / - 5% OF ARMS LENGTH P RICE. 10 STAY NO. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) 2.7 THE TPO, HOWEVER, OBSERVED THAT THE ASSESSEE HAD INCURRED MORE THAN NORMAL AMP EXPENSES TO BUILD AMADEUS BRAND IN INDIA WHICH IS LEGALLY OWNED BY M/S AMADEUS SPAIN. THE TP O HELD THAT THE ASSESSEE SHOULD HAVE BEEN REIMBURSED WITH APPROPRIA TE MARK-UP ON SUCH EXCESSIVE AMP EXPENDITURE IDENTIFIED BY HIM BY APPLYING THE BRIGHT LINE TEST (BLT). IN HIS ORDER, THE TPO HAS I DENTIFIED THE SAID ABNORMAL AMP EXPENSES BY APPLYING THE BRIGHT LINE M ETHOD I.E., BY COMPARING THE AMP AS A PERCENTAGE TO SALES OF THE A SSESSEE WITH AVERAGE AMP AS A PERCENTAGE OF THE COMPARABLE COMPA NIES FINALLY SELECTED BY HIM FOR BENCHMARKING THE MAIN FUNCTIONS OF THE ASSESSEE. THEREAFTER, BY APPLYING A MARK-UP OF 11.69%, THE TP O HAS COMPUTED THE FINAL ADJUSTMENT FOR THE ALLEGED TRANSACTION OF BRAND PROMOTION AS UNDER:- TPO ORDER DATED 20- 01-2015 TPO ORDER DATED 28.02.2016 GIVING EFFECT TO DRP VALUE OF GROSS SALES RS 231,73,07,014 RS 231,73,07,014 AMP/SALES OF THE COMPARABLES 1.48% 1.48% AMOUNT THAT REPRESENT BRIGHT LINE RS 3,42,96,144 RS 3,42,96,144 EXPENDITURE ON AMP BY ASSESSEE RS 94,31,24,844 RS 94,31,24,844 EXPENDITURE IN EXCESS OF BRIGHT LINE RS 90,88,28,700 RS 90,88,28,700 PLI 11.69 % 26.42% MARKUP RS 10,62,42,075 RS 24,01,12,542 CUMULATIVE ADDITION RS 101,50,70,775 RS 114,89,41,243 11 STAY NO. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) 2.8 BEING AGGRIEVED BY THE ABOVE PROPOSED TRANS FER PRICING ADJUSTMENT, THE ASSESSEE FILED DETAILED OBJECTIONS BEFORE THE LD. DRP. THE LD. DRP, WHILE REFERRING TO DECISION OF THE HON BLE DELHI HIGH COURT IN THE CASE OF SONY ERICSSON MOBILE COMMUNICA TIONS REPORTED IN 374 ITR 118(DEL), HAS EXAMINED THE CONTENTIONS P UT FORTH BY THE ASSESSEE BEFORE IT AS UNDER:- SUB GROUNDS OF APPEAL SUMMARIZED AS PER ISSUE FROM FORM 35A SONY ERICSSON HIGH COURT ORDER DT.16 MARCH, 2015 RE-CHARACTERIZATION OF EXPENSES INCURRED FOR OWN BUSINESS AS A SERVICE TO AE IS NOT JUSTIFIED UPHELD AT PARA 64 PAGE 48 OF 142 AND PARA 147, PAGE 111 THE BURDEN IS ON THE ASSESSED TO SELECT AND JUSTIFY THE METHOD ADOPTED AND THE ARMS LENGTH PRICE DECLARED UNDER SUB-SECTION (3) TO SECTION 92C, THE ASSESSING OFFICER CAN PROCEED TO DETERMINE THE ARMS LENGTH PRICE IN ACCORDANCE WITH SECTION 92C(1) AND (2) ON THE BASIS OF MATERIAL, INFORMATION OR DOCUMENTS IN HIS POSSESSION, IF ANY OF THE CIRCUMSTANCES MENTIONED IN CLAUSES (A) TO (D) ARE SATISFIED - THE AMP EXPENSES INCURRED BY THE ASSESSEE, QUA INDEPENDENT PARTIES, ARE DOMESTIC TRANSACTION AND NOT INTERNATIONAL TRANSACTION AS DEFINED IN SECTION 92B OF THE ACT. AMP EXPENSE IS AN INTERNATIONAL TRANSACTION. (PARAS 52 & 53 OF THE JUDGMENT) : THE TPO HAS JURISDICTION TO DETERMINE THE ALP OF THE INTERNATIONAL TRANSACTION OF AMP EXPENSES (PARA 50 OF THE JUDGMENT); DISCUSSION UNDER THE HEADING C PARA 51-57, THE SUBSTANTIAL QUESTION OF LAW ANSWERED IN FAVOR OF REVENUE. 12 STAY NO. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) AO/TPO CAN SEGREGATE AMP EXPENSES AS AN INDEPENDENT INTERNATIONAL TRANSACTION, BUT ONLY AFTER ELUCIDATING THE GROUNDS AND REASONS FOR NOT ACCEPTING THE BUNCHING ADOPTED BY THE ASSESSED AND EXAMINING AND GIVING BENEFIT OF SET OFF UNDER 92(3). ASSESSEE IS ALREADY REMUNERATED FOR THE ACTIVITIES PERFORMED BY IT. PARA 134 PAGE 103 OWNER OF THE MARKETING INTANGIBLE SHOULD ADEQUATELY COMPENSATE THE DOMESTIC AE INCURRING COSTS TOWARDS MARKETING ACTIVITIES BY REIMBURSEMENT OF EXPENSES OR BY SUFFICIENT AND APPROPRIATE RETURN. BRIGHT LINE TEST, APPLIED BY THE LD. TPO/LD. AO, IS NOT PERMITTED BY THE TRANSFER PRICING REGULATIONS PARA 194, SNO X, PAGE 139 BRIGHT LINE TEST HAS NO STATUTORY MANDATE. BRIGHT LINE TEST CANNOT BE APPLIED TO WORK OUT NON-ROUTINE AMP EXPENSES FOR BENCHMARKING [PARA 194 (X)]; THE AMP EXPENSES INCURRED BY THE ASSESSEE ALREADY BENCHMARKED BY APPLYING TNMM SO SEPARATE BENCHMARKING NOT REQUIRED PAGE 140 AO FOR GOOD AND SUFFICIENT REASONS CAN DE-BUNDLE INTERCONNECTED TRANSACTIONS, IS SEGREGATED DISTRIBUTION, MARKETING OR AMP TRANSACTIONS WHEN BUNDLED TRANSACTIONS CANNOT BE ADEQUATELY COMPARED ON AN AGGREGATE BASIS. ALP OF AMP EXPENSES SHOULD BE DETERMINED PREFERABLY IN A BUNDLED MANNER WITH THE DISTRIBUTION ACTIVITY (PARAS 91,121 & OTHERS); VALUE OF ALLEGED INTERNATIONAL TRANSACTION HAS BEEN DETERMINED INCORRECTLY PAGE. 137 THE ASSESSED, I.E., THE DOMESTIC AE MUST BE COMPENSATED FOR THE AMP EXPENSES BY THE FOREIGN AE. SUCH COMPENSATION MAY BE INCLUDED OR SUBSUMED IN LOW PURCHASE PRICE OR BY 13 STAY NO. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) NOT CHARGING OR CHARGING LOWER ROYALTY. DIRECT COMPENSATION CAN ALSO BE PAID. THE METHOD SELECTED AND COMPARABILITY ANALYSIS SHOULD BE APPROPRIATE AND RELIABLE SO AS TO INCLUDE THE AMP FUNCTIONS AND COSTS. THE LD.AO/LD.TPO HAS SELECTED INAPPROPRIATE COMPARABLES AMP IS A SEPARATE FUNCTION. AN EXTERNAL COMPARABLE SHOULD PERFORM SIMILAR AMP FUNCTIONS. [PARAS 165 & 166]; FOR DETERMINING THE ALP OF THESE TRANSACTIONS IN A BUNDLED MANNER, SUITABLE COMPARABLES HAVING UNDERTAKEN SIMILAR ACTIVITIES OF DISTRIBUTION OF THE PRODUCTS AND ALSO INCURRING OF AMP EXPENSES, SHOULD BE CHOSEN (PARAS 194(I), (II), (VIII) & OTHERS); THE AO/TPO CAN REJECT A METHOD SELECTED BY THE ASSESSED FOR SEVERAL REASONS INCLUDING WANT OF RELIABILITY IN THE FACTUAL MATRIX OR LACK / NON- AVAILABILITY OF COMPARABLES (SEE SECTION 92C(3) OF THE ACT). PAGE 138 WHEN THE AO/TPO REJECTS METHOD ADOPTED BY ASSESSED, HE IS ENTITLED TO SELECT MAM, AND UNDERTAKE COMPARABILITY ANALYSIS. SELECTION OF METHOD AND COMPARABLES SHOULD BE AS PER THE COMMAND AND DIRECTIVE OF THE ACT AND RULES AND JUSTIFIED BY GIVING REASONS. THE CHOICE OF COMPARABLES CANNOT BE RESTRICTED ONLY TO DOMESTIC COMPANIES USING ANY FOREIGN BRAND (PARA 120); IF NO COMPARABLES HAVING PERFORMED BOTH THE FUNCTIONS IN A SIMILAR MANNER ARE AVAILABLE, THEN, SUITABLE ADJUSTMENT SHOULD BE MADE TO BRING INTERNATIONAL TRANSACTIONS AND COMPARABLE TRANSACTIONS AT PAR [PARA 14 STAY NO. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) 194(III)]; IF ADJUSTMENT IS NOT POSSIBLE OR COMPARABLE IS NOT AVAILABLE, THEN, THE TNMM ON ENTITY LEVEL SHOULD NOT BE APPLIED [PARAS 100, 121, 194(III) & (VI)] FOR DETERMINING THE ALP OF THESE TRANSACTIONS IN A BUNDLED MANNER, SUITABLE COMPARABLES HAVING UNDERTAKEN SIMILAR ACTIVITIES OF DISTRIBUTION OF THE PRODUCTS AND ALSO INCURRING OF AMP EXPENSES, SHOULD BE CHOSEN [PARAS 194(I), (II), (VIII) & OTHERS]; THE CHOICE OF COMPARABLES CANNOT BE RESTRICTED ONLY TO DOMESTIC COMPANIES USING ANY FOREIGN BRAND [PARA 120]; ARBITRARY MARK UP PLR CANNOT BE THE BASIS FOR COMPU TING MARKUP ON AMP EXPENSES AS AN INTERNATIONAL TRANSACTION. MARK-UP AS PER SUB-CLAUSE (II) TO RULE 10B(1) WOULD BE COMPARABLE GROSS PROFIT ON THE COST OR EXPENSES INCURRED AS AMP. THE MARK-UP HAS TO BE BENCHMARKED WITH COMPARABLE UNCONTROLLED TRANSACTIONS OR TRANSACTIONS FOR PROVIDING SIMILAR SERVICE/PRODUCT. THE REVENUES STAND IN SOME CASES APPLYING THE PRIME LENDING RATE FIXED BY THE RESERVE BANK OF INDIA WITH A FURTHER MARK-UP, IS MISTAKEN AND UNFOUNDED. INTEREST RATE MARK-UP WOULD APPLY TO INTERNATIONAL TRANSACTIONS GRANTING/AVAILING LOANS, ADVANCES, ETC. 2.9 THE LD. DRP HAS, HOWEVER, UPHELD THE TRANSFER PRICING ADJUSTMENT PROPOSED BY THE TPO. IN THIS REGARD IT I S NOTED BY THE LD DRP THAT TAX DEPARTMENT HAS FILED AN SLP BEFORE THE HONBLE APEX 15 STAY NO. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) COURT AND, THEREAFTER, TO THE EXTENT THE DECISION O F THE HONBLE DELHI HIGH COURT IN CASE OF SONY MOBILE (SUPRA) IS PREJUDICIAL TO THE INTEREST OF THE REVENUE, RELIEF CANNOT BE GRANTED TO THE ASS ESSEE AT THIS STAGE. THUS, EVEN ON ISSUES DECIDED IN FAVOR OF THE ASSESS EE BY THE HONBLE HIGH COURT IN SONY MOBILE (SUPRA), RELIEF HAS BEEN WITHHELD BY THE LD DRP. 2.10 . BEING AGGRIEVED, THE ASSESSEE IS NOW IN APPE AL BEFORE US. 3.0 IN THIS REGARD, THE LD. AR SH. TARANDEEP SI NGH, AT THE OUTSET, SUBMITTED THAT IN ABSENCE OF A TRANSACTION BETWEE N THE ASSESSEE AND ITS DEEMED AE FOR INCURRING AMP EXPENDITURE ON BEHALF OF THE AE, THE IMPUGNED ADJUSTMENT DESERVED TO BE DELETED. IT IS SUBMITTED THAT THIS IS A JURISDICTIONAL ISSUE WHICH MERITS ADJUDIC ATION AT THE OUTSET. IT WAS SUBMITTED BY THE LD. AR THAT LOWER AUTHORITI ES HAVE HELD THAT THERE EXISTS AN INTERNATIONAL TRANSACTION FOR BRAND PROMOTION PREMISED FOLLOWING FACTS/MATERIAL: (A) DISTRIBUTION AGREEMENT DATED 01 ST OCTOBER 2004; (B) LOYALTY AGREEMENT WITH VARIOUS SUBSCRIBERS; (C) FINDINGS RECORDED BY THE ITAT IN CASE OF AE {RE PORTED IN 113 TTJ 767 (DEL)} WHEREIN IT IS HELD THAT THE ASSESSEE CON STITUTES A DEPENDENT AGENCY PERMANENT ESTABLISHMENT OF THE AE; (D) AMENDMENTS MADE TO PROVISIONS OF SECTION 92B BY FINANCE ACT 2012; 16 STAY NO. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) (E) DECISION GIVEN BY THE SPECIAL BENCH OF ITAT IN CASE OF LG ELECTRONICS REPORTED IN 140 ITD 41 (DEL) (TRIB); (F) DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF SONY ERICSSON MOBILE (SUPRA). 3.1 IN THIS REGARD, THE LD. AR, IN HIS WRITTEN S YNOPSIS, HAS SUBMITTED AS UNDER:- 1. AT THE OUTSET IT IS RELEVANT TO NOTE THAT A DE TAILED ANALYSIS WAS CONDUCTED BY THE TPO VIS A VIS BENCHMARKING ANA LYSIS ADOPTED BY THE A FOR REPORTED INTERNATIONAL TRANS ACTIONS OF PROVISION OF ITES SERVICES AND RECEIPT OF DATA PROC ESSING SERVICES. TPO ACCEPTS THAT THE MARGINS DISCLOSED AR E WITHIN ARMS LENGTH....CONCLUSION AT @ PAGES 309 TO 313, P ARA 10 AND 10.1 2. ISSUE AS TO WHETHER THERE EXISTS A TRANSACTION FOR BRAND PROMOTION IN THE INSTANT CASE IS NOW SETTLED BY APP ELLATE ORDERS PASSED IN CASE OF A FOR EARLIER ASSESSMENT YEARS. KIND REFERENCE IN THIS REGARD IS INVITED TO THE DECISION OF HONBLE ITAT IN FOR AY 09-10 REPORTED IN 52 ITR(T) 83 {COPY ENCL OSED AT PAGES 409 TO 447 OF PB FILLED IN STAY NOS 475 & 476/DEL/2 018}. HONBLE ITAT AFTER CONSIDERING THE FACTS OF THE CAS E HAS HELD THAT IN ABSENCE OF A TRANSACTION FOR BRAND PROMOTION B ETWEEN A AND ITS AE NO TP ADJUSTMENT FOR ALLEGED AMP EXPENSE S CAN BE MADE. KIND REFERENCE IS INVITED TO FOLLOWING EXTRAC TS OF HONBLE ITAT DECISION: (A) TPO ACCEPTS THAT INTERNATIONAL TRANSACTION F OR PROVISION OF ITES SERVICES ARE AT ALP APPLYING TNMM.PAGE 421, P ARA 8 17 STAY NO. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) (B) JURISDICTIONAL ISSUE QUESTIONING EXISTENCE OF TRANSACTION FOR BRAND PROMOTION MERELY PREMISED BENEFIT TO AE TAKEN UP FOR CONSIDERATION..PAGE 421-422, PARA 8 (C) ARGUMENT OF DR PRAYING FOR REMAND REJECTED. HE LD, THAT ALL NECESSARY FACTS ARE ON RECORD EFFECT IS TO BE GIV EN TO DECISIONS OF JURISDICTIONAL HIGH COURT WHICH ARE DIRECT ON TH IS ISSUE.PAGE 422, PARA 8.1 (D) JURISDICTIONAL HIGH COURT DECISIONS IN CASE OF MARUTI SUZUKI INDIA LTD. REPORTED IN 381 ITR 117(DEL), WHIRLPOOL OF INDIA LTD. REPORTED IN 381 ITR 154(DEL) AND BAUSCH & LOMB EYECARE (INDIA) (P.) LTD. REPORTED IN 381 ITR 227(DEL) FOLL OWED . PAGES 422 TO 425, PARA 8.1 (E) TPOS RELIANCE ON DISTRIBUTION AGREEMENT FOR CO NSTRUING EXISTENCE OF TRANSACTION REJECTED PAGE 425-426, PARA 8.2 (F) AT PAGE 426, PARA 8.3 HONBLE ITAT REJECTED FO LLOWING FINDINGS /OBSERVATIONS MADE BY LOWER AUTHORITIES: - SPECIAL BENCH DECISION IN CASE OF LG ELECTRONICS (S UPRA) NO MORE A GOOD LAW - AMENDMENTS MADE TO SECTION 92B BY FINANCE ACT 2012 DO NOT SUPPORT THE CASE OF REVENUE - THE FACT THAT A HAS BEEN HELD TO BE A DAPE IN ASS ESSMENT OF ITS AE IS IRRELEVANT TO DETERMINATION OF ISSUE U NDER CONSIDERATION PREMISED ABOVE FACTUAL FINDINGS IT HAS BEEN HELD (R EFER PAGE 427, PARA 8.4) BY HONBLE ITAT IN AY 09-10 THAT CONSIDE RING THE MATERIAL FACTS LIKE THE ABSENCE OF AN AGREEMENT, AR RANGEMENT OR UNDERSTANDING BETWEEN THE APPELLANT AND ITS ASSOCIA TED 18 STAY NO. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) ENTERPRISE FOR SHARING THE ADVERTISEMENT, MARKETING AND PROMOTION EXPENSES OR FOR INCURRING THE ADVERTISEME NT, MARKETING AND PROMOTION EXPENSES FOR THE SOLE BENEFIT OF THE ASSOCIATED ENTERPRISE, PAYMENTS MADE BY THE APPELLANT UNDER TH E HEAD 'ADVERTISEMENT, MARKETING AND PROMOTION' TO THE DOM ESTIC PARTIES CANNOT BE TERMED AS AN 'INTERNATIONAL TRANSACTION' SPECIFICALLY WHEN THE LEARNED TRANSFER PRICING OFFICER HAS NOT B EEN ABLE TO PROVE THAT THE EXPENSES INCURRED WERE NOT FOR THE B USINESS CARRIED OUT BY THE APPELLANT IN INDIA. SINCE THE JURISDICTIONAL ISSUE WAS DECIDED IN FAVOU R OF A IT WAS HELD THAT OTHER GROUNDS OF APPEAL HAVE BECOME INFRU CTUOUS. 3. DECISION RENDERED BY HONBLE ITAT IN AY 09-10 H AS BEEN UPHELD BY HONBLE HIGH COURT VIDE ORDER DATED 26.04 .2017 IN ITA NO. 154/2017.COPY ENCLOSED AT PAGES 515-516. 4. THE ABOVE DECISIONS HAVE THEREAFTER ALSO BEEN F OLLOWED BY HONBLE ITAT IN CASE OF A FOR AY 2010-11 IN ITA N O. 1835/DEL/2015 VIDE ORDER DATED 23.10.2017..COPY EN CLOSED AT PAGES 448 TO 492 CONCLUSIONS ON THIS ISSUE ARE AT PAGES 463 TO 475, PARA 4.4 TO 4.7. 5. IN AY 2011-12 TPO HAS ALSO RELIED UPON LOYALTY AGREEMENT WITH VARIOUS SUBSCRIBERS. PAYMENT OF LOYALTY INCENT IVE TO SUBSCRIBERS HAS BEEN HELD TO BE A SELLING EXPENSE B Y HONBLE ITAT IN AY 2008-09 VIDE ORDER DATED 06.03.2014 REPO RTED IN 149 ITD 496(DEL) COPY ENCLOSED AT PAGES 405 TO 408, REL EVANT CONCLUSIONS AT PAGE 408, PARAS 7 AND 8. 19 STAY NO. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) 4. ON THE OTHER HAND, THE LD. CIT (DR) VEHEMENTLY O PPOSED THE SUBMISSIONS MADE BY THE LD. AR. BY RELYING ON THE O RDERS PASSED BY THE TPO AND THE LD. DRP IT WAS SUBMITTED BY HIM THA T THE LOWER AUTHORITIES HAVE, FOR FAIR REASONS, CONCLUDED THAT THERE EXISTS AN INTERNATIONAL TRANSACTION BETWEEN THE ASSESSEE AND ITS AE FOR BRAND PROMOTION. 5.0 WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES AND HAVE ALSO PERUSED THE MATERIAL AVAILA BLE ON RECORD. IT IS SEEN THAT THE ISSUE IN DISPUTE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE COORDINATE BENCH OF THIS COURT IN E ARLIER ASSESSMENT YEARS AND THE ORDER PASSED BY THE COORDINATE BENCH FOR A.Y.2009-10 HAS ALSO BEEN UPHELD BY THE HONBLE JURISDICTIONAL HIGH COURT. IN EARLIER YEARS THE ISSUE IN DISPUTE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE COORDINATE BENCH BY TAKING INTO CON SIDERATION THE FOLLOWING DECISIONS OF THE HONBLE JURISDICTIONAL H IGH COURT:- (I) MARUTI SUZUKI INDIA LTD. VS. CIT REPORTED IN 3 81 ITR 117 (DELHI); (II) CIT VS. WHIRLPOOL OF INDIA LTD. REPORTED IN 38 1 ITR 154 (DELHI); (III) HONDA SIEL POWER PRODUCTS LTD. VS. DY. CIT RE PORTED IN 237 TAXMAN 304 (DELHI); (IV) BAUSCH AND LOMB EYECARE (INDIA) PVT. LTD. V. A DDL. REPORTED IN CIT 381 ITR 227 (DELHI); 20 STAY NO. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) 5.1 IN THE YEAR UNDER CONSIDERATION THERE IS NO CH ANGE IN THE FACTS AND CIRCUMSTANCES OF THE CASE AS COMPARED TO A.Y. 2009-10 AND EVEN THE AGREEMENTS BETWEEN ASSESSEE AND THE AE CON TINUE TO BE OPERATIONAL FOR THE YEAR UNDER CONSIDERATION. WE, T HEREFORE, CONCUR WITH THE REASONING GIVEN BY THE COORDINATE BENCH FO R A.Y. 2009- 10,WHEREIN, IT IS HELD AS UNDER:- 8. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY THE PARTIES AND HAVE ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. UNDISPUTEDLY, THE MAIN DATA PROCESSING AND SUBSIDIARY DISTRIBUTIO N ACTIVITIES OF THE APPELLANT HAVE BEEN HELD TO BE AT THE ARM'S LEN GTH PRICE APPLYING THE TRANSACTIONAL NET MARGIN METHOD. PROVI SION OF THE INFORMATION TECHNOLOGY ENABLED SERVICES TO ASSOCIAT ED ENTERPRISE UNDER THE AGREEMENT HAS BEEN THOROUGHLY BENCHMARKED BY THE TRANSFER PRICING OFFICER. MOST APPROPRIATE METHOD B EING THE TRANSACTIONAL NET MARGIN METHOD HAS NOT BEEN DOUBTE D AND AFTER AN IN-DEPTH ANALYSIS OF COMPARABLE COMPANIES SELECT ED BY THE APPELLANT AND BY TINKERING WITH THE SAME THE LEARNE D TRANSFER PRICING OFFICER HAS GIVEN A FINDING THAT OP/OC OF T HE ASSESSEE IS 20.27 PER CENT AND OP/OC OF REVISED COMPARABLE SET IS 23.94 PER CENT. NO ADJUSTMENT MADE ON THIS ACCOUNT HAS BEEN M ADE AS THE DIFFERENCE IS WITHIN + FIVE PER CENT RANGE. THE LEA RNED TRANSFER PRICING OFFICER, HOWEVER, HAS SEGREGATED THE ADVERT ISEMENT, MARKETING AND PROMOTION EXPENSES AND HELD THAT BEIN G AN INDEPENDENT TRANSACTION IT REQUIRES TO BE BENCHMARK ED INDEPENDENTLY. IN THESE CIRCUMSTANCES, IN OUR OPINI ON, THE FUNDAMENTAL QUESTION TO BE ANSWERED IS TO DECIDE AS TO WHETHER IN 21 STAY NO. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) THE ABSENCE OF ANY AGREEMENT, ARRANGEMENT OR UNDERS TANDING FOR EITHER INCURRING THE ADVERTISEMENT, MARKETING AND P ROMOTION EXPENSES ON BEHALF OR FOR THE BENEFIT OF THE ASSOCI ATED ENTERPRISE OR FOR PAYMENT OF THE ADVERTISEMENT, MARKETING AND PRO MOTION EXPENSES BY THE ASSOCIATED ENTERPRISE CAN IT BE HEL D THAT THERE WAS AN 'INTERNATIONAL TRANSACTION' ONLY ON THE BASIS TH AT THE ADVERTISEMENT, MARKETING AND PROMOTION EXPENDITURE, INCURRED BY THE APPELLANT, WOULD HAVE BENEFITED THE ASSOCIATED ENTERPRISE, WHO OWNED THE BRANDS USED BY THE APPELLANT. THE LEARNED AUTHORISED REPRESENTATIVE HAS RIGHTLY SUBMITTED THAT THIS IS A JURISDICTIONAL ISSUE, WHICH REQUIRES A FOREMOST ADJUDICATION AND O NLY IF THE ANSWER TO THIS ISSUE IS AGAINST THE APPELLANT THAT THE MATTER THEN REQUIRED A DE NOVO ADJUDICATION IN THE LIGHT OF THE JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF SONY ERICSSON MO BILE COMMUNICATIONS (SUPRA). THE ABOVE LINE OF ADJUDICAT ION IS ALSO SUPPORTED BY THE DECISION OF THE HONOURABLE JURISDI CTIONAL HIGH COURT IN THE CASE OF DIAKIN AIRCONDITIONING INDIA ( P.) LTD. (SUPRA) WHEREIN IT IS HELD AS UNDER: 'ACCORDINGLY, THE COURT DIRECTS AS UNDER: (A) THE IMPUGNED ORDER DATED OCTOBER 8, 2015, PASSE D BY THE INCOME-TAX APPELLATE TRIBUNAL IN I. T. A. NO. 5090/ DEL/2010 FOR THE ASSESSMENT YEAR 2006-07 IS SET ASIDE AND TH E SAID APPEAL IS RESTORED TO THE FILE OF THE INCOME-TAX AP PELLATE TRIBUNAL ; (B) THE INCOME-TAX APPELLATE TRIBUNAL WILL FIRST DE CIDE THE QUESTION REGARDING THE EXISTENCE OF AN INTERNATIONA L TRANSACTION INVOLVING AMP EXPENSES BETWEEN THE ASSE SSEE AND ITS ASSOCIATED ENTERPRISE. THIS QUESTION WILL NOT BE REMANDED BY THE INCOME-TA X APPELLATE TRIBUNAL TO ANY OTHER AUTHORITY FOR DECIS ION. IF THE SAID QUESTION IS ANSWERED IN FAVOUR OF THE ASSESSEE , THEN NO 22 STAY NO. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) OTHER QUESTION WOULD ARISE. IF ANSWERED AGAINST THE ASSESSEE, THEN THE INCOME-TAX APPELLATE TRIBUNAL WILL DECIDE THE FURTHER ISSUES THAT ARISE IN THE APPEAL IN ACCORDANCE WITH LAW.' 8.1 THE CASE RECORDS FURTHER SHOW THAT BOTH THE LOW ER AUTHORITIES HAVE CATEGORICALLY GIVEN A FINDING THAT THERE EXIST ED A 'TRANSACTION' FOR BRAND PROMOTION BETWEEN APPELLANT AND ITS ASSOC IATED ENTERPRISE. THIS IS ALSO UNDER CHALLENGE BEFORE US. HENCE, IT CANNOT BE SAID THAT NECESSARY FACTS ARE NOT ON RECORD. WIT H REGARD TO THE SUBMISSIONS OF THE LEARNED DEPARTMENTAL REPRESENTAT IVE THAT THE ISSUE OF ADVERTISEMENT, MARKETING AND PROMOTION EXP ENSES BE RESTORED BACK TO THE FILE OF THE LEARNED TRANSFER P RICING OFFICER, WE WOULD LIKE TO STATE THAT SINCE FACTS NECESSARY TO D ETERMINATION ARE ON RECORD THE LAW LAID DOWN BY THE HONOURABLE JURIS DICTIONAL HIGH COURT HAS TO BE GIVEN EFFECT TO. IT IS NOT EVEN THE ARGUMENT OF THE LEARNED COMMISSIONER OF INCOME-TAX (DEPARTMENTAL RE PRESENTATIVE) THAT ANY FRESH FACT IS REQUIRED FOR SUCH A DETERMIN ATION. UNDER THE CIRCUMSTANCES, A DIRECTION FOR REMAND IS NOT CALLED FOR. THE HONOURABLE JURISDICTIONAL HIGH COURT IN VARIOUS CAS ES HAVE HIGHLIGHTED THE TESTS TO BE APPLIED FOR ASCERTAININ G WHETHER THERE EXISTS A TRANSACTION FOR BRAND PROMOTION IN A PARTI CULAR CASE. THE LEARNED AUTHORISED REPRESENTATIVE HAS IMPARTIALLY S UMMARISED THE RELEVANT PROPOSITIONS FROM THESE DECISIONS IN HIS N OTE, WHICH WE HAVE REPRODUCED ABOVE. WE FIND THAT IN THE CASES OF MARUTI SUZUKI INDIA LTD. V. CIT [2015] 64 TAXMANN.COM 150/[2016] 237 TAXMAN 256/381 ITR 117, CIT V. WHIRLPOOL OF INDIA LTD. [20 15] 64 TAXMANN.COM 324/[2016] 237 TAXMAN 49/381 ITR 154 (DELHI), BAUSCH & LOMB EYECARE (INDIA) (P.) LTD. [2 016] 65 TAXMANN.COM 141/237 TAXMAN 24/381 ITR 227 (DELHI) T HE HONOURABLE HIGH COURT ON THE ISSUE OF THE ADVERTISE MENT, 23 STAY NO. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) MARKETING AND PROMOTION EXPENSES HAS DELIBERATED UP ON EXTENSIVELY ON EACH AND EVERY ARGUMENT RAISED BY TH E TRANSFER PRICING OFFICER/DISPUTE RESOLUTION PANEL AND HAS AN ALYSED THE SAME THREADBARE. WE WOULD LIKE TO REPRODUCE THE REL EVANT PORTION OF THE JUDGMENT OF BAUSCH & LOMB EYECARE (INDIA) (P .) LTD.'S CASE (SUPRA) AS UNDER (PAGE 251): 'A READING OF THE HEADING OF CHAPTER X ('SPECIAL PR OVISIONS RELATING TO AVOIDANCE OF TAX') AND SECTION 92(1) WH ICH STATES THAT ANY INCOME ARISING FROM AN INTERNATIONAL TRANS ACTION SHALL BE COMPUTED HAVING REGARD TO THE ARM'S LENGTH PRICE AND SECTION 92C(1) WHICH SETS OUT THE DIFFERENT MET HODS OF DETERMINING THE ARM'S LENGTH PRICE, MAKES IT CLEAR THAT THE TRANSFER PRICING ADJUSTMENT IS MADE BY SUBSTITUTING THE ARM'S LENGTH PRICE FOR THE PRICE OF THE TRANSACTION . TO BEGIN WITH THERE HAS TO BE AN INTERNATIONAL TRANSACTION W ITH A CERTAIN DISCLOSED PRICE. THE TRANSFER PRICING ADJUS TMENT ENVISAGES THE SUBSTITUTION OF THE PRICE OF SUCH INT ERNATIONAL TRANSACTION WITH THE ARM'S LENGTH PRICE. UNDER SECTIONS 92B TO 92F, THE PRE-REQUISITE FOR CO MMENCING THE TRANSFER PRICING EXERCISE IS TO SHOW THE EXISTE NCE OF AN INTERNATIONAL TRANSACTION. THE NEXT STEP IS TO DETE RMINE THE PRICE OF SUCH TRANSACTION. THE THIRD STEP WOULD BE TO DETERMINE THE ARM'S LENGTH PRICE BY APPLYING ONE OF THE FIVE PRICE DISCOVERY METHODS SPECIFIED IN SECTION 92C. T HE FOURTH STEP WOULD BE TO COMPARE THE PRICE OF THE TRANSACTI ON THAT IS SHOWN TO EXIST WITH THAT OF THE ARM'S LENGTH PRICE AND MAKE THE TRANSFER PRICING ADJUSTMENT BY SUBSTITUTING THE ARM'S LENGTH PRICE FOR THE CONTRACT PRICE. SECTION 92B DEFINES 'INTERNATIONAL TRANSACTION' AS UNDER: '92B. MEANING OF INTERNATIONAL TRANSACTION.(1) FOR THE PURPOSES OF THIS SECTION AND SECTIONS 92, 92C, 92D AND 92E, 'INTERNATIONAL TRANSACTION' MEANS A TRANSACTION BET WEEN TWO OR MORE ASSOCIATED ENTERPRISES, EITHER OR BOTH OF W HOM ARE NON-RESIDENTS, IN THE NATURE OF PURCHASE, SALE OR L EASE OF 24 STAY NO. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) TANGIBLE OR INTANGIBLE PROPERTY, OR PROVISION OF SE RVICES, OR LENDING OR BORROWING MONEY, OR ANY OTHER TRANSACTIO N HAVING A BEARING ON THE PROFITS, INCOME, LOSSES OR ASSETS OF SUCH ENTERPRISES, AND SHALL INCLUDE A MUTUAL AGREEMENT O R ARRANGEMENT BETWEEN TWO OR MORE ASSOCIATED ENTERPRI SES FOR THE ALLOCATION OR APPORTIONMENT OF, OR ANY CONTRIBU TION TO, ANY COST OR EXPENSE INCURRED OR TO BE INCURRED IN CONNE CTION WITH A BENEFIT SERVICE OR FACILITY PROVIDED OR TO BE PROVI DED TO ANYONE OR MORE OF SUCH ENTERPRISES. (2) A TRANSACTION ENTERED INTO BY AN ENTERPRISE WIT H A PERSON OTHER THAN AN ASSOCIATED ENTERPRISE SHALL, FOR THE PURPOSES OF SUB-SECTION (1), BE DEEMED TO BE A TRANSACTION ENTE RED INTO BETWEEN TWO ASSOCIATED ENTERPRISES, IF THERE EXISTS A PRIOR AGREEMENT IN RELATION TO THE RELEVANT TRANSACTION B ETWEEN SUCH OTHER PERSON AND THE ASSOCIATED ENTERPRISE; OR THE TERMS OF THE RELEVANT TRANSACTION ARE DETERMINED IN SUBST ANCE BETWEEN SUCH OTHER PERSON AND THE ASSOCIATED ENTERP RISE.' THUS, UNDER SECTION 92B (1) AN 'INTERNATIONAL TRANS ACTION' MEANS '(A) A TRANSACTION BETWEEN TWO OR MORE ASSOCIATED E NTERPRISES, EITHER OR BOTH OF WHOM ARE NON-RESIDENT, (B) THE TRANSACTION IS IN THE NATURE OF PURCHASE, S ALE OR LEASE OF TANGIBLE OR INTANGIBLE PROPERTY OR PROVISION OF SERVICE OR LENDING OR BORROWING MONEY OR ANY OTHER TRANSACTION HAVING A BEARING ON THE PROFITS, INCOMES OR LOSSES OF SUCH E NTERPRISES, AND (C) SHALL INCLUDE A MUTUAL AGREEMENT OR ARRANGEMENT BETWEEN TWO OR MORE ASSOCIATED ENTERPRISES FOR ALLOCATION O R APPORTIONMENT OR CONTRIBUTION TO THE ANY COST OR EX PENSES INCURRED OR TO BE INCURRED IN CONNECTION WITH THE B ENEFIT, SERVICE OR FACILITY PROVIDED OR TO BE PROVIDED TO O NE OR MORE OF SUCH ENTERPRISES.' CLAUSES (B) AND (C) ABOVE CANNOT BE READ DISJUNCTIV ELY. EVEN IF RESORT IS HAD TO THE RESIDUARY PART OF CLAUSE (B) T O CONTEND THAT THE AMP SPEND OF BLI IS 'ANY OTHER TRANSACTION HAVI NG A 25 STAY NO. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) BEARING' ON ITS 'PROFITS, INCOMES OR LOSSES', FOR A 'TRANSACTION' THERE HAS TO BE TWO PARTIES. THEREFORE, FOR THE PUR POSES OF THE 'MEANS' PART OF CLAUSE (B) AND THE 'INCLUDES' PART, OF CLAUSE (C), THE REVENUE HAS TO SHOW THAT THERE EXISTS AN 'AGREE MENT' OR 'ARRANGEMENT' OR 'UNDERSTANDING' BETWEEN BLI AND B& L, USA WHEREBY BLI IS OBLIGED TO SPEND EXCESSIVELY ON AMP IN ORDER TO PROMOTE THE BRAND OF B&L, USA. AS FAR AS THE LEG ISLATIVE INTENT IS CONCERNED, IT IS SEEN THAT CERTAIN TRANSA CTIONS LISTED IN THE EXPLANATION UNDER CLAUSES (I)(A) TO (E) TO S ECTION 92B ARE DESCRIBED AS AN 'INTERNATIONAL TRANSACTION'. THIS M IGHT BE ONLY AN ILLUSTRATIVE LIST, BUT SIGNIFICANTLY IT DOES NOT LIST ADVERTISEMENT, MARKETING AND PROMOTION SPENDING AS ONE SUCH TRANSACTION. IN MARUTI SUZUKI INDIA LTD. [2016] 381 ITR 117 (DEL HI), ONE OF THE SUBMISSIONS OF THE REVENUE WAS (PAGE 144) : 'TH E MERE FACT THAT THE SERVICE OR BENEFIT HAS BEEN PROVIDED BY ONE PARTY TO THE OTHER WOULD BY ITSELF CONSTITUTE A TRANSACTI ON IRRESPECTIVE OF WHETHER THE CONSIDERATION FOR THE S AME HAS BEEN PAID OR REMAINS PAYABLE OR THERE IS A MUTUAL A GREEMENT TO NOT CHARGE ANY COMPENSATION FOR THE SERVICE OR B ENEFIT'. THIS WAS NEGATIVED BY THE COURT BY POINTING OUT (PA GE 144): 'EVEN IF THE WORD 'TRANSACTION' IS GIVEN ITS WIDEST CONNOTATION, AND NEED NOT INVOLVE ANY TRANSFER OF MONEY OR A WRITTEN AGREEMENT AS SUGGESTED BY THE REVENUE, AND EVEN IF RESORT IS HAD TO SECTION 92F(V ), WHICH DEFINES 'TRANSACTION' TO INCLUDE 'ARRANGEMENT ', 'UNDERSTANDING' OR 'ACTION IN CONCERT', 'WHETHER FO RMAL OR IN WRITING', IT IS STILL INCUMBENT ON THE REVENU E TO SHOW THE EXISTENCE OF AN 'UNDERSTANDING' OR AN 'ARRANGEMENT' OR 'ACTION IN CONCERT' BETWEEN MSIL A ND SMC AS REGARDS ADVERTISEMENT, MARKETING AND PROMOTION SPEND FOR BRAND PROMOTION. IN OTHER WORDS , FOR BOTH THE 'MEANS', PART AND THE 'INCLUDES' PART OF SECTION 92B(1) WHAT HAS TO BE DEFINITELY SHOWN IS T HE EXISTENCE OF TRANSACTION WHEREBY MSIL HAS BEEN OBLIGED TO INCUR AMP OF A CERTAIN LEVEL FOR SMC FOR THE PURPOSES OF PROMOTING THE BRAND OF SMC.' 26 STAY NO. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) IN WHIRLPOOL OF INDIA LTD. [2016] 381 ITR 154 (DELH I), THE COURT INTERPRETED THE EXPRESSION 'ACTED IN CONCERT' AND IN THAT CONTEXT REFERRED TO THE DECISION OF THE SUPREME COU RT IN DAIICHI SANKYO CO. LTD. V. JAYARAM CHIGURUPATI [ 2010] 157 COMP CAS 380 (SC) ; [2010] 6 MANU/SC/0454/2010, WHICH AROSE IN THE CONTEXT OF ACQUISITION OF SHARES OF ZENOTECH LABORATORY LTD. BY THE RANBAXY GROUP. THE QUESTION THAT WAS EXAMINED WAS WHETHER AT THE RELEV ANT TIME THE APPELLANT, I.E., 'DAIICHI SANKYO COMPANY A ND RANBAXY' WERE 'ACTING IN CONCERT' WITHIN THE MEANIN G OF REGULATION 20(4)(B) OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (SUBSTANTIAL ACQUISITION OF SHARES AND TAKEOV ERS) REGULATIONS, 1997. IN PARAGRAPH 44, IT WAS OBSERVED AS UNDER (PAGE 408 OF 157 COMP CAS): 'THE OTHER LIMB OF THE CONCEPT REQUIRES TWO OR MORE PERSONS JOINING TOGETHER WITH THE SHARED COMMON OBJECTIVE AND PURPOSE OF SUBSTANTIAL ACQUISITION OF SHARES, ETC., OF A CERTAIN TARGET COMPANY. THERE CA N BE NO 'PERSONS ACTING IN CONCERT' UNLESS THERE IS A SH ARED COMMON OBJECTIVE OR PURPOSE BETWEEN TWO OR MORE PERSONS OF SUBSTANTIAL ACQUISITION OF SHARES, ETC., OF THE TARGET COMPANY. FOR, DEHORS THE ELEMENT OF THE SHAR ED COMMON OBJECTIVE OR PURPOSE THE IDEA OF 'PERSON ACT ING IN CONCERT' IS AS MEANINGLESS AS CRIMINAL CONSPIRAC Y WITHOUT ANY AGREEMENT TO COMMIT A CRIMINAL OFFENCE. THE IDEA OF 'PERSONS ACTING IN CONCERT' IS NOT ABOU T A FORTUITOUS RELATIONSHIP COMING INTO EXISTENCE BY ACCIDENT OR CHANCE. THE RELATIONSHIP CAN COME INTO BEING ONLY BY DESIGN, BY MEETING OF MINDS BETWEEN T WO OR MORE PERSONS LEADING TO THE SHARED COMMON OBJECTIVE OR PURPOSE OF ACQUISITION OF SUBSTANTIAL ACQUISITION OF SHARES, ETC., OF THE TARGET COMPANY. IT IS ANOTHER MATTER THAT THE COMMON OBJECTIVE OR PURPOSE MAY BE IN PURSUANCE OF AN AGREEMENT OR AN UNDERSTANDING, FORMAL OR INFORMAL ; THE ACQUISITION OF SHARES, ETC., MAY BE DIRECT OR INDIRECT OR THE PERS ONS ACTING IN CONCERT MAY CO-OPERATE IN ACTUAL ACQUISIT ION OF SHARES, ETC., OR THEY MAY AGREE TO CO-OPERATE IN SU CH ACQUISITION. NONETHELESS, THE ELEMENT OF THE SHARED COMMON OBJECTIVE OR PURPOSE IS THE SINE QUA NON FOR THE 27 STAY NO. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) RELATIONSHIP OF 'PERSONS ACTING IN CONCERT' TO COME INTO BEING.' THE TRANSFER PRICING ADJUSTMENT IS NOT EXPECTED TO BE MADE BY DEDUCING FROM THE DIFFERENCE BETWEEN THE 'EXCESS IVE' AMP EXPENDITURE INCURRED BY THE ASSESSEE AND THE ADVERTISEMENT, MARKETING AND PROMOTION EXPENDITURE OF A COMPARABLE ENTITY THAT AN INTERNATIONAL TRANSACTION EXISTS AND THEN PROCEEDING TO MAKE THE ADJUSTMENT OF THE DIFFERENCE IN ORDER TO DETERMINE THE VALUE OF SUCH ADVERTISEMENT, MARKETING AND PROMOTION EXPENDITURE INCURRED, FOR THE ASSOCIATED ENTERPRISE. IN ANY EVE NT, AFTER THE DECISION IN SONY ERICSSON [2015] 374 ITR 118 (D ELHI), THE QUESTION OF APPLYING THE BRIGHT LINE TEST TO DETERM INE THE EXISTENCE OF AN INTERNATIONAL TRANSACTION INVOLVING THE ADVERTISEMENT, MARKETING AND PROMOTION EXPENDITURE DOES NOT ARISE. THERE IS MERIT IN THE CONTENTION OF THE ASSESSEE TH AT A DISTINCTION IS REQUIRED TO BE DRAWN BETWEEN A 'FUNC TION' AND A 'TRANSACTION' AND THAT EVERY EXPENDITURE FORMING PART OF THE FUNCTION, CANNOT BE CONSTRUED AS A 'TRANSACTION'. F URTHER, THE REVENUE'S ATTEMPT AT RECHARACTERISING THE ADVERTISE MENT, MARKETING AND PROMOTION EXPENDITURE INCURRED AS A TRANSACTION BY ITSELF WHEN IT HAS NEITHER BEEN IDEN TIFIED AS SUCH BY THE ASSESSEE OR LEGISLATIVELY RECOGNISED IN THE EXPLANATION TO SECTION 92B RUNS COUNTER TO THE LEGA L POSITION EXPLAINED IN CIT V. EKL APPLIANCES LTD. [2012] 345 ITR 241 (DELHI) WHICH REQUIRED A TRANSFER PRICING OFFICER ' TO EXAMINE THE 'INTERNATIONAL TRANSACTION' AS HE ACTUALLY FIND S THE SAME'. IN THE PRESENT CASE, THE MERE FACT THAT B&L, USA TH ROUGH B&L, SOUTH ASIA, INC. HOLDS 99.9 PER CENT. OF THE S HARE OF THE ASSESSEE WILL NOT IPSO FACTO LEAD TO THE CONCLUSION THAT THE MERE INCREASING OF THE ADVERTISEMENT, MARKETING AND PROMOTION EXPENDITURE BY THE ASSESSEE INVOLVES AN INTERNATIONAL TRANSACTION IN THAT REGARD WITH B&L, USA. A SIMILAR CONTENTION BY THE REVENUE, NAMELY THAT EVEN IF THERE IS NO EXPLICIT ARRANGEMENT, THE FACT THAT THE BENEF IT OF SUCH ADVERTISEMENT, MARKETING AND PROMOTION EXPENSES WOU LD 28 STAY NO. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) ALSO ENURE TO THE ASSOCIATED ENTERPRISE IS ITSELF S UFFICIENT TO INFER THE EXISTENCE OF AN INTERNATIONAL TRANSACTION HAS BEEN NEGATIVED BY THE COURT IN MARUTI SUZUKI INDIA LTD. [2016]381 ITR 117(DELHI) AS UNDER (PAGE 146): 'THE ABOVE SUBMISSIONS PROCEED PURELY ON SURMISES AND CONJECTURES AND IF ACCEPTED AS SUCH WILL LEAD T O SENDING THE TAX AUTHORITIES THEMSELVES ON A WILD-GO OSE CHASE OF WHAT CAN AT BEST BE DESCRIBED AS A 'MIRAGE '. FIRST OF ALL, THERE HAS TO BE A CLEAR STATUTORY MAN DATE FOR SUCH AN EXERCISE. THE COURT IS UNABLE TO FIND O NE. TO THE QUESTION WHETHER THERE IS ANY 'MACHINERY' PROVISION FOR DETERMINING THE EXISTENCE OF AN INTERNATIONAL TRANSACTION INVOLVING ADVERTISEMENT, MARKETING AND PROMOTION EXPENSES, MR. SRIVASTAVA ONLY REFERRED TO SECTION 92F(II) WHICH DEFINES ARM' S LENGTH PRICE TO MEAN A PRICE 'WHICH IS APPLIED OR PROPOSED TO BE APPLIED IN A TRANSACTION BETWEEN PERSONS OTHER THAN ASSOCIATED ENTERPRISE IN UNCONTROLLED CONDITIONS'. SINCE THE REFERENCE IS TO 'PRICE' AND TO 'UNCONTROLLED CONDITIONS' IT IMPLICI TLY BRINGS INTO PLAY THE BRIGHT LINE TEST. IN OTHER WOR DS, IT EMPHASISES THAT WHERE THE PRICE IS SOMETHING OTHER THAN WHAT WOULD BE PAID OR CHARGED BY ONE ENTITY FR OM ANOTHER IN UNCONTROLLED SITUATIONS THEN THAT WOULD BE THE ARM'S LENGTH PRICE. THE COURT DOES NOT SEE THIS AS A MACHINERY PROVISION PARTICULARLY IN LIGHT OF THE FA CT THAT THE BRIGHT LINE TEST HAS BEEN EXPRESSLY NEGATIVED B Y THE COURT IN SONY ERICSSON. THEREFORE, THE EXISTENCE OF AN INTERNATIONAL TRANSACTION WILL HAVE TO BE ESTABLISH ED DEHORS THE BRIGHT LINE TEST. . . . WHAT IS CLEAR IS THAT IT IS THE 'PRICE' OF AN INTER NATIONAL 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 THAT SINCE IT IS NOT AN ARM'S LENGTH PRICE , AN 'ADJUSTMENT' HAS TO BE MADE. THE BURDEN IS ON THE REVENUE TO FIRST SHOW THE EXISTENCE OF AN INTERNATI ONAL TRANSACTION. NEXT, TO ASCERTAIN THE DISCLOSED 'PRIC E' OF SUCH TRANSACTION AND THEREAFTER ASK WHETHER IT IS A N ARM'S LENGTH PRICE. IF THE ANSWER TO THAT IS IN THE NEGATIVE THE TRANSFER PRICING ADJUSTMENT SHOULD FOL LOW. 29 STAY NO. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) THE OBJECTIVE OF CHAPTER X IS TO MAKE ADJUSTMENTS T O THE PRICE OF AN INTERNATIONAL TRANSACTION WHICH THE ASSOCIATED ENTERPRISES INVOLVED MAY SEEK TO SHIFT F ROM ONE JURISDICTION TO ANOTHER. AN 'ASSUMED' PRICE CAN NOT FORM THE REASON FOR MAKING AN ARM'S LENGTH PRICE ADJUSTMENT. SINCE A QUANTITATIVE ADJUSTMENT IS NOT PERMISSIBLE FOR THE PURPOSES OF A TRANSFER PRICING ADJUSTMENT UNDER CHAPTER X, EQUALLY IT CANNOT BE PERMITTED IN RESPEC T OF ADVERTISEMENT, MARKETING AND PROMOTION EXPENSES EITHER. AS ALREADY NOTICED HEREINBEFORE, WHAT THE REVENUE HAS SOUGHT TO DO IN THE PRESENT CASE IS TO RESORT TO A QUANTITATIVE ADJUSTMENT BY FIRST DETERM INING WHETHER THE ADVERTISEMENT, MARKETING AND PROMOTION SPEND OF THE ASSESSEE ON APPLICATION OF THE BRIGHT LINE TEST, IS EXCESSIVE, THEREBY EVIDENCING THE EXISTENC E OF AN INTERNATIONAL TRANSACTION INVOLVING THE ASSOCIAT ED ENTERPRISE. THE QUANTITATIVE DETERMINATION FORMS TH E VERY BASIS FOR THE ENTIRE TRANSFER PRICING EXERCISE IN THE PRESENT CASE. . . . THE PROBLEM WITH THE REVENUE'S APPROACH IS THAT IT WANTS EVERY INSTANCE OF AN ADVERTISEMENT, MARKETING AND PROMOTION SPEND BY AN INDIAN ENTITY WHICH HAPPENS TO USE THE BRAND OF A FOREIGN ASSOCIATED ENTERPRISE TO BE PRESUMED TO INVOLVE AN INTERNATION AL TRANSACTION. AND THIS, NOTWITHSTANDING THAT THIS IS NOT ONE OF THE DEEMED INTERNATIONAL TRANSACTIONS LISTED UNDER THE EXPLANATION TO SECTION 92B OF THE ACT. TH E PROBLEM DOES NOT STOP HERE. EVEN IF A TRANSACTION INVOLVING AN ADVERTISEMENT, MARKETING AND PROMOTION SPEND FOR A FOREIGN ASSOCIATED ENTERPRISE IS ABLE T O BE LOCATED IN SOME AGREEMENT, WRITTEN, (FOR E.G., THE SAMPLE AGREEMENTS PRODUCED BEFORE THE COURT BY THE REVENUE) OR OTHERWISE, HOW SHOULD A TRANSFER PRICIN G OFFICER PROCEED TO BENCHMARK THE PORTION OF SUCH, ADVERTISEMENT, MARKETING AND PROMOTION SPEND THAT THE INDIAN ENTITY SHOULD BE COMPENSATED FOR?' FURTHER, IN MARUTI SUZUKI INDIA LTD. [2016] 381 ITR 117 (DELHI) THE COURT FURTHER EXPLAINED THE ABSENCE OF A MACHINERY PROVISION QUA THE ADVERTISEMENT, MARKETIN G AND PROMOTION EXPENSES BY THE FOLLOWING ANALOGY (PAGE 1 49): 30 STAY NO. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) 'AS AN ANALOGY, AND FOR NO OTHER PURPOSE, IN THE CO NTEXT OF A DOMESTIC TRANSACTION INVOLVING TWO OR MORE REL ATED PARTIES, REFERENCE MAY BE MADE TO SECTION 40A(2)(A) UNDER WHICH CERTAIN TYPES OF EXPENDITURE INCURRED B Y WAY OF PAYMENT TO RELATED PARTIES IS NOT DEDUCTIBLE WHERE THE ASSESSING OFFICER 'IS OF THE OPINION THAT SUCH EXPENDITURE IS EXCESSIVE OR UNREASONABLE HAVING REG ARD TO THE FAIR MARKET VALUE OF THE GOODS'. IN SUCH EVE NT, 'SO MUCH OF THE EXPENDITURE AS IS SO CONSIDERED BY HIM TO BE EXCESSIVE OR UNREASONABLE SHALL NOT BE ALLOWED A S A DEDUCTION'. THE ASSESSING OFFICER IN SUCH AN INSTAN CE DEPLOYS THE 'BEST JUDGMENT' ASSESSMENT AS A DEVICE TO DISALLOW WHAT HE CONSIDERS TO BE AN EXCESSIVE EXPENDITURE. THERE IS NO CORRESPONDING 'MACHINERY' PROVISION IN CHAPTER X WHICH ENABLES AN ASSESSING OFFICER TO DETERMINE WHAT SHOULD BE THE FAIR 'COMPENSATION' AN INDIAN ENTITY WOULD BE ENTITLED T O IF IT IS FOUND THAT THERE IS AN INTERNATIONAL TRANSACT ION IN THAT REGARD. IN PRACTICAL TERMS, ABSENT A CLEAR STA TUTORY GUIDANCE, THIS MAY ENCOUNTER FURTHER DIFFICULTIES. THE STRENGTH OF A BRAND, WHICH COULD BE PRODUCT SPECIFI C, MAY BE IMPACTED BY NUMEROUS OTHER IMPONDERABLES NOT LIMITED TO THE NATURE OF THE INDUSTRY, THE GEOGRAPH ICAL PECULIARITIES, ECONOMIC TRENDS BOTH INTERNATIONAL A ND DOMESTIC, THE CONSUMPTION PATTERNS, MARKET BEHAVIOU R AND SO ON. A SIMPLISTIC APPROACH USING ONE OF THE MODES SIMILAR TO THE ONES CONTEMPLATED BY SECTION 9 2C MAY NOT ONLY BE LEGALLY IMPERMISSIBLE BUT WILL LEND ITSELF TO ARBITRARINESS. WHAT IS THEN NEEDED IS A C LEAR STATUTORY SCHEME ENCAPSULATING THE LEGISLATIVE POLI CY AND MANDATE WHICH PROVIDES THE NECESSARY CHECKS AGAINST ARBITRARINESS WHILE AT THE SAME TIME ADDRESSING THE APPREHENSION OF TAX AVOIDANCE.' IN THE ABSENCE OF ANY MACHINERY PROVISION, BRINGING AN IMAGINED TRANSACTION TO TAX IS NOT POSSIBLE. THE DE CISIONS IN CIT V. B. C. SRINIVASA SETTY [1981] 128 ITR 294 (SC) ; [2002-TIOL-587-SC-IT-LB] AND PNB FINANCE LTD. V. CIT [2008] 307 ITR 75 (SC) MAKE THIS POSITI ON EXPLICIT. THEREFORE, WHERE THE EXISTENCE OF AN INTERNATIONAL TRANSACTION INVOLVING AMP EXPENSE WITH AN ASCERTAIN ABLE PRICE IS UNABLE TO BE SHOWN TO EXIST, EVEN IF SUCH PRICE IS NIL, 31 STAY NO. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) CHAPTER X PROVISIONS CANNOT BE INVOKED TO UNDERTAKE A TRANSFER PRICING ADJUSTMENT EXERCISE. AS ALREADY MENTIONED, MERELY BECAUSE THERE IS AN IN CIDENTAL BENEFIT TO THE FOREIGN ASSOCIATED ENTERPRISE, IT CA NNOT BE SAID THAT THE ADVERTISEMENT, MARKETING AND PROMOTION EXP ENSES INCURRED BY THE INDIAN ENTITY WAS FOR PROMOTING THE BRAND OF THE FOREIGN ASSOCIATED ENTERPRISE. AS MENTIONED IN SASSOON J. DAVID [1979] 118 ITR 261, 276 (SC) 'THE FACT THA T SOMEBODY OTHER THAN THE ASSESSEE IS ALSO BENEFITTED BY THE EXPENDITURE SHOULD NOT COME IN THE WAY OF AN EXPEND ITURE BEING ALLOWED BY WAY OF A DEDUCTION UNDER SECTION 1 0(2)(XV) OF THE ACT (INDIAN INCOME-TAX ACT, 1922) IF IT SATI SFIES OTHERWISE THE TESTS LAID DOWN BY THE LAW'.' 8.2 ON A CAREFUL CONSIDERATION OF THE FACTS ON RECO RD WE ARE OF THE OPINION THAT THERE IS NOTHING ON RECORD TO SHOW THA T THE APPELLANT BY INCURRING THE ADVERTISEMENT, MARKETING AND PROMO TION EXPENSES WANTED TO PROMOTE ITS ASSOCIATED ENTERPRISE. THE LE ARNED TRANSFER PRICING OFFICER HAS FAILED TO PROVE THAT THE APPELL ANT BY INCURRING THE ADVERTISEMENT, MARKETING AND PROMOTION EXPENSES WANTED TO BENEFIT THE ASSOCIATED ENTERPRISE AND NOT TO PROMOT E ITS OWN BUSINESS. THE SUBMISSION OF THE LEARNED TRANSFER PR ICING OFFICER THAT CLAUSES 10.02, 10.05, 11.01 AND ARTICLE XVI OF THE AGREEMENT INDICATE THE EXISTENCE OF A 'TRANSACTION' FOR BRAND PROMOTION IS NOT SUPPORTED BY CONTENTS OF THOSE CLAUSES. THE APPELLA NT'S OBJECTIONS BEFORE THE LEARNED DISPUTE RESOLUTION PANEL, WHICH WE HAVE QUOTED ABOVE, ARE ACCEPTABLE. THESE CLAUSES NOWHERE PROVID E THAT THE APPELLANT WILL BE INCURRING BRAND PROMOTION EXPENSE S FOR AND ON BEHALF OF ITS ASSOCIATED ENTERPRISE OR SOLELY FOR I TS BUSINESS PURPOSES AND INTERESTS. THE AGREEMENT DATED OCTOBER 1, 2004, BETWEEN THE APPELLANT AND ITS ASSOCIATED ENTERPRISE IS BASED UPON THE REVENUE SHARING MODEL IN WHICH 46 PER CENT REVE NUE IS BEING 32 STAY NO. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) SHARED BY AMADEUS SPAIN WITH THE APPELLANT AND, HEN CE, IT IS DIFFICULT TO VISUALISE THAT THE APPELLANT WILL NOT BE INCURRING ROUTINE ADVERTISEMENT EXPENSES IN ITS ENTREPRENEUR CAPACITY . EXCLUDING THE PAYMENT OF INCENTIVES, WHICH IN THE EARLIER YEARS H AVE BEEN HELD, TO BE PURE SELLING EXPENSES THE RATIO OF THE AMP/SALES OF THE APPELLANT IS MERE 2.29 PER CENT. THE LEARNED AUTHORISED REPRE SENTATIVE IS ALSO RIGHT IN RELYING UPON THE DECISION OF THE HONOURABL E JURISDICTIONAL HIGH COURT IN THE CASE OF SONY ERICSSON MOBILE COMMUNICATIONS (SUPRA) FOR SUBMITTING THAT EVENTS W HICH WOULD TRANSPIRE ON TERMINATION OF DISTRIBUTION REQUIRE A TRANSFER PRICING ADJUSTMENT AT THAT STAGE BUT THE SAME WILL BE IMMAT ERIAL TO PRESUME THE EXISTENCE OF AN AGREEMENT, ARRANGEMENT OR UNDERSTANDING IN THE YEAR UNDER CONSIDERATION. IN T HIS REGARD THE HONOURABLE HIGH COURT AT PARAGRAPH 153 OF ITS REPOR TED JUDGMENT HAS BEEN PLEASED TO BE HOLD AS UNDER (PAGE 217): 'ECONOMIC OWNERSHIP OF A BRAND IS AN INTANGIBLE ASS ET, JUST AS LEGAL OWNERSHIP. UNDIFFERENTIATED, ECONOMIC OWNE RSHIP BRAND VALUATION IS NOT DONE FROM MOMENT TO MOMENT B UT WOULD BE MANDATED AND REQUIRED IF THE ASSESSED IS DEPRIVED, DENIED OR TRANSFERS ECONOMIC OWNERSHIP. T HIS CAN HAPPEN UPON TERMINATION OF THE DISTRIBUTION-CUM-MAR KETING AGREEMENT OR WHEN ECONOMIC OWNERSHIP GETS TRANSFERR ED TO A THIRD PARTY. TRANSFER PRICING VALUATION, THEREFORE, WOULD BE MANDATED AT THAT TIME. THE INTERNATIONAL TRANSACTIO N COULD THEN BE MADE A SUBJECT MATTER OF TRANSFER PRICING A ND SUBJECTED TO TAX.' 8.3 AS HELD ABOVE, THE APPELLANT HAS RAISED OBJECTI ONS BEFORE THE LEARNED DISPUTE RESOLUTION PANEL THAT NONE OF THE A BOVE CLAUSES OF THE AGREEMENT MAKE IT MANDATORY FOR THE APPELLANT T O INCUR THE BRAND PROMOTION EXPENSES FOR AND ON BEHALF OF THE A SSOCIATED ENTERPRISE. THE LEARNED DISPUTE RESOLUTION PANEL HA S NOT DISTURBED 33 STAY NO. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) THESE OBJECTIONS BUT HAS UPHELD THE CASE OF THE LEA RNED TRANSFER PRICING OFFICER ON SOME OTHER GROUNDS, I.E., (I) BY RELYING UPON THE SPECIAL BENCH DECISION IN THE CASE OF L. G. ELECTRO NICS INDIA (P.) LTD. V. ASSTT. CIT [2013] 29 TAXMANN.COM 300/140 IT D 41 (DELHI - TRIB.) [SB] ; (II) BY HOLDING THAT SINCE THE APPELL ANT IS A DEPENDENT AGENCY PERMANENT ESTABLISHMENT OF ITS ASSOCIATED EN TERPRISE HENCE ALL THE EXPENSES ON ADVERTISEMENT, MARKETING AND PR OMOTION ARE BEING INCURRED BY IT FOR THE BENEFIT OF THE ASSOCIA TED ENTERPRISE, AND (III) BY RELYING UPON THE AMENDED PROVISIONS OF SEC TION 92B. WE DO NOT FIND ANY SUBSTANCE IN THE ABOVE APPROACH OF THE LEARNED DISPUTE RESOLUTION PANEL. THE DECISION OF THE SPECI AL BENCH IN L.G. ELECTRONICS (P.) LTD. (SUPRA) IS NO MORE GOOD LAW P OST ABOVE DECISIONS OF THE JURISDICTIONAL HIGH COURT. WE HAVE ALREADY REPRODUCED THE ABOVE FINDINGS OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF BAUSCH & LOMB EYECARE (INDIA) (P.) LTD. (SUPRA) WHEREIN IT IS HELD THAT (PAGE 253) '. . . AS FAR AS THE LEG ISLATIVE INTENT IS CONCERNED, IT IS SEEN THAT CERTAIN TRANSACTIONS LIS TED IN THE EXPLANATION UNDER CLAUSES (I)(A) TO (E) TO SECTION 92B ARE DESCRIBED AS AN 'INTERNATIONAL TRANSACTION'. THIS MIGHT BE ON LY AN ILLUSTRATIVE LIST BUT SIGNIFICANTLY IT DOES NOT LIST ADVERTISEME NT, MARKETING AND PROMOTION SPENDING AS ONE SUCH TRANSACTION . . .' H ENCE THE AMENDMENTS TO SECTION 92B BY THE FINANCE ACT, 2012, ALSO DO NOT SUPPORT THE CASE OF THE REVENUE LASTLY ON THE OBSER VATIONS MADE BY THE LEARNED DISPUTE RESOLUTION PANEL THAT SINCE THE APPELLANT IS A DEPENDENT AGENCY PERMANENT ESTABLISHMENT OF ITS ASS OCIATED ENTERPRISE, HENCE, ALL ITS EXPENSES ON ADVERTISEMEN T, MARKETING AND PROMOTION ARE BEING INCURRED BY IT FOR THE BENEFIT OF ASSOCIATED ENTERPRISE WE WOULD LIKE TO STATE THAT THIS IS ALSO ENTIRELY IRRELEVANT. WHILE ALLEGING AS THE ABOVE THE LEARNED DISPUTE RES OLUTION PANEL 34 STAY NO. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) HAS NOT APPRECIATED THAT THE APPELLANT HAS BEEN HEL D TO BE A DEPENDENT AGENT PERMANENT ESTABLISHMENT OF AMADEUS SPAIN FOR DETERMINATION OF AMADEUS SPAIN'S INCOME, WHICH IS T AXABLE IN INDIA. MOREOVER, WE MAY REFER HERE THE DECISION OF THE HONOURABLE JURISDICTIONAL HIGH COURT IN THE CASE OF WHIRLPOOL OF INDIA LTD. (SUPRA) WHEREIN IT IS HELD BY THE HONOURABLE H IGH COURT AS UNDER (PAGES 175, 179 OF 381 ITR): 'THE PROVISIONS UNDER CHAPTER X DO ENVISAGE A 'SEPA RATE 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 FACT DICTATED BY WHIRLPOOL USA. MERELY BECAUSE WHIR LPOOL USA HAS A FINANCIAL INTEREST, IT CANNOT BE PRESUMED THAT THE ADVERTISEMENT, MARKETING AND PROMOTION EXPENSE INCU RRED BY THE WOIL ARE AT THE INSTANCE OR ON BEHALF OF WHI RLPOOL USA. THERE IS MERIT IN THE CONTENTION OF THE ASSESS EE THAT THE INITIAL ONUS IS ON THE REVENUE TO DEMONSTRATE THROU GH SOME TANGIBLE MATERIAL THAT THE TWO PARTIES ACTED IN CON CERT AND FURTHER THAT THERE WAS AN AGREEMENT TO ENTER INTO A N INTERNATIONAL TRANSACTION CONCERNING THE ADVERTISEM ENT, MARKETING AND PROMOTION EXPENSES . . . . AS ALREADY MENTIONED, MERELY BECAUSE THERE IS AN IN CIDENTAL BENEFIT TO WHIRLPOOL, USA, IT CANNOT BE SAID THAT T HE ADVERTISEMENT, MARKETING AND PROMOTION EXPENSES INC URRED BY WOIL WAS FOR PROMOTING THE BRAND OF WHIRLPOOL, U SA. AS MENTIONED IN SASSOON J. DAVID [1979] 118 ITR 261 (S C) 'THE FACT THAT SOMEBODY OTHER THAN THE ASSESSEE IS ALSO BENEFITED BY THE EXPENDITURE SHOULD NOT COME IN THE WAY OF AN EXPENDITURE BEING ALLOWED BY WAY OF A DEDUCTION UND ER SECTION 10(2)(XV) OF THE ACT (INDIAN INCOME-TAX ACT , 1922) IF IT SATISFIES OTHERWISE THE TESTS LAID DOWN BY THE LAW. ' 8.4 CONSIDERING THE MATERIAL FACTS LIKE THE ABSENCE OF AN AGREEMENT, ARRANGEMENT OR UNDERSTANDING BETWEEN THE APPELLANT AND ITS ASSOCIATED ENTERPRISE FOR SHARING THE ADVER TISEMENT, 35 STAY NO. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) MARKETING AND PROMOTION EXPENSES OR FOR INCURRING T HE ADVERTISEMENT, MARKETING AND PROMOTION EXPENSES FOR THE SOLE BENEFIT OF THE ASSOCIATED ENTERPRISE, PAYMENTS MADE BY THE APPELLANT UNDER THE HEAD 'ADVERTISEMENT, MARKETING AND PROMOTION' TO THE DOMESTIC PARTIES CANNOT BE TERMED AS AN 'INTERNATIONAL TRANSACTION' SPECIFICALLY WHEN THE L EARNED TRANSFER PRICING OFFICER HAS NOT BEEN ABLE TO PROVE THAT THE EXPENSES INCURRED WERE NOT FOR THE BUSINESS CARRIED OUT BY T HE APPELLANT IN INDIA. WE ARE THUS OF THE OPINION THAT THE TRANSFER PRICING OFFICER HAD WRONGLY INVOKED THE PROVISIONS OF CHAPTER X OF THE ACT FOR THE SAID ADVERTISEMENT, MARKETING AND PROMOTION SPENT. THE ADDITION OF RS. 75,40,09,515 IS, THEREFORE, DIRECTED TO BE D ELETED. GROUND NOS. 4 TO 4.4 ARE THEREFORE ALLOWED. CONSIDERING OU R CONCLUSIONS ABOVE GROUND NOS. 5 AND 5.1 DO NOT REQUIRE ANY ADJU DICATION. 5.2 THE ORDER PASSED BY THE COORDINATE BENCH FOR A .Y. 2009-10 HAS ALSO BEEN FOLLOWED BY THE TRIBUNAL VIDE ORDER D ATED 23 RD OCTOBER, 2017 IN ITA NO.1835/DEL/2015 FOR A.Y. 2010-11. MORE OVER, THE DECISION OF THE COORDINATE BENCH FOR A.Y.2010-11 HA S ALSO BEEN UPHELD BY THE HONBLE JURISDICTIONAL HIGH COURT IN ITA NO. 154/2017 VIDE ORDER DATED 26 TH APRIL, 2017 AS UNDER:- 3. THE FIRST ISSUE CONCERNS THE DELETION OF THE TRANSF ER PRICING ADJUSTMENT OF RS.75,40,09,515/- ON ACCOUNT OF ADVER TISING, MARKETING AND SALES PROMOTION EXPENSES (AMP EXPENSE S) RELYING UPON THE DECISIONS OF THIS COURT INCLUDING THE DECI SION IN BAUSCH & LOMB EYECARE (INDIA) PVT. LTD. VS. ADDITIONAL COM MISSIONER OF INCOME TAX (2016) 381 ITR 227 (DEL). 36 STAY NO. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) 4. AS FAR AS THE ABOVE ISSUE IS CONCERNED, IT IS CO VERED BY THE EARLIER DECISIONS OF THIS COURT AGAINST THE REVENUE . THIS COURT IS NOT INCLINED TO FRAME ANY SUBSTANTIAL QUESTION OF L AW ON THIS ISSUE. 5.3 RESPECTFULLY FOLLOWING THE ABOVE BINDING PRECE DENTS, IT IS CONCLUDED THAT THE TPO HAS WRONGLY INVOKED THE PROV ISIONS OF CHAPTER X OF THE ACT. THE ADDITION OF RS.114.89 CRO RES, IS THEREFORE, DIRECTED TO BE DELETED. GROUND NOS. 3 & 3.1 ARE, TH EREFORE, ALLOWED. CONSIDERING OUR CONCLUSIONS, OTHER GROUNDS CHALLENG ING VARIOUS OTHER FACETS OF THE IMPUGNED ADDITION DO NOT REQUIRE ANY ADJUDICATION AS HAVING BECOME IN FRUCTUOUS. 6.0 THE NEXT ISSUE IN DISPUTE ARISING OUT OF GROUN DS 7, 7.1 & 8 OF THE APPEAL PERTAINS TO THE TRANSFER PRICING ADJU STMENT OF RS.8,98,683/- ON ACCOUNT OF ALLEGED TRANSACTION FOR NOTIONAL INTEREST ATTRIBUTABLE TO DELAYED PAYMENTS RECEIVABLE FROM TH E AE. IN THIS REGARD, THE TPO RECORDS THAT AT YEAR-END, THE ASSES SEE HAD RECEIVABLES FROM ITS AES. AN INFERENCE IS DRAWN BY THE TPO THAT THE PAYMENT FOR INVOICES RAISED BY THE ASSESSEE WERE NO T BEEN REALIZED WITHIN THE STIPULATED TIME AS PROVIDED IN THE INVOI CE/ AGREEMENT. THE TPO, THEREFORE, HOLDS THAT THIS IS ALSO A SEPARATE INTERNATIONAL TRANSACTION WHICH REQUIRES A SEPARATE BENCH MARKING . THE TPO HAS FURTHER RECORDED THAT, AS PER THE MARKET PRACTICE, SUCH RECEIVABLES 37 STAY NO. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) OUGHT TO HAVE BEEN REALIZED WITHIN A SPAN OF 30 DAY S OF THE INVOICE AND ANY EXCESS PERIOD OF CREDIT WOULD REQUIRE A SUI TABLE COMPENSATION FOR DELAY WITH INTEREST @ 11.69% (I.E. , SBI BASE RATE). CONCLUDING AS SUCH, THE TPO HAS PROPOSED AN ADJUSTM ENT OF RS.8,98,683/-. BEING AGGRIEVED, THE ASSESSEE FILED OBJECTION BEFORE THE LD. DRP. THE LD. DRP HAS HELD THAT OVERDUE RECEIVAB LES WOULD CONSTRUE A SEPARATE INTERNATIONAL TRANSACTION AND H AS UPHELD THE ACTION OF THE TPO IN SEPARATELY BENCH MARKING THE S AME. FURTHER, THE LD. DRP HAS ALSO REJECTED THE CONTENTION RAISED BY THE ASSESSEE THAT THE WORKING CAPITAL ADJUSTMENT WOULD SUBSUME ADJUST MENT ON ACCOUNT OF OVERDUE RECEIVABLES. BEING AGGRIEVED, TH E ASSESSEE IS NOW IN APPEAL BEFORE US. 7.0 THE LD. AR OPPOSED THE IMPUGNED ADDITION AND I N THIS REGARD IT IS SUBMITTED BY THE LD. AR AS UNDER:- ISSUE DECIDED IN FAVOUR OF A BY HONBLE ITAT IN AYS 2009-10 AND 2010-11. REFERENCES: AY 2009-10 ITAT ORDER REPORTED IN 52 ITR(T) 83 {COP Y ENCLOSED AT PAGES 409 TO 447 OF PB FILLED IN STAY N OS 475 & 476/DEL/2018} RELEVANT ISSUE DISCUSSED AT PAGE 427, PARA 9 ONWARDS AND CONCLUSIONS ARE AT PAGES 428 TO 430, PA RA 11 ITAT ORDER FOR AY 09-10 ACCEPTED BY REVENUE ON THIS ISSUE NO FURTHER APPEAL TO HIGH COURT. 38 STAY NO. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) AY 2010-11 ITAT ORDER DATED 23.10.2017 IN ITA NO. 1835/DEL/2015 {COPY ENCLOSED AT PAGES 448 TO 492 OF PB FILLED IN STAY NOS 475 & 476/DEL/2018} RELEVANT ISSUE DISC USSED AT PAGE 475, PARA 5 ONWARDS AND CONCLUSIONS ARE AT PAG ES 475 TO 479 AT PARAS 5.3 TO 5.5. 7.2 THE LD. AR ALSO REFERRED TO THE ORDERS PASSED BY THE TPO FOR ASSESSMENT YEARS 2012-13 AND 2013-14 WHEREIN, A FTER ISSUING SHOW CAUSE PROPOSING AN ADJUSTMENT ON ACCOUNT OF OU TSTANDING RECEIVABLES, THE ISSUE HAS, THEREAFTER, BEEN DROPPE D AND NO FURTHER ADJUSTMENT IS PROPOSED BY THE TPO FOR THOSE YEARS. IN SUPPORT, THE LD. AR ALSO RELIED ON THE DECISION OF HONBLE JURIS DICTIONAL HIGH COURT IN THE CASE OF PR. CIT VS. KUSUM HEALTHCARE PVT. LT D. REPORTED IN 2017-TII-28-HC-DEL-TP. 8.0 ON THE OTHER HAND, THE LD. CIT (DR) OPPOSED TH E ARGUMENTS AND CONTENTIONS TAKEN BY THE LD. AR. RELY ING ON ORDERS PASSED BY THE LOWER AUTHORITIES, IT WAS SUBMITTED B Y HIM THAT THE REASONING GIVEN BY THE LD. DRP REQUIRES NO INTERFER ENCE. HOWEVER, ON QUERY BEING RAISED BY THE BENCH, THE LD. CIT (DR) W AS FAIR ENOUGH TO ADMIT THAT IN EARLIER ASSESSMENT YEARS, IDENTICAL I SSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE AND THAT THE DEPA RTMENT HAS ACCEPTED THE ORDER PASSED BY THE COORDINATE BENCH F OR A.Y. 2009-10 ON THIS ISSUE. 39 STAY NO. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) 9.0 WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS M ADE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS OBS ERVED THAT THE COORDINATE BENCH IN A.Y. 2009-10 HAD ADJUDICATED UP ON THE IDENTICAL ISSUE IN FAVOUR OF THE ASSESSEE AS UNDER:- 11. WE HAVE CONSIDERED THE ARGUMENTS ADVANCED BY T HE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECOR D. UNDISPUTEDLY, IN THE PRESENT CASE THE BENCHMARKING OF THE MAIN INTERNATIONAL TRANSACTIONS APPLYING THE TRANSACTION AL NET MARGIN METHOD HAS BEEN ACCEPTED BY THE TRANSFER PRICING OF FICER. CONSIDERING THIS, WE FIND THAT THE RATIO LAID DOWN BY THE MUMBAI INCOME-TAX APPELLATE TRIBUNAL IN RUSABH DIAMONDS' CASE (SUPRA) IS CLEARLY APPLICABLE TO THE FACTS OF INSTANT CASE. IN THE SAID JUDGMENT, IT HAS BEEN HEL D BY A CO- ORDINATE BENCH OF THE TRIBUNAL AS UNDER (HEAD NOTE FROM RUSABH DIAMONDS): 'THE INTEREST INCOME IS AN INTEGRAL PART OF THE PBI T INASMUCH AS INTEREST INCOME, IN CASES OTHER THAN FINANCE COM PANIES, IS REQUIRED TO BE INCLUDED IN THE 'OTHER INCOME' AND T HUS AFFECTS THE PROFIT BEFORE INTEREST AND TAXES. WHILE PROFIT BEFORE INTEREST AND TAXES DOES NOT TAKE INTO ACCOUNT 'INTE REST EXPENDITURE', IT DOES TAKE INTO ACCOUNT 'INTEREST I NCOME' BECAUSE THE INTEREST INCOME IS PART OF THE 'OTHER I NCOME', UNDER PRE-AMENDED AS WELL AS POST-AMENDED SCHEDULE VI TO THE COMPANIES ACT, WHICH IS DULY TAKEN INTO ACCOUNT INTO COMPUTATION OF PBIT. IN A WAY PBIT IS A MISNOMER, A S WHILE PBIT DOES NOT TAKE INTO ACCOUNT INTEREST EXPENDITUR E, IT DOES TAKE INTO ACCOUNT INTEREST INCOME APPEARING IN THE OTHER INCOME. ONCE THE PROFITABILITY, AS PER PBIT, IS FOU ND TO BE COMPARABLE, THERE CANNOT BE A SEPARATE ADJUSTMENT F OR 40 STAY NO. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) INTEREST INCOME ON DELAYED REALISATION, WHICH IS AN INTEGRAL PART OF THE PBIT FIGURE. (PARAGRAPH 12) AS FOR THE REVENUE'S SUGGESTION THAT IT IS TO BE VE RIFIED WHETHER THE COMPARABLES INCLUDE INTEREST INCOME, IF ANY, ALL ONE CAN SAY IS THAT THE STATUTORY PROVISIONS REQUIR E THE INTEREST INCOME, UNLESS IT IS AN INTEREST INCOME OF THE FINANCE AND BANKING COMPANIES, TO BE INCLUDED IN THE OTHER INCOME WHICH IS TAKEN INTO ACCOUNT FOR COMPUTING PBIT. THE PRESUMPTION, THEREFORE, IS THAT THE ACCOUNTS ARE DR AWN UP AS PER THE STATUTORY REQUIREMENTS, AND THE EXCLUSIONS FROM 'OTHER INCOME' ARE SPECIFICALLY DISCUSSED ON THE FA CTS OF EACH CASE, AND AS SUCH CONSTITUTE INTEGRAL PART OF THE T RANSFER PRICING DOCUMENTATION. THERE IS NOTHING ON RECORD T O SHOW THESE EXCLUSIONS. (PARAGRAPH 15) AS REGARDS THE CONTENTION THAT NORMALLY ALL INTERES T INCOMES ARE EXCLUDED IN THE COMPUTATION OF PBIT AS SUCH INC OMES RARELY CONSTITUTE OPERATIONAL INCOME, THERE IS NO N EED TO BE GUIDED BY SUCH HYPOTHESIS AND GENERALITIES. THERE I S NOTHING ON THE RECORDS, TO SHOW SUCH EXCLUSIONS ON THE FACT S OF THIS CASE. IN ANY EVENT, SETTING OFF OF INTEREST EXPENDI TURE WITH INTEREST ON ACCOUNT OF DELAY IN REALISATION OF DEBT S, EVEN IF SO, IS NOT TOO COMMON AN OCCURRENCE AND MORE OF EXC EPTIONS THAN THE RULE. THE APPREHENSIONS OF THE REVENUE ARE PURELY HYPOTHETICAL AND, THEREFORE, DEVOID OF LEGALLY SUST AINABLE MERITS. (PARAGRAPH 16) IN VIEW OF THESE DISCUSSIONS, AS ALSO BEARING IN MI ND ENTIRETY OF THE CASE, NO ARM'S LENGTH PRICE ADJUSTM ENTS CAN BE MADE, IN RESPECT OF DELAY IN RELATION OF SALE PR OCEEDS. SUCH BEING CONCLUSION, THERE IS NO NEED TO ADDRESS THE SPECIFIC FACTUAL ARGUMENTS ADVANCED BY THE ASSESSEE . IN EFFECT THUS THE GRIEVANCE OF THE ASSESSEE, IS UPHEL D AND DIRECT THE ASSESSING OFFICER TO DELETE THE IMPUGNED ARM'S LENGTH PRICE ADJUSTMENT. (PARAGRAPH 17) 41 STAY NO. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) EXPLANATION TO SECTION 92B THERE IS, HOWEVER, ONE MORE ASPECT OF THE MATTER FO R WHICH THE IMPUGNED ARM'S LENGTH PRICE ADJUSTMENT MUST BE DELETED. (PARAGRAPH 19) IT IS NOTED THAT EVERYTHING HINGES ON APPLICATION O F THE EXPLANATION TO SECTION 92B, VIDE FINANCE ACT, 2 012, THOUGH WITH RETROSPECTIVE EFFECT FROM APRIL 1, 2002 . (PARAGRAPH 20) THE AMENDMENT SO MADE BY THE FINANCE ACT, 2012, STA TED TO BE WITH RETROSPECTIVE EFFECT APRIL 1, 2002, INSERTS AN EXPLANATION TO SECTION 92B. IN PLAIN WORDS, THIS AMENDMENT, INTER ALIA, IMPLIES THAT CAPITAL FINANCI NG OF ANY TYPE, INCLUDING BY WAY OF 'DEFERRED PAYMENT OR RECE IVABLE OR ANY OTHER DEBT ARISING DURING THE COURSE OF BUSINES S' WILL CONSTITUTE AN INTERNATIONAL TRANSACTION UNDER SECTI ON 92B. GOING BY THIS DEFINITION 'ANY DEBTS ARISING DURING THE COURSE OF BUSINESS' WILL CONSTITUTE AN INTERNATIONAL TRANS ACTION. A TRADE DEBT IS, ACCORDINGLY, COVERED BY THIS DEFINIT ION. HOWEVER, SINCE THE ASSESSMENT YEAR THAT ONE IS DEAL ING WITH IS PRIOR TO THE ASSESSMENT YEAR 2012-13, THE NEXT I MPORTANT QUESTION IS WHETHER THIS AMENDMENT COULD BE HELD TO BE APPLICABLE IN THE ASSESSMENT YEAR BEFORE AS WELL. UNDOUBTEDLY, THE AMENDMENT IS SAID TO BE RETROSPECT IVE BUT THEN THE QUESTION REALLY IS WHETHER JUST STATING TH E LAW TO BE RETROSPECTIVE WILL MAKE IT RETROSPECTIVE IN EFFECT. (PARAGRAPH 29) IT IS VERY IMPORTANT TO BEAR IN MIND THE FACT THAT RIGHT NOW ONE IS DEALING WITH AMENDMENT OF A TRANSFER PRICING RELATED PROVISION WHICH IS IN THE NATURE OF A SAAR (SPECIFI C ANTI- ABUSE RULE), AND THAT EVERY ANTI-ABUSE LEGISLATION, WHETHER SAAR (SPECIFIC ANTI-ABUSE RULE) OR GAAR (GENERAL AN TI-ABUSE RULE), IS A LEGISLATION SEEKING THE TAXPAYERS TO OR GANISE THEIR AFFAIRS IN A MANNER COMPLIANT WITH THE NORMS SET OU T IN SUCH ANTI-ABUSE LEGISLATION. AN ANTI-ABUSE LEGISLATION D OES NOT TRIGGER THE LEVY OF TAXES; IT ONLY TELLS YOU WHAT B EHAVIOUR IS ACCEPTABLE OR WHAT IS NOT ACCEPTABLE. 42 STAY NO. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) WHAT TRIGGERS LEVY OF TAXES IS NON-COMPLIANCE WITH THE MANNER IN WHICH THE ANTI-ABUSE REGULATIONS REQUIRE THE TAXPAYERS TO CONDUCT THEIR AFFAIRS. IN THAT SENSE, ALL ANTI- ABUSE LEGISLATIONS SEEK A CERTAIN DEGREE OF COMPLIA NCE WITH THE NORMS SET OUT THEREIN. IT IS, THEREFORE, ONLY E LEMENTARY THAT AMENDMENTS IN THE ANTI-ABUSE LEGISLATIONS CAN ONLY BE PROSPECTIVE. IT DOES NOT MAKE SENSE THAT SOMEONE TE LLS YOU TODAY AS TO HOW YOU SHOULD HAVE BEHAVED YESTERDAY, AND THEN GOES ON TO LEVY A TAX BECAUSE YOU DID NOT BEHA VE IN THAT MANNER YESTERDAY. (PARAGRAPH 36) WHEN THIS IS PUT TO THE DEPARTMENT, HIS STOCK REPLY IS THAT THE AMENDMENT ONLY CLARIFIES THE LAW, IT DOES NOT E XPAND THE LAW. (PARAGRAPH 37) WELL, IF THE 2012 AMENDMENT DOES NOT ADD ANYTHING O R EXPAND THE SCOPE OF INTERNATIONAL TRANSACTION DEFIN ED UNDER SECTION 92B, ASSUMING THAT IT INDEED DOES NOT THIS PROVISION HAS ALREADY BEEN JUDICIALLY INTERPRETED, AND THE MA TTER RESTS THERE UNLESS IT IS REVERSED BY A HIGHER JUDICIAL FO RUM. HOWEVER, IF THE 2012 AMENDMENT DOES INCREASE THE SC OPE OF INTERNATIONAL TRANSACTION UNDER SECTION 92B, THERE IS NO WAY IT COULD BE IMPLEMENTED FOR THE PERIOD PRIOR TO THI S LAW COMING ON THE STATUTE, I.E., MAY 28, 2012. THE LAW IS WELL SETTLED. IT DOES NOT EXPECT ANYONE TO PERFORM AN IMPOSSIBILITY. (PARAGRAPH 38) IT IS FOR THIS REASON THAT THE EXPLANATION TO SECTI ON 92B, THOUGH STATED TO BE CLARIFICATORY AND STATED TO BE EFFECTIVE FROM APRIL 1, 2002, HAS TO BE NECESSARILY TREATED A S EFFECTIVE FROM AT BEST THE ASSESSMENT YEAR 2013-14. IN ADDITI ON TO THIS REASON, IN THE LIGHT OF THE DELHI HIGH COURT'S GUIDANCE IN THE CASE OF DIT V. NEW SKIES SATELLITE BV [2016] 38 2 ITR 114 (DELHI) ; 68 TAXMANN.COM 8 ; [2016-TII-6-HC-DEL-INT L] ALSO, THE AMENDMENT IN THE DEFINITION OF INTERNATIONAL TR ANSACTION UNDER SECTION 92B, TO THE EXTENT IT PERTAINS TO THE ISSUANCE OF CORPORATE GUARANTEE BEING OUTSIDE THE SCOPE OF 'INT ERNATIONAL TRANSACTION', CANNOT BE SAID TO BE RETROSPECTIVE IN EFFECT. THE FACT THAT IT IS STATED TO BE RETROSPECTIVE, IN THE LIGHT OF THE 43 STAY NO. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) AFORESAID GUIDANCE OF THE DELHI HIGH COURT WOULD NO T ALTER THE SITUATION, AND IT CAN ONLY BE TREATED AS PROSPE CTIVE IN EFFECT, I.E., WITH EFFECT FROM APRIL 1, 2012, ONWAR DS. (PARAGRAPH 39) FOR THE DETAILED REASONS SET OUT ABOVE, THE AMENDME NT IN SECTION 92B, AT LEAST TO THE EXTENT IT DEALT WITH T HE QUESTION OF ISSUANCE OF CORPORATE GUARANTEES, IS EFFECTIVE F ROM APRIL 1, 2012. THE ASSESSMENT YEAR BEING AN ASSESSMENT YEAR PRIOR TO THAT DATE, THE AMENDED PROVISIONS OF SECTION 92B HAVE NO APPLICATION IN THE MATTER. (PARAGRAPH 43).' RESPECTFULLY FOLLOWING THE ABOVE, GROUND NOS. 7 AND 8 OF THE APPEAL ARE ALLOWED AND THE ASSESSING OFFICER IS DIR ECTED TO DELETE THE ADDITION 9.1 IT IS NOT DISPUTED THAT THE REVENUE HAS NOT FI LED ANY APPEAL BEFORE THE HONBLE HIGH COURT AGAINST THE ABOVE DEC ISION OF THE TRIBUNAL ON THE ISSUE IN DISPUTE IN A.Y. 2009-10. M OREOVER, FOLLOWING THE DECISION OF A.Y. 2009-10, THE COORDINATE BENCH, IN A.Y. 2010-11, HAS AGAIN DECIDED THE ISSUE IN FAVOUR OF THE ASSESS EE. IT WILL ALSO BE RELEVANT TO NOTE THAT THERE IS NO ADJUSTMENT PROPOS ED ON THIS ISSUE BY THE TPO IN A.YS.2011-12 & 2013-14. THE CONTENTION O F THE LD. DRP THAT WORKING CAPITAL ADJUSTMENT WOULD NOT SUBSUME A DJUSTMENT ON ACCOUNT OF OVERDUE RECEIVABLES IS NO MORE GOOD LAW. SUPPORT, IN THIS REGARD IS FOUND FROM THE HONBLE JURISDICTIONAL HIG H COURTS DECISION IN CASE OF KUSUM HEALTHCARE (SUPRA) WHEREIN HONBLE HIGH COURT HAS HELD AS UNDER:- 44 STAY NO. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) 10. THE COURT IS UNABLE TO AGREE WITH THE ABOVE SU BMISSIONS. THE INCLUSION IN THE EXPLANATION TO SECTION 92B OF THE ACT OF THE EXPRESSION 'RECEIVABLES' DOES NOT MEAN THAT DE HORS THE CONTEXT EVERY ITEM OF 'RECEIVABLES' APPEARING IN THE ACCOUN TS OF AN ENTITY, WHICH MAY HAVE DEALINGS WITH FOREIGN AES WOULD AUTO MATICALLY BE CHARACTERISED AS AN INTERNATIONAL TRANSACTION. T HERE MAY BE A DELAY IN COLLECTION OF MONIES FOR SUPPLIES MADE, EV EN BEYOND THE AGREED LIMIT, DUE TO A VARIETY OF FACTORS WHICH WIL L HAVE TO BE INVESTIGATED ON A CASE TO CASE BASIS. IMPORTANTLY, THE IMPACT THIS WOULD HAVE ON THE WORKING CAPITAL OF THE ASSESSEE W ILL HAVE TO BE STUDIED. IN OTHER WORDS, THERE HAS TO BE A PROPER I NQUIRY BY THE TPO BY ANALYSING THE STATISTICS OVER A PERIOD OF TI ME TO DISCERN A PATTERN WHICH WOULD INDICATE THAT VIS--VIS THE REC EIVABLES FOR THE SUPPLIES MADE TO AN AE, THE ARRANGEMENT REFLECTS AN INTERNATIONAL TRANSACTION INTENDED TO BENEFIT THE AE IN SOME WAY. 11. THE COURT FINDS THAT THE ENTIRE FOCUS OF THE AO WAS ON JUST ONE AY AND THE FIGURE OF RECEIVABLES IN RELATION TO THA T AY CAN HARDLY REFLECT A PATTERN THAT WOULD JUSTIFY A TPO CONCLUDI NG THAT THE FIGURE OF RECEIVABLES BEYOND 180 DAYS CONSTITUTES A N INTERNATIONAL TRANSACTION BY ITSELF. WITH THE ASSESSEE HAVING ALR EADY FACTORED IN THE IMPACT OF THE RECEIVABLES ON THE WORKING CAPITA L AND THEREBY ON ITS PRICING/PROFITABILITY VIS--VIS THAT OF ITS COMPARABLES, ANY FURTHER ADJUSTMENT ONLY ON THE BASIS OF THE OUTSTAN DING RECEIVABLES WOULD HAVE DISTORTED THE PICTURE AND RE -CHARACTERISED THE TRANSACTION. THIS WAS CLEARLY IMPERMISSIBLE IN LAW AS EXPLAINED BY THIS COURT IN CIT V. EKL APPLIANCES LT D. (2012) 345 ITR 241 (DELHI) 45 STAY NO. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) 9.2 RESPECTFULLY FOLLOWING THE ABOVE BINDING PRECE DENTS, GROUNDS 7 & 7.1 ARE ALLOWED AND THE AO IS DIRECTED TO DELETE THE ADDITION OF RS.8,98,683/-. 10.0 THE NEXT ISSUE WHICH REQUIRES OUR DELIBERATIO NS PERTAINS TO DISALLOWANCE OF DEDUCTION U/S 10A OF THE ACT. THIS ISSUE IS RAISED IN GROUND NOS. 9, 9.1, 9.2 & 9.3 OF THE APPEAL. THE RE LEVANT FACTS IN THIS REGARD ARE THAT IN THE COMPUTATION OF INCOME, DEDUC TION U/S 10A OF THE ACT AMOUNTING TO RS.17,70,80,624/- HAS BEEN CLA IMED BY THE ASSESSEE. DURING THE COURSE OF ASSESSMENT, UNIT-WIS E COMPUTATION OF TOTAL INCOME WAS FILED BY THE ASSESSEE AND ON PERUS AL OF THAT, THE AO RECORDS THAT THE FOLLOWING REVENUE HAS BEEN EARNED BY THE ASSESSEE FROM UNITS 1 AND 2: SL. NO. INCOME UNIT-I UNIT-II TOTAL 1. DATA PROCESSING RECEIPTS / SOFTWARE EXPORT SERVICES RS.188,21,57,319/- RS.22,91,81,909/- RS.211,13,39,228/- 2. IT SUPPORT SERVICES RS.19,74,96,375/- RS.84,71,411/- RS.20,59,67,787/- 3. OTHER INCOME RS.11,74,97,153/- RS.1,18,61,127/- RS.12,93,58,281/- 4. TOTAL RS.219,71,50,847/- RS.24,95,14,447/- RS.244,66,65,295/- 10.1 THE AO FURTHER NOTES THAT IN A.Y.2009-10, THE LD. DRP HAD MADE AN ENHANCEMENT TO THE TOTAL INCOME BY DISALLOW ING THE CLAIM FOR DEDUCTION U/S 10A OF THE ACT. IN THIS REGARD, THE A O HAS EXTENSIVELY 46 STAY NO. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) QUOTED AND RELIED ON THE ORDER PASSED BY THE LD. DR P FOR A.Y. 2009- 10 WHEREIN IT IS HELD THAT DATA PROCESSING RECEIPTS DERIVED BY THE ASSESSEE FROM UNITS 1 AND 2 WOULD NOT BE ELIGIBLE F OR DEDUCTION U/S 10A OF THE ACT. IN NUTSHELL, IT IS HELD BY THE AO ( FOLLOWING THE ORDER OF THE LD. DRP FOR A.Y. 2009-10 & 2010-11) THAT THERE IS NO EXPORT ACTIVITY CARRIED ON BY THE ASSESSEE AND AS SUCH IT IS NOT ELIGIBLE FOR CLAIMING DEDUCTION U/S 10A OF THE ACT. HOWEVER, IT IS ACCEPTED THAT IT SUPPORT SERVICES AND CALL CENTER RECEIPTS WOULD BE ELIGIBLE FOR BENEFIT U/S 10A OF THE ACT. THE AO HAS, THEREFORE, RESTRICT ED THE CLAIM FOR DEDUCTION U/S 10A TO RS.59,39,683/- AND THE DIFFERE NCE OF RS.17,11,40,951/- (RS.17,70,80,634/- - RS.59,39,683 /-) HAS BEEN DISALLOWED. 10.2 BEING AGGRIEVED, THE ASSESSEE FILED OBJECTION S BEFORE THE LD. DRP. THE LD. DRP HAS UPHELD THE DISALLOWANCE BY OBS ERVING AS UNDER:- THIS IS A LEGACY ISSUE. THE FACT PATTERN REMAINS T HE SAME THIS YEAR AS IN AY 2010-11. WE ARE IN AGREEMENT WIT H THE VIEWS OF THE DRP ON THIS ISSUE. THE TAXPAYER HAS NO T BEEN ABLE TO CONTROVERT THE ARGUMENTS OF THE AO DISCUSSE D COMPREHENSIVELY AT ASSESSMENT ORDER. THUS FOLLOWING THE RULE OF CONSISTENCY, THE DRP FOLLOWING THE DECISION OF DRP IN AY 2010-11 APPROVES THE AOS ORDER AND THE ACTION O F THE AO IN THE PROPOSED DRAFT ASSESSMENT ORDER FOR NOT A LLOWING 47 STAY NO. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) DEDUCTION U/S 10A ON THE ALLEGED DATA PROCESSING F EE WHICH IS HELD TO BE OF THE NATURE OF COMMISSION ON RENDERING OF DISTRIBUTION AND MARKETING ACTIVITIES. 10.3 BEING AGGRIEVED, THE ASSESSEE/APPELLANT IS NO W IN APPEAL BEFORE US. 11.0 IN THIS REGARD, THE LD. AR HAS SUBMITTED AS U NDER:- ISSUE DECIDED IN FAVOUR OF A BY HONBLE ITAT IN AYS 2009-10 AND 2010-11. REFERENCES: AY 2009-10 ITAT ORDER REPORTED IN 52 ITR(T) 83 {COP Y ENCLOSED AT PAGES 409 TO 447 OF PB FILLED IN STAY N OS 475 & 476/DEL/2018} RELEVANT ISSUE DISCUSSED AT PAGE 430, PARA 12 ONWARDS AND CONCLUSIONS ARE AT PAGES 437 TO 447, PA RA 15 TO 16. ITAT ORDER FOR AY 09-10 ON THIS ISSUE HAS BEEN UPHE LD BY HONBLE DELHI HIGH COURT VIDE ORDER DATED 22.05.201 7 IN ITA 154/2017 {COPY ENCLOSED AT PAGES 493 TO 514 RELEVAN T CONCLUSIONS AT PAGE 507, PARA 32} . AY 2010-11 ITAT ORDER DATED 23.10.2017 IN ITA NO. 1835/DEL/2015 {COPY ENCLOSED AT PAGES 448 TO 492 OF PB FILLED IN STAY NOS 475 & 476/DEL/2018} RELEVANT ISS UE DISCUSSED AT PAGE 479, PARA 6 ONWARDS AND CONCLUSIO NS ARE AT PAGES 480 TO 491 AT PARAS 6.4 TO 6.6. 48 STAY NO. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) 12.0 ON THE OTHER HAND, THE LD. DR WAS UNABLE TO C ONTROVERT THE ABOVE ARGUMENTS. THE LD. DR RELIED UPON ORDERS PASS ED BY THE LOWER AUTHORITIES. 13.0 WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS SEEN THAT THE C OORDINATE BENCH OF TRIBUNAL, WHILE ADJUDICATING UPON THE ISSUE OF DEDU CTION U/S 10A OF THE ACT IN A.Y. 2009-10, HAS RELIED UPON THE DECISI ON IN THE ASSESSEE/APPELLANTS OWN CASE FOR A.YS.1996-97 & 19 97-98 REPORTED IN 79 ITD 407(DEL) AND ALSO THE DECISION OF THE TRI BUNAL IN THE CASE OF M/S INTERGLOBE TECHNOLOGY CONTENTS PRIVATE LIMITED FOR ASSESSMENT YEARS 2007-08 TO 2010-11 IN ITA NOS.419/DEL/2011, 5830/DEL/2011, 1463/DEL/2011 AND 6144/DEL/2013. THE COORDINATE BENCH, FOR A.Y. 2009-10, HAS HELD AS UND ER:- '15.1 ABOVE CONCLUSIONS OF COORDINATE BENCH CLEARLY HIGHLIGHT THE NATURE OF DATA PROCESSING ACTIVITIES CARRIED ON BY THE APPELLANT. WE FIND NO REASON FOR NOT FOLLOWING THE ABOVE BINDING PRECEDENT. MOREOVER TAX DEPARTMENT HAS ALSO ACCEPTED THE ABOVE DECISION. LD DRP HAS VEHEMENTLY HARPED UPON THE FACT THAT NATURE OF ACTIVITIES CARRIED ON BY THE APPELLANT IS SOLELY DISTRIBUTION AND MARKETING AND NOT EXPORT ORIENTED. WE ARE UNABLE TO CONVINCE OURS ELVES IN THIS REGARD. SIMILAR ALLEGATIONS WERE RAISED BY THE AO I N HIS ORDER OF ASSESSMENT FOR AYS 1997-98 AND 1998-99. ON FURTHER APPEAL ITAT IN AY 1997-98 AND THE LEARNED CIT(A) IN 1998-99 FOL LOWING RATIO PROPOUNDED IN 79 ITD 407(DEL) HAS ALLOWED APPELLANT 'S CLAIM FOR 49 STAY NO. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) DEDUCTION U/S 10A IN THOSE YEARS. EVEN THESE ORDERS HAVE BEEN ACCEPTED BY THE TAX DEPARTMENT AND THERE IS NO FURT HER CHALLENGE THERETO. LD DRP'S ACTION IN ENHANCING THE TOTAL INC OME IN AY 2009- 10 AND DISALLOWING THE CLAIM FOR DEDUCTION U/S 10A IN THE INSTANT CASE IS CONTRARY TO THE DECISION OF HON'BLE JURISDI CTIONAL HIGH COURT OF DELHI IN CASE OF NEO POLY PACK (P) LIMITED REPOR TED IN 245 ITR 492(DEL) WHEREIN THE HON'BLE COURT HAS HELD AS UNDE R: 'WE ARE OF THE VIEW THAT NO FAULT CAN BE FOUND W ITH THE ORDER OF THE TRIBUNAL DECLINING TO MAKE REFERENCE ON THE PROPOSED QUESTION. IT IS TRUE THAT EACH ASSESSMENT YEAR BEIN G INDEPENDENT OF EACH OTHER, THE DOCTRINE OF RES JUDICATA DOES NOT S TRICTLY APPLY TO THE INCOME-TAX PROCEEDINGS, BUT WHERE AN ISSUE HAS BEEN CONSIDERED AND DECIDED CONSISTENTLY IN A NUMBER OF EARLIER ASS ESSMENT YEARS IN A PARTICULAR MANNER, FOR THE SAKE OF CONSISTENCY , THE SAME VIEW SHOULD CONTINUE TO PREVAIL IN THE SUBSEQUENT YEARS UNLESS THERE IS SOME MATERIAL CHANGE IN FACTS. IN THE PRESENT CASE, THE LEARNED COUNSEL FOR THE REVENUE HAS NOT BEEN ABLE TO POINT OUT EVEN A SINGLE DISTINGUISHING FEATURE IN RESPECT OF THE ASSESSMENT YEAR IN QUESTION WHICH COULD HAVE PROMPTED THE ASSESSING OFFICER TO TAKE A VIEW DIFFERENT FROM THE EARLIER ASSESSMENT YEARS IN WHIC H THE SAME INCOME WAS BROUGHT TO TAX AS INCOME FROM BUSINESS.' 15.2 EVEN OTHERWISE ON MERITS WE ARE UNABLE TO SUST AIN THE VIEW ADOPTED BY LD DRP. LD AR IS JUSTIFIED IN SUBMITTING THAT THE LEARNED DRP HAS WRITTEN FACTUALLY INCORRECT FINDING S IN ITS ORDER. MOREOVER THE DETAILS ,FILED BY THE APPELLANT HAVE A LSO BEEN PARTIALLY TAKEN INTO CONSIDERATION. LD DRP TAKES NOTE OF TOP 25 EMPLOYEES BUT OMITS TO TAKE INTO CONSIDERATION CRUCIAL FACT T HAT DIRECTOR OF APPELLATE COMPANY SHRI ANKUR BHATIA IS A SOFTWARE E NGINEER WITH 50 STAY NO. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) 16 YEARS OF EXPERIENCE. MOREOVER DIVISION WISE BREA K UP OF TOTAL EMPLOYEE STRENGTH HAS ALSO PARTIALLY BEEN REPRODUCE D BY LD DRP IN ITS ORDER. APPELLANT VIDE SUBMISSIONS DATED 29TH NO VEMBER 2011 HAS SUBMITTED FOLLOWING DETAILS: . ABOVE DETAILS CLEARLY SHOW THAT APPELLANT DID POSSE SS REQUISITE TECHNICAL STAFF FOR CARRYING OUT DATA PROCESSING AC TIVITIES. WE FURTHER OBSERVE THAT LD DRP HAS ERRONEOUSLY BEEN IN FLUENCED BY THE FACT THAT APPELLANT IS HAVING BRANCHES IN VARIO US LOCATIONS. FACTS ON RECORD CLEARLY SHOW THAT THOSE BRANCHES BE LONG TO UNIT I AND NOT TO UNIT II. AS REGARDS UNIT II THE STPI REG ISTRATION HAS BEEN GRANTED TO THE APPELLANT ONLY FOR ONE LOCATION I.E VASANT VIHAR, NEW DELHI. LD AR HAS ALSO DRAWN OUR ATTENTION TOWARDS A PPLICATION SEEKING STPI REGISTRATION WHEREIN IT IS STATED THAT APPLICANT WILL NOT HAVE ANY STP UNIT IN ANY OTHER LOCATION (REFER PAGE 447 OF PAPER BOOK). ANNUAL RETURN TO STPI AUTHORITIES ALSO CLARI FY THAT UNIT II WAS OPERATING ONLY FROM ONE LOCATION. REGISTRATION GRAN TED BY STPI AUTHORITIES TO UNIT II IS SOLELY FOR MANUFACTURE OF 'COMPUTER SOFTWARE / IT ENABLED SERVICES'. ONCE STPI AUTHORIT IES DO NOT DOUBT THE FACTUM OF EXPORT ACTIVITIES OF UNIT II, W E FAILED TO APPREHEND HOW LEARNED DRP CAN TAKE A CONTRARY VIEW. WE MAY REFER HERE TO THE DECISION OF SPECIAL BENCH OF TRIB UNAL IN CASE OF MITSUI & CO. REPORTED IN 39 ITD 59(DEL)(SB), WHEREI N IT IS HELD AS UNDER: 'ONE IS NOT TO BE LED AWAY BY THE ENORMITY OF THE E XPENDITURE INCURRED IN RUNNING AN OFFICE IN INDIA. THAT WOULD DEPEND UPON THE LEVEL OF THE COUNTRY TO WHICH THE OFFICE BELONGS. W E HAVE TO JUDGE THE EXPENDITURE INCURRED FROM THAT ANGLE AND NOT FR OM OUR ANGLE. IT 51 STAY NO. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) IS NOT THE CASE OF THE REVENUE THAT THE EXPENDITURE INCURRED WAS SO CAMOUFLAGED AS TO COVER THE EXPENDITURE INCURRED IN A TRADING ACTIVITY TO SHOW IT AS EXPENDITURE INCURRED ON LIAI SON ACTIVITY. NOR IS IT THE CASE OF THE REVENUE THAT THE WORK CARRIED ON BY THE ASSESSEE IN INDIA WHICH ACCORDING TO THEM AMOUNTED TO TRADIN G ACTIVITY PRODUCED INCOME IN INDIA OR ANYWHERE ELSE. IBIS EXP ENDITURE INCURRED IN INDIA WAS MET OUT OF THE REMITTANCES RE CEIVED BY THE INDIAN BRANCHES AGAIN THROUGH THE RESERVE BANK OF I NDIA. THERE WAS NO EVIDENCE BROUGHT ON RECORD AT ANY STAGE THAT THE INDIAN BRANCHES HAD EXCEEDED THE LIMITS PRESCRIBED FOR IT BY THE RESERVE BANK OF INDIA. AS LONG AS THE INDIAN OFFICERS WERE CONDUCTING THE OPERATIONS WITHIN THE RESTRICTED AREA AND SO LONG A S THOSE ACTIVITIES WERE NOT CONSIDERED BY THE RESERVE BANK OF INDIA, W HICH IS THE CONCERNED AUTHORITY AS AMOUNTING TO ANYTHING OTHER THAN CARRYING ON OF LIAISON WORK NO INFERENCE ADVERSE TO THE ASSE SSEE CAN BE DRAWN OR IS POSSIBLE TO DRAW. TO REPEAT WHAT ALL TH AT WAS DONE BY THE ASSESSEE FELL WITHIN THE PARAMETERS OF SUPPLYIN G OF INFORMATION WHICH IS PREPARATORY TO AND AUXILIARY TO THE FORMAT ION OF THE FINAL CONTRACTS.' APPELLANT HAS CLARIFIED ABOVE THAT LIKE EARLIER YEA RS IN THE YEAR UNDER CONSIDERATION ALSO THE SOLE ACTIVITY CARRIED ON BY IT WAS THAT OF PROVIDING THE TRAVEL AGENTS AN ACCESS TO THE AMA DEUS CRS SYSTEM BY RENDERING ITES DATA PROCESSING SERVICES. FACTS ON RECORD ALSO SHOW THAT THE APPELLANT HAS NOT CARRIED ON ANY 'DISTRIBUTION' FUNCTIONS THOUGH THE AGREEMENT PROVIDED FOR SAME DR P'S ACTION IN THE PRESENT CASE IS MOTIVATED BY THE 'DISTRIBUTION' PART OF AGREEMENT WHICH WAS NOT ACTUALLY CARRIED ON BY THE APPELLANT. SINCE FEE TO BE PAID TO APPELLANT AS PER ANNEXURE A OF THE 52 STAY NO. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) AGREEMENT WAS DEFINED IN ACONSOLIDATED MANNER PROBA BLY THAT HAS LEAD TO THE PRESENT CONFUSION IN LD DRP'S ACTION OF MAKING DISALLOWANCE OF DEDUCTION U/S 10A. AS HELD BY THE T RIBUNAL IN APPELLANT'S OWN CASE FOR AY 1996-97 (SUPRA) IT MERE LY PROVIDES ITES SERVICES TO AMADEUS SPAIN. APPELLANT RENDERS N O SERVICES TO THE TRAVEL AGENTS BUT DOES RENDER DATA PROCESSING S ERVICES ONLY TO AMADEUS SPAIN AND FOR THIS IT IS BEING REMUNERATED ON A PROFIT SHARING BASIS. THE MEANING ASCRIBED TO TERM 'DISTRI BUTION' BY LD DRP IN THIS YEAR HAS FORMED PART OF APPELLANT'S AGR EEMENTS % WITH AMADEUS SPAIN SINCE INCEPTION FROM AY 1996-97. HENC E IT DOES NOT WIPE OUT THE PAST HISTORY OF THE CASE. IT IS ADMITT ED BY LEARNED DRP THAT FACTS ARE COMMON AND THERE IS NO CHANGE IN MOD US OPERANDI. HENCE ACTION OF LEARNED DRP IN NOW DOUBTING THE CLA IM MADE WHEN AFTER A DETAILED TECHNICAL EXAMINATION OF APPELLANT 'S ACTIVITIES, ELIGIBILITY OF ITS SOLE DATA PROCESSING ACTIVITY FO R CLAIMING DEDUCTION U/S 10A HAS ALREADY BEEN SETTLED BY THE TRIBUNAL IN AY 1996-97 AND ACCEPTED BY TAX DEPARTMENT IS UNSUSTAINABLE. 15.3 THE VIEW ADOPTED BY LD DRP HAS FURTHER BEEN IN FLUENCED BY THE FACT THAT AMADEUS SPAIN HAS A PE IN INDIA IN FO RM OF AMADEUS INDIA PRIVATE LIMITED (I.E THE APPELLANT). WE FIND THAT THIS FACT IS TOTALLY IRRELEVANT IN ADJUDICATION OF APPELLANT'S C LAIM FOR DEDUCTION U/S 10A. FOREIGN COMPANY'S DAPE AND DA ARE TWO SEPA RATE TAXABLE ENTITIES AS PER LAW. DAPE IS A CREATION OF ARTICLE 5 OF THE RELEVANT DTAA, WHEREIN THE OBJECT IS TO TAX PROFITS OF FOREIGN COMPANY IN THE SOURCE STATE. THIS DISTINCTION HAS E FFICIENTLY BEEN HIGHLIGHTED BY A COORDINATE BENCH OF TRIBUNAL IN CA SE OF SET SATELLITE (SINGAPORE) (SUPRA) AS UNDER: 53 STAY NO. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) '11. THE PARTICULAR DIFFICULTY IN THE CASE OF A DEP ENDENT AGENT PERMANENT ESTABLISHMENT IS THAT DAPE ITSELF IS HYPO THETICAL BECAUSE THERE IS NO ESTABLISHMENT-PERMANENT OR TRAN SIENT OF THE GE IN THE PE STATE. THE HYPOTHETICAL PE, THEREFORE, MU ST BE VISUALIZED ON THE BASIS OF PRESENCE OF THE GE AS PROJECTED THR OUGH THE PE, WHICH IN TURN DEPENDS ON FUNCTIONS PERFORMED, ASSET S USED AND RISKS ASSUMED BY THE GE IN RESPECT OF THE BUSINESS CARRIED ON THROUGH THE PE. THE DAPE AND DA HAS TO BE, THEREFOR E, BE TREATED AS TWO DISTINCT TAXABLE UNITS. THE FORMER IS A HYPO THETICAL ESTABLISHMENT, TAXABILITY OF WHICH IS ON THE BASIS OF REVENUES OF THE ACTIVITIES OF THE GE ATTRIBUTABLE TO THE PE, IN TUR N BASED ON THE FAR ANALYSIS OF THE DAPE, MINUS THE PAYMENTS ATTRIBUTAB LE IN RESPECT OF SUCH ACTIVITIES. IN SIMPLE WORDS, WHATEVER ARE T HE REVENUES GENERATED ON ACCOUNT OF FUNCTIONAL ANALYSIS OF THE DAPE ARE TO BE TAKEN INTO ACCOUNT AS HYPOTHETICAL INCOME OF THE SA ID DAPE, AND DEDUCTION IS TO BE PROVIDED IN RESPECT OF ALL THE E XPENSES INCURRED BY THE GE TO EARN SUCH REVENUES, INCLUDING, OF COUR SE, THE REMUNERATION PAID TO THE DA. THE SECOND TAXABLE UNI T IN THIS TRANSACTION IS THE DA ITSELF, BUT THIS TAXABILITY I S IN RESPECT OF THE REMUNERATION OF THE DA. THE PROVISIONS OF THE TAX T REATY ARE SILENT ON THIS ISSUE, AND RIGHTLY SO, BECAUSE THE TAXABILI TY OF THE DA IS QUITE DISTINCT OF THE TAXABILITY OF THE ENTERPRISE OF THE CONTRACTING STATE WHICH IS IN RESPECT OF PE OF SUCH AN ENTERPRI SE. AT THE COST OF REPETITION, IT IS NOT THE DA WHO CONSTITUTES PE OF THE GE, BUT IT IS BY THE VIRTUE OF A DA THAT THE GE IS DEEMED TO HAVE A PE, A DAPE THOUGH, IN THE OTHER CONTRACTING STATE. WE ARE OF T HE CONSIDERED VIEW THAT IN ADDITION OF THE TAXABILITY OF THE DA I N RESPECT OF REMUNERATION EARNED BY HIM, WHICH IS IN ACCORDANCE WITH THE DOMESTIC LAW AND WHICH HAS NOTHING TO DO WITH THE T AXABILITY OF THE 54 STAY NO. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) FOREIGN ENTERPRISE OF WHICH HE IS DEPENDENT AGENT, THE FOREIGN ENTERPRISE IS ALSO TAXABLE IN INDIA, IN TERMS OF TH E PROVISIONS OF ARTICLE 7 OF THE TAX TREATY, IN RESPECT OF THE PROF ITS ATTRIBUTABLE TO THE DEPENDENT AGENT PERMANENT ESTABLISHMENT. AS WE HAVE ELABORATED EARLIER IN THIS ORDER, A DEPENDENT AGENT PERMANENT ESTABLISHMENT IS DISTINCT FROM THE DEPENDENT AGENT. WHILE COMPUTING THE PROFITS OF THIS DEPENDENT AGENT PERMANENT ESTABLISHMENT, A DED UCTION IS TO BE ALLOWED FOR THE REMUNERATION PAID TO THE DEPENDE NT AGENT AS THAT IS COST OF OPERATION OF THE DEPENDENT AGENT PE RMANENT ESTABLISHMENT AND AS IT HAS BEEN INCURRED FOR GENER ATING THE REVENUES ATTRIBUTABLE TO SUCH HYPOTHETICAL PERMANEN T ESTABLISHMENT' TRIBUNAL HAS ALSO MAINTAINED THE ABOVE DISTINCTION WHILE DECIDING THE CASE OF AMADEUS SPAIN. A DEDUCTION HAS BEEN ALL OWED TO AMADEUS SPAIN FOR 46% REVENUE IT HAS PASSED ON TO T HE APPELLANT, AS IT IS A LEGITIMATE BUSINESS EXPENSE OF AMADEUS S PAIN AND INCOME TAXABLE IN HANDS OF THE APPELLANT. IT WILL B E RELEVANT HERE TO REFER TO THE DECISION OF AMADEUS SPAIN (SUPRA) WHER EIN TRIBUNAL HAS HELD AS UNDER: ' THUS WHERE THE ENTIRE ACTIVITY OF AN ENTERPRIS E ARE NOT CARRIED OUT IN A CONTRACTING STATE WHERE THE PE IS SITUATED, THAN ONLY SO MUCH OF THE PROFIT AS IS ATTRIBUTABLE TO TH E FUNCTIONS CARRIED THROUGH THE PE CAN BE TAXABLE IN SUCH SOURCE STATE. WHILE DEALING WITH THE QUESTION AS TO WHAT IS SUCH PART OF INCOME AS IS REASONABLY ATTRIBUTABLE TO THE OPERATIONS CARRIED O UT IN INDIA, WE HAVE HELD THAT ONLY 15% OF THE REVENUE GENERATED FR OM THE BOOKINGS MADE WITHIN INDIA IS TAXABLE IN INDIA. THE SAME PROPORTION HAS TO BE ADOPTED HERE WHILE COMPUTING P ROFIT 55 STAY NO. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) ATTRIBUTABLE TO THE PE. WE HAVE ALSO HELD THAT SINC E THE PAYMENT TO THE AGENT IN INDIA IS MORE THAN WHAT IS THE INCOME ATTRIBUTABLE TO THE PE IN INDIA, IT EXTINGUISH THE ASSESSMENT AS NO FURTHER INCOME IS TAXABLE IN INDIA. IT IS TO BE NOTED THAT EVEN IN THE FIRST ASSESSMENT FRAMED BY THE ASSESSING OFFICER, THE ENT IRE EXPENSES IN THE FORM OF REMUNERATION PAID TO AIPL WAS HELD AS A LLOWABLE DEDUCTION AND WAS REDUCED WHILE COMPUTING THE INCOM E OF APPELLANT IF THAT BE THE CASE, THE INCOME ATTRIBUTA BLE TO PE IN INDIA BEING LESS THAN THE REMUNERATION PAID TO THE DEPEND ENT AGENT, IT EXTINGUISHES THE ASSESSMENT AND REQUIRES NO FURTHER EXERCISE FOR COMPUTATION OF INCOME. WE ACCORDINGLY HOLD SO AND I N VIEW OF THE SAME THE INCOME OF THE APPELLANT FOR ASSESSMENT YEA RS 1997-98 AND 1998-99 WILL BE 'NIL'.' 15.4 BEFORE CONCLUDING WE WOULD LIKE TO MENTION OVE R HERE THAT IDENTICAL ISSUE HAD ALSO CAME UP FOR THE CONSIDERAT ION OF THE TRIBUNAL IN CASE OF M/S INTERGLOBE TECHNOLOGY QUOTI ENT PRIVATE LIMITED FOR AYS 2007-08 TO 2010-11 IN ITA NOS. 419/ DEL/2011, 5830/DEL/2011, 1463/DEL/2013 AND 6144/DEL/2013. VID E ORDER DATED 26TH JULY 2016 DIVISION BENCH OF THIS TRIBUNA L ALLOWED THE CLAIM FOR DEDUCTION U/S 10A OF THE ACT BY M/S INTER GLOBE QUOTIENT, WHICH IS A COMPETITOR OF THE APPELLANT. BOTH THE AS SESSEES HAVE SIMILAR BUSINESS MODEL AND ARE RENDERING DATA PROCE SSING ACTIVITY. FACTUAL ALLEGATIONS LEVIED BY THE AUTHORITIES BELOW ARE ALSO SAME. IN THE SAID ORDER, AFTER FOLLOWING TRIBUNAL'S DECIS ION OF APPELLANT FOR AY 1996-97 (SUPRA), THE TRIBUNAL HAS OPINED AS UNDE R: 'WE FIND THAT THE LEARNED CIT(APPEALS) WHILE DEALIN G WITH THE ISSUE HAS BASICALLY FOLLOWED THE DECISION OF THE IT AT IN THE CASE OF AMADEUS INDIA (SUPRA). HE HAS ELABORATELY DISCUSSED THE TERMS OF 56 STAY NO. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) DISTRIBUTION AGREEMENT BETWEEN THE ASSESSEE AND GAL ILEO AND HAS COMPARED THE ACTIVITIES OF THE ASSESSEE WITH THAT O F AMADEUS INDIA BEFORE COMING TO THE CONCLUSION THAT THE ASSESSEE B EFORE US IS VERY MUCH ELIGIBLE FOR CLAIMING DEDUCTION UNDER SECTION 10AA OF THE ACT WITH THIS FINDING THAT THE ASSESSING OFFICER WAS NO T JUSTIFIED IN DENYING THE CLAIMED DEDUCTION UNDER SECTION 10AA OF THE ACT IN THE PRESENT CASE. IN PARA NO.5.2, THE LEARNED CIT(APPEA LS) FIRSTLY HAS DISCUSSED THE TERMS OF DISTRIBUTION AGREEMENT AND O N THE BASIS OF THOSE DESCRIPTION OF SERVICES, HE HAS COME TO THE C ONCLUSION THAT THE ASSESSEE HAD UNDERTAKEN EXPORT OF SOFTWARE /DATA PR OCESSING SERVICES AT THE RATE OF % OF GDP AS PART OF THE DIS TRIBUTION SERVICES PROVIDED TO GALILEO AND THE CONSIDERATION PAID BY G ALILEO FOR SUCH SERVICES QUALIFIED FOR DEDUCTION UNDER SECTION 10AA OF THE ACT. THE LEARNED CIT (APPEALS) HAS MET OUT THE OBJECTIONS RA ISED BY THE ASSESSING OFFICER TO JUSTIFY HIS DENIAL OF THE CLAI MED DEDUCTION. THE SERVICES RENDERED BY THE ASSESSEE TO GALILEO HAVE B EEN COMPARED BY THE LEARNED CIT(APPEALS) WITH THE SERVICES RENDE RED BY AMADEUS INDIA TO AMADEUS GROUP OF COMPANIES. IF WE COMPARE THE WORKING OF THE ASSESSEE WITH AMADEUS INDIA UNDI SPUTEDLY WAS IN THE SAME LINE OF BUSINESS. IN THE CASE OF AMADEU S INDIA (SUPRA), THE ITAT HAS HELD THAT THE AMADEUS INDIA WAS PERFOR MING THE FUNCTIONS OF A PROGRAM EXPORTER. THEY DO NOT ADD MO RE ENTRIES TO THE DATA BASE AS DONE BY THE TRAVEL AGENT. IN FACT, IT HAS NO DIRECT INTEREST IN ADDING TO, OR DRAWING EXTRACTS FROM THE DATA BASE BUILT INTO THE COMPUTERS LIKE THE SEVERAL OPERATORS ALL T HE WORLD OVER BUT WHAT IT DOES ACTUALLY IS TO SUPPLEMENT THE FUNCTION OF THE AMADEUS GROUP BY PREPARING AND TRANSMITTING PROGRAMS TO THE LATTER FOR THE INCORPORATION INTO THE PORTION OR 'PARTITION' IN IT S MEGA - COMPUTERS AT ERDING IN GERMANY, SO AS TO ENABLE THE TRAVEL AG ENT IN MARKETING 57 STAY NO. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) REASON DRAWN ON THE AVAILABLE INFORMATION FOR THEIR BENEFIT. ITS ACTIVITIES ARE TO ISSUE INSTRUCTIONS TO THE MASTER COMPUTER TO RECOGNIZE THE OPERATORS, IDENTIFY THEM AND PROVIDE THEM EXCESS TO SPECIFIC PORTION OF THE DATA BASE. THERE CAN BE NO DOUBT WHATEVER, FOR THE REASONS DISCUSSED ABOVE THAT THE ASSESSEE M ANUFACTURES, PRODUCES AND EXPORT SOFTWARE WITHIN THE MEANING OF THE THREE SPECIFIED SECTIONS OF THE ACT. IT IS OPEN TO IT TO CLAIM EXEMPTION UNDER ANY OF THESE SECTIONS AND AS IS WELL ESTABLIS HED BY PERTAINING TO INTERPRETATION OF TAXING STATUTE IT I S ENTITLED TO CHOOSE THAT ONE WHICH IS MOST FAVOURABLE TO IT IN ANY PART ICULAR ASSESSMENT YEAR, HELD THE IT AT. THE IT AT IN THAT CASE ALSO NOTED SOME MATERIAL FACTS THAT ASSESSEE COMPANY SUBMITS T HEIR MONTHLY RETURNS FOR EXPORT TO THE COMPETENT AUTHORITY WHICH HAS ACCEPTED THE SAME IN DISCHARGE OF EXPORT OBLIGATION. THE ITA T NOTED FURTHER THAT THE EXPORT OF SOFTWARE AS PER THE STATUTORY RE QUIREMENT ARE ALSO DECLARED ON EXPORTERS DECLARATION FORM SOFTES (SPECIMEN OF SOFTES FORM HAS BEEN FILED). THE COMPETENT AUTHORIT Y LE., DEPARTMENT OF ELECTRONICS AUTHORIZED OFFICIAL ALSO CERTIFIED THAT THE SOFTWARE DESCRIBED IN THE SOFTES FORM WAS ACTUALLY TRANSMITTED AND THE EXPORT VALUE DECLARED BY THE EXPORTER HAS B EEN FOUND TO BE IN ORDER AND ACCEPTED BY THE AUTHORIZED OFFICER. SI MILAR ARE THE FUNCTIONS OF THE ASSESSEE IN THE PRESENT CASE BEFOR E US AND SIMILAR TYPES OF CERTIFICATES HAVE BEEN ISSUED TO THE ASSES SEE ABOUT THE TRANSMISSION OF SOFTWARE AND THE EXPORT VALUE DECLA RED BY THE EXPORTER HAS BEEN FOUND TO BE IN ORDER AND ACCEPTED BY THE AUTHORIZED OFFICER. WE ARE THUS OF THE VIEW THAT TH E LEARNED CIT(APPEALS) WAS JUSTIFIED IN EQUATING THE FACTS OF THE PRESENT CASE WITH THAT OF THE AMADEUS INDIA, ALSO IN THE SAME LI NE OF BUSINESS AND FOLLOWING THE DECISION OF THE IT AT ON AN IDENT ICAL ISSUE, IN THE 58 STAY NO. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) CASE OF AMADEUS INDIA, IN PARA NO. 5.2 OF THE FIRST APPELLATE ORDER REPRODUCED HEREINABOVE, THE LEARNED CIT(APPEALS) HA S SUMMARIZED THE FULFILLMENT OF ALL THE REQUIREMENTS OF THE ELIGIBILITY OF THE DEDUCTION CLAIMED UNDER SEC. 10AA OF THE ACT IN THE CASE OF THE ASSESSEE, WHICH WE ARE NOT REITERATING HERE FOR THE SALE OF BREVITY. BESIDES, SOFTWARE EXPORT DEALER ACTION FOR M SHOWS THE ASSESSEE IN THE DATA ENTRY JOBS AND CONVERSION SOFT WARE, DATA PROCESSING, THE PROFIT AND LOSS ACCOUNT SHOW DATA P ROCESSING SOFTWARE EXPORT, SOFTWARE DEVELOPMENT SERVICES INCO ME, AUDITOR'S REPORT HAS CERTIFIED THAT THE ASSESSEE HAS BEEN ENG AGED IN THE DEVELOPMENT OF COMPUTER SOFTWARE AND INFORMATION TE CHNOLOGY ENABLED PRODUCT AND SERVICES. THE AUDITOR'S REPORT ALSO TALKS ABOUT THE REVENUE DEPICTED UNDER DATA PROCESSING SOFTWARE ' HAS BEEN / IS BEING CERTIFIED BY THE OFFICE OF DEVELOPMENT COM MISSIONER, NOIDA, NOIDA SPECIAL ECONOMIC ZONE. EXPORT AS PER T HE SPECIAL ECONOMIC ZONES ACT, 2005' IN RELATION TO THE 'SPECI AL ECONOMIC ZONES' MEANS TAKING GOODS, OR PROVIDING SERVICES OU T OF INDIA FROM A SPECIAL ECONOMIC ZONES' MEANS TAKING GOODS, OR PR OVIDING SERVICES OUT OF INDIA FROM A SPECIAL ECONOMIC ZONE BY LAND, SEA AIR OR BY ANY OTHER MODE WHETHER PHYSICAL OR OTHERWISE. AND ABOVE ALL, AS PER SECTION 51 OF THE SEZ, ACT, NOTWITHSTAN DING ANYTHING INCONSISTENT THEREWITH CONTAINED IN ANY OTHER LAW F OR THE TIME BEING IN FORCE, THE PROVISIONS OF SEZ ACT WILL PREVAIL. W E THUS DO NOT FIND INFIRMITY IN THE FIRST APPELLATE ORDER IN COMING TO THE CONCLUSION THAT THE ASSESSEE IS VERY MUCH ELIGIBLE FOR THE CLAIMED DEDUCTION UNDER SEC. 10AA OF THE ACT IN VIEW OF THE OF DECISION OF THE ITAT IN THE CASE OF AMADEUS INDIA (SURPA). THE LEARNED CIT(APPE ALS) WAS THUS RIGHT IN DELETING THE DISALLOWANCE MADE BY THE ASSE SSING OFFICER IN THIS REGARD. 59 STAY NO. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) 7.6 THE ABOVE VIEW THAT THE ASSESSEE IS ELIGIBLE FO R CLAIMED DEDUCTION UNDER SEC. 10AA OF THE ACT IS ALSO STRENG THENED BY THE DECISION OF CESTAT, NEW DELHI BENCH IN THE CASE OF ACQUIRE SERVICE (P) LTD. VS. COMMISSIONER OF SERVICE TAX (SUPRA). I N THAT CASE LIKE THE PRESENT ASSESSEE BEFORE US, THE ASSESSEE WERE 1 00% EOUS REGISTERED WITH SOFTWARE TECHNOLOGY PARK AND WERE G RANTED EXEMPTION UNDER INCOME-TAX FOR EXPORT OF COMPUTER S OFTWARE. THE ASSESSEE THEREIN WERE PARTS OF A GROUP OF COMPANIES I.E., AMADEUS OR GALILEO. THESE GROUPS HAD EVOLVED AND WERE MAINT AINING A COMPUTER RESERVATION SYSTEM (CRS), THE REQUISITE SO FTWARE AND A HUGE DATABASE COMPRISING A VARIETY OF INFORMATION R ELATING TO SEVERAL AIRLINES AND OTHER TRAVEL SERVICES PROVIDES , FOR PROVIDING INTERNATIONAL TRAVEL RELATED FACILITIES. THE CORE C OMPUTER SYSTEM/SERVER WERE ESTABLISHED AT OVERSEAS LOCATION S AT US, GERMANY OR SPAIN AS THE CASE MAY BE. THE TRAVEL AGE NT, WITH A COMPUTER, MERELY ACCESSES OR UTILIZES TRAVEL INFORM ATION DRAWN FROM THE DATA BASE OF THE COMPUTERS. THE TRAVEL AGE NT ALSO ADDS TO, AND ALTERS THE DATA AVAILABLE ON THE COMPUTER WHEN HE BOOKS A TICKET (OR OTHER TRAVEL FACILITIES LIKE CAB SERVICE S, ACCOMMODATION AT HOTELS/RESORTS ETC.) FOR A CUSTOMER BY FEEDING IN T HE DATA REGARDING THE CUSTOMER SUCH AS AIRLINES, HOTEL, LOCAL TRAVEL FARE, TICKETS, THE SEVERAL INTERMEDIARY AND EVENTUAL DESTINATION; AND THE NATURE OF SERVICES TO BE PROVIDED ETC. THIS DATA ENTERS THE C OMPOSITE DATA BASED STREAM AND BECOMES AVAILABLE TO OTHER OPERATO RS VIA COMPUTERS OPERATING ON AMADEUS OR GALILEO SYSTEM, A LL OVER THE WORLD, WHENEVER A FULFILLING TRANSACTIONS OCCURS AT THE TRAVEL AGENTS END. THE ASSESSEE'S ROLE LIKE THE PRESENT ASSESSEE BEFORE US, WAS OCCUPYING THE POSITION OF HYPHEN BETWEEN THE OVERSE AS AMADEUS AND GALILEO WHICH HAVE CONCEIVED, EVOLVED, MAINTAIN ED AND 60 STAY NO. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) OPERATES THE CRS (COMPUTER RESERVATION SYSTEM) FACI LITY ON THE ONE HAND; AND TRAVEL AGENT ON THE OTHER. WHAT THE TO AS SESSEE DO, IS TO SUPPLEMENT FUNCTIONS, OF THE OVERSEAS ENTITIES (AMA DEUS OR GALILEO) BY PREPARING AND TRANSMITTING THE LOCALLY GENERATED TRAVEL RELATED DATA TO THEM FOR INCORPORATION AND SYNTHESIS INTO T HE CORE DATA BASE, MAINTAINED IN THE MEGA COMPUTERS OVERSEAS, SO AS TO ENABLE TRAVEL AGENTS (OPERATING WITHIN THE ASSESSEE'S MARK ETING REGION) TO DRAW ON THE AVAILABLE AND UPDATED INFORMATION, FOR THEIR BENEFIT. THE ASSESSEES ISSUED INSTRUCTIONS TO THE RESPECTIVE MASTER COMPUTER (OF AMADEUS OR GALILEO) TO ENABLE RECOGNIT ION THAT IDENTIFICATION OF TOUR OPERATORS AND FACILITATE ACC ESS TO THEM OF SPECIFIC PORTION (SEGMENT) OF THE COMPOSITE DATA BA SIS. CRS IS A SYSTEM CONNECTED WITH A DATA BASE CARRYING VARIOUS KINDS OF INFORMATION PERTAINING TO SEVERAL AIRLINES AND OTHE R TRAVEL SERVICES PROVIDES IS USED FOR BOOKING AIRLINES TICKETS, CABS HOTELS AND LIKE TRAVEL FACILITIES ACROSS THE GLOBE. AIRLINES HOTELS , CABS AGENCIES AND OTHER SERVICES PROVIDERS PAY FEE TO THE OVERSEAS EN TITIES (AMADEUS OR GALILEO) FOR BOOKINGS MADE BY EMPLOYING THE CRS. THE ASSESSEE PROCESS THE DATA GENERATED BY THEIR ACCREDITED TRAV EL AGENT IN INDIA, AT THEIR RESPECTIVE STP UNIT AND ALIGN AND I NTERFACE SUCH INFORMATION AS PER PROTOCOLS OF THE CRS SYSTEMS OF THE OVERSEAS ENTITLES-AMADEUS OR GALILEO. ON SUCCESSFUL BOOKING OF A TICKET OR OTHERS TRAVELS RELATED FACILITIES BY ACCREDITED TRA VEL AGENTS, THE RELEVANT DATA IS PROCESSED BY THE ASSESSEES AND FED INTO THE DATA OVERSEAS, EMPLOYING INTERNET FACILITIES AND ACTIVIT IES AMOUNTING TO COMPUTER DATA PROCESSING. FOR PROVIDING THIS SERVIC E, ASSESSEES RECEIVED DATA PROCESSING FEES FROM THE OVERSEAS ENT ITIES IN CONVERTIBLE FOREING EXCHANGE, ASSESSEES HOWEVER REC EIVE NO FEE/CONSIDERATION FROM EITHER THE AIRLINES, THE TRA VEL AGENTS OR FROM 61 STAY NO. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) HOTELS ETC. THE CESTAT HAS THUS COME TO THE CONCLUS ION THAT ASSESSEES PROMOTE/MARKET CRS SERVICES PROVIDE BY TH E OVERSEAS ENTITIES (AMADEUS/ GALILEO) BUT DO SO THROUGH COMPU TERS DATE PROCESSING, AMOUNTING TO INFORMATION TECHNOLOGY SER VICES. 7.7 THE FUNCTIONS OF ASSESSEE HAVE ALSO BEEN DISCUS SED BY THE ITAT IN THE CASE OF GALILEO INTERNATIONAL INC. VS. DCIT (SUPRA) DECIDING THE ISSUE OF HOLDING OF ANY PERMANENT ESTA BLISHMENT OF GALILEO INTERNATIONAL INC. IN INDIA TO EXAMINE ITS INCOME TO BE TAXABLE IN INDIA. THIS DECISION OF THE IT AT HAS BE EN UPHELD BY THE HON'BLE HIGH COURT. 7.8 THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. M.L. OUTSOURCING SERVICES (P) LTD. (SUPRA) IN THE PARA N O. 9 OF THE DECISION HAS BEEN PLEASED TO MAKE OBSERVATION ON TH E CBDT NOTIFICATION NO. S0890(E) DATED 26.09.2000 IN RELAT ION TO DEDUCTION UNDER SEC. 10A, REPRODUCED AS UNDER: '9. A PERUSAL OF THE SAID NOTIFICATION WOULD INDICA TE THAT THE BOARD HAS INCLUDED SEVERAL DISTINCT TYPES OF SERVICES UND ER THE EXPRESSION, 'PRODUCT OR SERVICES' IN THE FIFTEEN CL AUSES. THE BOARD, IN THE NOTIFICATION HAS UNDERSTOOD THAT PRODUCT OR SERVICES, TO BE INCLUDED WITHIN CLAUSE (B) OF EXPLANATION 2 TO SECT ION 10A, NEED NOT BE COMPUTER SOFTWARE AS UNDERSTOOD IN THE COMMON PA RLANCE OF EVEN CUSTOMIZED ELECTRONIC DATA, AS GENERALLY UNDER STOOD. ANY PRODUCT OR SERVICE OF SIMILAR NATURE WOULD INCLUDE IN ITS AMBIT, PRODUCT AND SERVICES WHICH WERE ENABLED BY, I.E. WO ULD RELY UPON, OR ARE DRIVEN BY INFORMATION TECHNOLOGY. THIS BECOM ES CLEAR WHEN WE REFER TO THE WIDE AMBIT OF THE DIVERGENT AND VAR IED SERVICES COVERED IN THE DIFFERENT CLAUSES LIKE, '(II) CALL C ENTRES...(VIII) HUMAN RESOURCES SERVICES...(VIII) INSURANCE CLAIM PROCESS ING... (XII) REMOTE 62 STAY NO. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) MAINTENANCE' AND '(XIV) SUPPORT CENTRES'. THESE SER VICES WOULD NOT NECESSARILY AND PRIMARILY INVOLVE CUSTOMIZED DATA P ROCESSING, BUT NEVERTHELESS, THESE ARE INFORMATION TECHNOLOGY ENAB LES SERVICES. IN CASE OF CALL ENTRES, QUERIES AND QUESTIONS FROM A C USTOMER OF A THIRD COMPANY ARE ANSWERED BY AN EMPLOYEE OF THE AS SESSEE BASED IN INDIA. THE SAID TASK IS PERFORMED WITH THE AID AND HELP OF INFORMATION TECHNOLOGY BUT IT WOULD NOT BE A CASE O F CUSTOMIZED ELECTRONIC DATA SERVICE OR EXPORT THEREOF. SIMILAR EXERCISE MAY BE UNDERTAKEN IN CASE OF REMOTE MAINTENANCE OR SUPPORT CENTERS, WHICH ANSWER QUERIES AND GIVES SUGGESTIONS BY E-MAI LS OR THROUGH VOICE AND/OR VIDEO COMMUNICATIONS. THESE SERVICES W OULD NOT NORMALLY INVOLVE PROCESSING OR SENDING CUSTOMIZED E LECTRONIC DATA ABROAD YET THESE ARE INFORMATION TECHNOLOGY ENABLED SERVICES AND SPECIFICALLY COVERED UNDER THE NOTIFICATION'. 7.9 IN VIEW OF THE ABOVE DISCUSSION, WE FIND THAT T HE LEARNED CIT(APPEALS) HAS RIGHTLY HELD THAT THE ASSESSEE IS ELIGIBLE FOR THE CLAIMED DEDUCTION UNDER SEC. 10AA OF THE INCOME-TAX ACT, 1961.' 16. FOLLOWING THE ABOVE VIEW, WE DIRECT THE ASSESSI NG OFFICER TO ALLOW THE CLAIMED DEDUCTION U/S 10A OF THE INCOME-T AX ACT, 1961 ON UNIT II OF THE APPELLANT.' 13.1 THE ORDER OF THE COORDINATE BENCH FOR A.Y.200 9-10 HAS BEEN FOLLOWED IN A.Y. 2010-11 IN ITA NO.1835/DEL/20 15 VIDE ORDER DATED 23 RD OCTOBER, 2017. MOREOVER, THE HONBLE JURISDICTIONA L HIGH COURT IN ITA NO.154/2017, VIDE ORDER DATED 22 ND MAY, 2017, HAS UPHELD THE FINDINGS OF THE TRIBUNAL FOR A.Y. 2009-1 0 BY OBSERVING AS UNDER:- 63 STAY NO. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) 'CONCLUSION OF ITA 154 OF 2017 (AIPL) 32. THE COURT FINDS THAT THE IMPUGNED ORDER OF THE ITAT IN THE CASE OF AIPL FOR AY 2009-10 ON THE ISSUE OF ALLOWIN G THE DEDUCTION UNDER SECTION 10A OF THE ACT SUFFERS FROM NO LEGAL INFIRMITY EITHER IN ITS ANALYSIS OF THE LEGAL PROVI SIONS OR IN ITS CONCLUSIONS. THE COURT IS NOT INCLINED TO FRAME ANY QUESTION OF LAW ON THE ISSUE CONCERNING A SECTION 10A DEDUCTION IN THE APPEAL OF THE REVENUE AGAINST AIPL FOR AY 2009-10.' 13.2 RESPECTFULLY FOLLOWING THE ABOVE BINDING PREC EDENTS, THE AO IS DIRECTED TO ALLOW DEDUCTION U/S 10A OF THE ACT A S CLAIMED BY THE ASSESSEE/APPELLANT IN THE RETURN OF INCOME. GROUNDS 9, 9.1, 9.2. & 9.3 ARE, THEREFORE, ALLOWED. 13.3 GROUND NOS.1 & 11 ARE GENERAL AND, THEREFORE, DO NOT REQUIRE SPECIFIC ADJUDICATION. 13.4 IN GROUND NO.10, THE ASSESSEE/APPELLANT HAS C HALLENGED CHARGING OF INTEREST U/S 234A, 234B AND 234C OF THE ACT. THE AO IS DIRECTED TO CONSEQUENTIAL RELIEF IN THIS REGARD. 14.0 IN THE RESULT, ITA NO.1662/DEL/2016 FOR AY 20 11-12 STANDS ALLOWED. 15.0 WE SHALL NOW TAKE UP FOR CONSIDERATION APPEAL FOR A.Y. 2012-13 BEARING ITA NO. 1811/DEL/2017. IN THIS APPE AL, THE FOLLOWING GROUNDS HAVE BEEN RAISED BY THE ASSESSEE/APPELLANT: 64 STAY NO. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) 1. THAT ON FACTS AND IN LAW THE ORDERS PASSED BY T HE ASSESSING OFFICER (HEREINAFTER REFERRED AS THE AO) / DISPUT E RESOLUTION PANEL (HEREINAFTER REFERRED AS THE DRP) / TRANSFER PRICING OFFICER (HEREINAFTER REFERRED AS THE TPO) ARE BAD IN LAW AND VOID AB- INITIO. 2. THAT ON FACTS AND IN LAW THE TPO/DRP ERRED IN NO T APPRECIATING THAT IN ABSENCE OF A TRANSACTION AS ENVISAGED UNDER SECTION 92F OF THE ACT BETWEEN APPELLANT AND ITS AE FOR BRAND PROMOTION OR FOR ESTABLISHING A MARKETING INT ANGIBLE, THE TPO HAD NO JURISDICTION TO PROPOSE AN ADJUSTMENT ON ACCOUNT OF AMP EXPENSES. 3. THAT THE TRANSFER PRICING ADJUSTMENT OF RS.200,1 2,15,476/- ON ACCOUNT OF ADVERTISEMENT, MARKETING AND SALES PR OMOTION (AMP) EXPENSES BEING THE AGGREGATE OF : (I) PROTECTIVE ADJUSTMENT RS. 96,63,03,610/- (II) SUBSTANTIVE ADJUSTMENT RS.103,39,11,866/- IS BAD IN LAW, ILLEGAL AND UNCALLED OR BOTH ON FA CTS AND IN LAW. 3.1 THAT ON FACTS AND IN LAW THE DRP ERRED IN : (A) ENHANCING THE TP ADJUSTMENT VIS--VIS PROTECTIVE/SUBSTANTIVE BASIS WITHOUT ISSUING ANY SH OW CAUSE NOTICE. (B) OBSERVING THAT THE APPELLANT HAS NOT FURNISHED COMPLETE / ADEQUATE DETAILS IN REPLY TO THE INVESTIGATION DIRE CTED TO BE CONDUCTED VIDE LETTER DATED 19 TH OCTOBER, 2016. (C) ISSUING DIRECTIONS CONTRARY TO PROVISIONS OF SE CTION 144C(8) OF THE ACT. 65 STAY NO. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) 3.2 THAT ON FACTS AND IN LAW THE TPO/DRP ERRED IN I GNORING AND NOT FOLLOWING THE ORDERS OF HONBLE ITAT AND HIGH C OURT IN THE APPELLANTS OWN CASE FOR THE AYS 2007-08, 2008-09 A ND 2009-10 DULY PLACED ON RECORD. 3.3 THAT ON FACTS AND IN LAW THE TPO/DRP ERRED IN D ISPROVING THE BENCHMARKING ANALYSIS ADOPTED BY THE APPELLANT WITHOUT FOLLOWING THE METHODOLOGY AND APPROACH RECOGNIZED U NDER SECTION 92C(3) OF THE ACT. 4. THAT ON FACTS AND IN LAW THE TPO ERRED IN HOLDIN G AND THE DRP INTER ALIA ERRED IN UPHOLDING / OBSERVING THAT : (I) APPELLANT HAD INCURRED AMP EXPENDITURE TOTALIN G TO RS.70,83,04,354/- ON PROMOTION OF PROPRIETARY MARKS AND FOR DEVELOPMENT OF MARKETING INTANGIBLE FOR THE BEN EFIT OF AE. (II) AMP EXPENDITURE OF RS.70,83,04,354/- INCURRED BY THE ASSESSEE IS AN INTERNATIONAL TRANSACTION U/S 92B OF THE ACT. (III) EXPENDITURE OF RS.66,66,86,509/- INCURRED BY THE ASSESSEE ON PAYMENT OF INCENTIVES TO SUBSCRIBERS IS IN THE NATURE OF AMP. (IV) BY INCURRING EXCESS / EXTRAORDINARY AMP EXPENS E THE APPELLANT HAD RENDERED INTRA GROUP SERVICES TO ITS AE. (V) AE IS DIRECTLY BENEFITED BY ANY EXPENDITURE INC URRED BY ASSESSEE ON AMP. (VI) AE DIRECTS THE AMP STRATEGY AND THE EXPENDITUR E INCURRED BY APPELLANT IN INDIA. 66 STAY NO. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) (VII) LEGAL OWNERSHIP OF THE MARKETING INTANGIBLE W OULD GET TRANSFERRED TO THE AE WITHOUT ANY CONSIDERATION ON TERMINATION OF THE DISTRIBUTION AGREEMENT. (VIII) APPELLANT HAS FAILED TO FURNISH ANY MATERIAL TO DEMONSTRATE THAT IT ENJOYED ECONOMIC OWNERSHIP OF B RAND. (IX) APPELLANT HAS FAILED TO SHOW THAT FOR EXCESSIVE AMP EXPENDITURE IT WAS COMPENSATED BY THE AE THROUGH A SET-OFF. (X) MARGINS EARNED BY THE APPELLANT (APPLYING TNMM) IS NOT SIGNIFICANTLY MORE THAT THE MARGINS OF THE COMP ARABLE COMPANIES. 5. 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 CARRIE D ON BY THE APPELLANT AND HENCE IT CANNOT BE SEGREGATED AND BEN CHMARKED ON A STAND-ALONE BASIS. 5.1 THAT ON FACTS AND IN LAW THE AO/TPO.DRP ERRED I N HOLDING THAT THERE IS NO SUITABLE COMPARABLE AVAILABLE FOR BENCHMARKING THE ALLEGED INTERNATIONAL TRANSACTION OF INCURRIN G EXCESSIVE AMP EXPENSE BY APPLYING THE AGGREGATED APPROACH. 6. THAT ON FACTS AND IN LAW THE AO/TPO/DRP ERRED IN MAKING / UPHOLDING PROTECTIVE TP ADJUSTMENT ON ACCOUNT OF AM P EXPENSES INVOKING BRIGHT LINE METHOD. 6.1 THAT ON FACTS AND IN LAW THE DRP ERRED IN HOLDI NG THAT USE OF BRIGHT LINE METHOD IS SUPPORTED BY RULE 10AB OF I NCOME TAX RULES. 67 STAY NO. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) 7. THAT ON FACTS AND IN LAW THE TPO/AO/DRP ERRED IN MAKING/UPHOLDING SUBSTANTIVE TP ADJUSTMENT ON ACCOU NT OF AMP EXPENSES INVOKING COST PLUS METHOD. 7.1 THAT WITHOUT PREJUDICE, ON FACTS AND IN LAW THE TPO/DRP ERRED IN MAKING/UPHOLDING THE APPLICABILITY OF A MA RKUP OF 45.97% ON THE ALLEGED EXCESSIVE AMP EXPENSES INCURR ED BY THE APPELLANT ON BEHALF OF THE ASSOCIATED ENTERPRISE. 8. THAT WITHOUT PREJUDICE ON FACTS AND IN LAW THE T PO/DRP ERRED IN MAKING/UPHOLDING THE APPLICABILITY OF A MA RKUP OF 45.97% ON THE ALLEGED EXCESSIVE AMP EXPENSES INCURR ED BY THE APPELLANT ON BEHALF OF THE ASSOCIATED ENTERPRISE. 9. THAT ON FACTS AND IN LAW THE AO/DRP ERRED IN MAK ING / UPHOLDING DISALLOWANCE OF RS.27,01,152/- U/S 14A OF THE ACT. 9.1 THAT ON FACTS AND IN LAW THE AO/DRP ERRED IN NO T APPRECIATING THAT PROVISIONS OF SECTION 14A ARE NOT APPLICABLE AS NO EXEMPT INCOME WAS EARNED BY THE APPELLANT DURING THE YEAR UNDER CONSIDERATION. 10. THAT ON FACTS AND IN LAW THE AO ERRED IN LEVYIN G INTEREST U/S 234B & 234C OF THE ACT. 15.1 AS IS APPARENT, THE FOLLOWING TWO ISSUES ARE INVOLVED IN THIS APPEAL:- (I) TRANSFER PRICING ADJUSTMENT ON ACCOUNT OF EXCES SIVE AMP SPEND I.E., PROTECTIVE ADJUSTMENT OF RS.96,73,03,61 0/- AND SUBSTANTIVE ADJUSTMENT OF RS.103,39,11,866/-. (II) DISALLOWANCE U/S 14A OF RS.27,01,152/- 68 STAY NO. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) 15.2 GROUND NO.1 IS GENERAL IN NATURE AND REQUIRES NO SPECIFIC ADJUDICATION. 15.3 IN GROUNDS 2 TO 8, THE ASSESSEE/APPELLANT CHA LLENGES THE TRANSFER PRICING ADJUSTMENT ON ACCOUNT OF ALLEGED E XCESSIVE AMP EXPENDITURE. A PERUSAL OF ORDER PASSED BY THE TPO F OR A.Y. 2012-13 DEPICTS THAT THE FACTS AND CIRCUMSTANCES OF THE CAS E ARE AKIN TO THAT IN A.Y. 2011-12. THE ONLY DISTINCTION WE COULD GATH ER IS THAT THE TPO HAS PROPOSED A SUBSTANTIVE ADDITION AND A PROTECTIV E ADDITION. PROTECTIVE ADDITION HAS BEEN MADE APPLYING THE BRIG HT LINE TEST TO THE ALLEGED ENTIRE AMP EXPENDITURE OF THE ASSESSEE INCL UDING INCENTIVES PAID TO THE TRAVEL AGENTS AND THE SUBSTANTIVE ADDIT ION HAS BEEN MADE APPLYING COST-PLUS METHOD TO AMP EXPENDITURE INCURR ED EXCLUDING PAYMENT OF INCENTIVES TO THE TRAVEL AGENTS. THE REA SON WE COULD GATHER FOR SUCH AN ACTION IS THE DECISION OF THE HO NBLE DELHI HIGH COURT IN THE CASE OF SONY MOBILE (SUPRA) WHEREIN THE FOLLOWING TWO ISSUES HAVE BEEN ADJUDICATED BY HONBLE HIGH COURT AGAINST THE TAX DEPARTMENT I.E.: (I) THE HONBLE JURISDICTIONAL HIGH COURT HAS HELD THAT BRIGHT LINE TEST CANNOT BE USED AS A METHOD; AND (II) SELLING EXPENSES ARE TO BE EXCLUDED FROM THE A MBIT OF AMP. 69 STAY NO. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) 15.4 IN THIS REGARD, IT WILL BE RELEVANT TO NOTE T HAT INCENTIVES PAID TO TRAVEL AGENTS IN THE INSTANT CASE ARE SELLI NG EXPENSES AND THEY OUGHT TO HAVE BEEN EXCLUDED FROM THE AMBIT OF AMP { REFER ITAT DECISION IN THE CASE OF THE ASSESSEE/APPELLANT FOR A.Y. 2007-08 REPORTED IN 149 ITD 496(DEL)}. THE TPO RECORDS THAT SINCE ON BOTH THE ABOVE ISSUES, THE TAX DEPARTMENT HAS APPROACHED THE HONBLE APEX COURT, TO KEEP THESE ISSUES ALIVE, PROTECTIVE AND S UBSTANTIVE AMP ADJUSTMENTS HAVE BEEN MADE IN THE YEAR UNDER CONSID ERATION. IT WILL BE RELEVANT TO NOTE THAT THE LD. DRP FOR AY 2012-13 HAS ALSO SPECIFICALLY CONSIDERED THE JURISDICTIONAL ISSUE I. E. AS TO WHETHER AMP IS AN INTERNATIONAL TRANSACTION OR NOT AND IN THIS REGARD IT HAS BEEN HELD BY THE LD. DRP AS UNDER:- AMENDMENT REGARDING FILING OF APPEALS BY THE DEPART MENT AGAINST DRPS DIRECTIONS 1. THE INCOME TAX ACT HAS RECENTLY BEEN AMENDED W.E.F. , 1.4.2016, TO PROVIDE THAT THE DIRECTIONS OF THE DRP CANNOT BE APPEALED AGAINST BY THE DEPARTMENT. THE HONBLE HIG H COURT IN THE CASE OF VODAFONE INDIA SERVICES PVT. LTD. HA VE HELD THAT PROCEEDINGS BEFORE THE DRP ARE CONTINUATION OF ASSE SSMENT PROCEEDINGS, AND THE FINAL ASSESSMENT ORDER IS PASS ED ONLY AFTER THE DIRECTIONS OF THE DRP. A SIMILAR VIEW HAS BEEN TAKEN IN SEVERAL DECISIONS OF THE HONBLE ITAT. THE RECEN T AMENDMENT IN THE INCOME TAX ACT ONLY STRENGTHENS TH E VIEW 70 STAY NO. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) THAT THE DRP IS AN ADMINISTRATIVE, RATHER THAN AN A PPELLATE BODY., 2. IN CERTAIN CASE, THE HONBLE DELHI HIGH COURT HA S DECIDED THE ISSUE AGAINST THE REVENUE. AS DISCUSSED ABOVE, THE DEPARTMENT HAS FILED SLP IN THE HONBLE SUPREME COU RT AGAINST THESE DECISIONS AND THE DECISION OF THE HON BLE SUPREME COURT IS AWAITED. IN SONY ERICSSON, THE DEP ARTMENTS SLP IN THE HONBLE SUPREME COURT ON THIS ISSUE HAS BEEN ADMITTED AND THE DECISION OF THE HONBLE SUPREME CO URT IS AWAITED. WITH THE HIGHEST RESPECT TO THE HONBLE HI GH COURTS DECISION IN THESE CASES, WE ARE CONSTRAINED TO OBSE RVE THAT IF THE AOS DECISION ON THIS ISSUE IS NOT APPROVED BY THE DRP FOLLOWING THE HONBLE HIGH COURTS DECISION IN THES E CASES, THIS WOULD RESULT IN A FAIT ACCOMPLI, BECAUSE AFTER THE AMENDMENT W.E.F. 1.6.2016, THE AO CANNOT FILE APPEAL AGAINST THE DIRECTIONS OF THE DRP. THIS WOULD BE INCONSISTENT W ITH THE VIEW TAKEN BY THE AO IN EARLIER YEARS AND SHOULD NOT BE MISCONSTRUED AS THE DEPARTMENT HAVING ACCEPTED THE ASSESSEES VIEW, EVEN WHEN SLP HAS BEEN FILED/ADMIT TED AGAINST THE DECISION OF THE HONBLE HIGH COURT ON T HIS ISSUE, IN THESE CASES. CONSIDERING THE FACTS, IT WOULD BE PRE MATURE AT PRESENT, FOR THE DRP TO DECIDE THIS ISSUE AGAINST T HE AO/TPO, WHEN THE DEPARTMENTS SLP IN THE HONBLE SUPREME CO URT ON THIS ISSUE HAS BEEN ADMITTED AND THE DECISION OF TH E HONBLE SUPREME COURT IS AWAITED. 15.5 BOTH THE LOWER AUTHORITIES, THEREFORE, ACCEPT THAT SUBJECT TO THE FINAL OUTCOME IN SLP BEFORE THE HONBLE APEX CO URT, THE CURRENT LEGAL POSITION, AS CLARIFIED BY THE HONBLE DELHI H IGH COURT IN CASE OF 71 STAY NO. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) MARUTI SUZUKI (SUPRA), WHIRLPOOL OF INDIA (SUPRA) A ND BAUSCH & LOMB EYECARE (SUPRA), SUPPORTS THE CLAIM MADE BY THE ASS ESSEE/ APPELLANT. WE HAVE ALREADY HELD ABOVE THAT ON FACTS AND CIRCUM STANCES OF THE CASE THERE IS NO TRANSACTION FOR INCURRENCE OF AMP TO PROMOTE THE BRAND OF AE. CONCLUSIONS DRAWN IN APPEAL FOR AY 201 1-12 WILL THEREFORE APPLY MUTATIS MUTANDIS TO THE PRESENT APPEAL. IT IS, ACCORDINGLY, HELD THAT IN ABSENCE OF A TRANSACTION FOR BRAND PROMOTION BETWEEN THE ASSESSEE/APPELLANT AND ITS AE, THE TPO AND THE LD DRP WERE, THEREFORE, NOT JUSTIFIED IN PROPOSING EITHER PROTECTIVE ADJUSTMENT OR THE SUBSTANTIVE ADJUSTMENT. AS A RESULT GROUND N OS. 2, 3 AND 3.2 IS ALLOWED. SINCE THE JURISDICTIONAL ASPECT IS DECI DED IN FAVOUR OF THE ASSESSEE/APPELLANT, OTHER GROUNDS CHALLENGING VARIO US OTHER FACETS OF IMPUGNED ADDITION DO NOT REQUIRE ANY ADJUDICATION A S HAVING BECOME IN FRUCTUOUS. 15.6 BEFORE FINALLY CONCLUDING ON THIS ISSUE, WE W OULD LIKE TO STATE THAT THE LD. AR HAS FAIRLY INVITED OUR ATTENT ION TOWARDS THE FINDINGS RECORDED BY THE LD. DRP AT PAGES 62 TO 80 OF THE ORDER WHEREIN THE LD. DRP HAS DIRECTED THAT IN THE ALTERN ATIVE AN AMP INTENSITY ADJUSTMENT BE MADE. IN THIS REGARD, IT HA S BEEN HELD BY THE LD. DRP AS UNDER:- IT MAY BE MENTIONED THAT THIS ADJUSTMENT IS NOT DE PENDENT ON WHETHER THERE IS AN INTERNATIONAL TRANSACTION. AS D ISCUSSED IN 72 STAY NO. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) PARA 4, THERE IS CLEARLY AN INTERNATIONAL TRANSACTI ON IN THIS CASE HOWEVER, IF THIS VIEW IS NOT ACCEPTED BY HIGHER JUD ICIAL AUTHORITIES, THE AMP INTENSITY ADJUSTMENT WOULD STILL STAND. 15.7 THEREAFTER, AT PAGE 79 -PARA 2, THE LD. DRP H AS LAID DOWN A METHODOLOGY FOR MAKING AN ADJUSTMENT ON ACCOUNT OF AMP INTENSITY AND HAS ISSUED DIRECTIONS TO THE TPO ACCORDINGLY. H IGHLIGHTING THE ABOVE BACKGROUND, IT WAS SUBMITTED BY THE LD. AR TH AT POST ISSUANCE OF DIRECTIONS BY THE LD DRP, VIDE LETTER DATED 10 TH JANUARY, 2017, THE ASSESSEE/APPELLANT SUBMITTED THE NECESSARY DETAILS FOR AMP INTENSITY ADJUSTMENT BEFORE THE TPO AS UNDER:- IN CONTINUATION TO OUR LETTER DATED 5 TH JANUARY, 2017 ON THE ABOVE MENTIONED SUBJECT AND AS INSTRUCTED BY YOU TO PROVIDE AMP INTENSITY ADJUSTMENT CALCULATIONS AS PER FORMUL A PROVIDED BY DRP IN ITS DIRECTIONS DATED 20 TH DECEMBER, 2016. PLEASE FIND ENCLOSED HEREWITH CALCULATION OF AMP IN TENSITY ADJUSTMENT AS PER DRP DIRECTIONS FOR AY 2012-13 M ARKED AS ANNEXURE A. AS IS EVIDENT FROM THE ATTACHED CALCULATION, DIFFER ENCE IN INTENSITY OF AMP IS NEGATIVE SO NO ADJUSTMENT IS REQUIRED TO BE DONE FOR ASSESSEE SINCE ITS AMP EXPENSES ARE LOSS THAN THE C OMPARABLES. FURTHER, JUST TO BRING ON RECORD, FOR ALP PURPOSE P RESCRIBED FORMULA IS OP/OC AND NOT NP/SALES, EVEN SO ASSESSEE S NP/SALES IS MUCH HIGHER THAN THE COMPARABLES. 15.8 IT IS SUBMITTED BY THE LD AR THAT THE ABOVE S UBMISSIONS HAVE BEEN ACCEPTED BY THE THE TPO AND IN HIS ORDER DATED 10 TH 73 STAY NO. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) JANUARY, 2017 {I.E ORDER GIVING EFFECT TO DIRECTION S ISSUED BY THE LD. DRP} NO ADJUSTMENT ON ACCOUNT OF AMP INTENSITY HAS BEEN MADE. WE HAVE MENTIONED THE ABOVE FACTS TO CLARIFY THAT PREM ISED PRESENT FACTS, WE NEED NOT DWELL UPON THIS ISSUE ON MERITS IN THE PRESENT APPEAL. 15.9 GROUND NOS. 9 & 9.1 CHALLENGE DISALLOWANCE OF RS.27,01,152/- U/S 14A OF THE ACT. IT IS UNDISPUTED THAT DURING YEAR UNDER CONSIDERATION THERE IS NO EXEMPT INCOME DERIV ED BY THE ASSESSEE/APPELLANT. ELABORATING UPON THIS, IT WAS S UBMITTED BY THE LD. AR THAT IN ABSENCE OF EXEMPT INCOME, DISALLOWAN CE U/S 14A CANNOT BE MADE. IN SUPPORT, HE RELIED ON THE DECISI ON OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF MCDONALDS INDIA PVT. LTD. REPORTED IN (2019) 101 TAXMANN.COM 86 (DEL). 15.10 ON THE OTHER HAND, THE LD. DR INVITED OUR ATT ENTION TOWARDS OPINION EXPRESS BY THE CBDT IN CIRCULAR DAT ED 11 TH FEBRUARY, 2014. 15.11 WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMIS SIONS. THE CLAIM MADE BY THE ASSESSEE/APPELLANT HAD BEEN REJEC TED BY THE LD. DRP BY OBSERVING AS UNDER:- 1. THE ASSESSEE HAS CHALLENGED THE DISALLOWANCE UN DER SECTION 14A. THE ASSESSEE HAS REITERATED THE CONTEN TIONS RAISED BEFORE THE AO AND ARGUED THAT NO DISALLOWANC E SHOULD BE MADE AS NO EXEMPT INCOME HAS BEEN RECEIVED DURIN G THE 74 STAY NO. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) YEAR. THE SUBMISSIONS OF THE ASSESSEE AND THE FACTS HAVE BEEN CAREFULLY CONSIDERED. IN HIS ORDER, THE AO HAS DISC USSED THE ISSUE IN DETAIL. THIS DISCUSSION IS NOT BEING REPEA TED HERE FOR THE SAKE OF BREVITY. IN HIS ORDER, THE AO HAS GIVEN VALID REASONS FOR HIS DECISION. THE DECISION OF THE AO IS SUPPORTED BY THE CBDT CIRCULAR AND JUDICIAL DECISIONS. THE AS SESSEE HAS FAILED TO CONTROVERT THE FINDINGS OF THE AO. 2. THE ASSESSEE HAS CONTENDED THAT IN AY 2011-12, T HE DRP HAVE DELETED THE DISALLOWANCE FOLLOWING THE DECISIO N OF THE HONBLE DELHI HIGH COURT IN CHEMINVEST. IT IS NOT C LEAR WHETHER THE DRPS DECISION ON THIS ISSUE WAS ACCEPTED BY TH E DEPARTMENT ON MERITS, OR WHETHER AN APPEAL WAS FILE D ON THIS ISSUE. IF THE DEPARTMENT HAS NOT ACCEPTED THE DRPS DECISION ON THIS ISSUE IN AY 2011-12, AND IF THE DRP WAS TO DIRECT DELETION OF THE DISALLOWANCE IN THE PRESENT YEAR AL SO, THIS WOULD RESULT IN A FAIT ACCOMPLI, BECAUSE AFTER THE AMENDMENT W.E.F. 1.6.2016, THE AO CANNOT FILE APPEAL AGAINST THE DIRECTIONS OF THE DRP. THIS WOULD BE INCONSISTENT W ITH THE VIEW TAKEN BY THE DEPARTMENT IN EARLIER YEAR AND SHOULD NOT BE MISCONSTRUED AS THE DEPARTMENT HAVING ACCEPTED THE EXCLUSION OF THIS COMPARABLE, EVEN WHEN THIS IS ACTUALLY NOT THE CASE. 3. IN VIEW OF THE ABOVE DISCUSSION, THIS ISSUE IS DECIDED AS FOLLOWS: (I) IF THE DEPARTMENT HAS ACCEPTED THE DECISION OF THE DRP ON THIS ISSUE IN AY 2011-12, AND HAS ALSO ACCEPTED THE DECISIONS OF THE HONBLE DELHI HIGH COURT IN CHEMINVEST AND H OLCIM, THE DISALLOWANCE UNDER SECTION 14A SHALL BE DELETED FOL LOWING THE 75 STAY NO. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) DECISION OF THE DRP IN AY 2011-12 AND THESE DECISIO NS OF THE HONBLE HIGH COURT. (II) IF THE DEPARTMENT HAS NOT ACCEPTED THE DECISIO N OF THE DRP ON THE ISSUE IN AY 2011-12, OR HAS NOT ACCEPTED THE DECISION OF THE HONBLE DELHI HIGH COURT IN CHEMINV EST AND HOLCIM, THE DISALLOWANCE UNDER SECTION 14A IS UPHEL D. IT IS POSSIBLE THAT THE DRPS DECISION AND THESE DECISION S OF THE HONBLE HIGH COURT HAVE NOT BEEN ACCEPTED ON MERITS HOWEVER, NO APPEAL IS FILED BECAUSE OF LOW TAX EFFECT. IN SU CH A CASE, AS THE DRPS DECISION ON THIS ISSUE HAS NOT BEEN ACCEP TED ON MERITS, THE DISALLOWANCE SHALL BE UPHELD. 15.12 SINCE UNDISPUTEDLY, THERE IS NO EXEMPT INCOME DERIVED BY ASSESSEE/APPELLANT IN THE INSTANT CASE, IN OUR CONS IDERED OPINION, THE ISSUE MERITS TO BE DECIDED IN FAVOUR OF THE ASSESSE E/APPELLANT FOLLOWING THE HONBLE JURISDICTIONAL HIGH COURTS D ECISION IN THE CASE OF MC DONALD INDIA PVT. LTD (SUPRA) AND M/S CHEMINVEST LTD. REPORTED IN 378 ITR 33(DEL). RESPECTFULLY FOLLOWING THE ABOV E BINDING PRECEDENTS OF THE HONBLE JURISDICTIONAL HIGH COURT WE DIRECT THE AO TO DELETE DISALLOWANCE U/S 14A. AS A RESULT, GROUN DS 9 & 9.1 ARE ALLOWED. 16.0 IN THE RESULT ITA NO. 1811/DEL/2017 STANDS AL LOWED. 17.0 NOW WE TAKE UP THE APPEAL FOR AY 2013-14 IN I TA NO. 7691/DEL/2017. IN THIS APPEAL, FOLLOWING GROUNDS HA VE BEEN RAISED BY THE ASSESSEE/APPELLANT. 76 STAY NO. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) 1. THAT ON FACTS AND IN LAW THE ORDERS PASSED BY T HE ASSESSING OFFICER (HEREINAFTER REFERRED AS THE AO) / DISPUT E RESOLUTION PANEL (HEREINAFTER REFERRED AS THE DRP) / TRANSFER PRICING OFFICER (HEREINAFTER REFERRED AS THE TPO) ARE BAD IN LAW AND VOID AB- INITIO. 2. THAT ON FACTS AND IN LAW THE TPO/DRP ERRED IN NO T APPRECIATING THAT IN ABSENCE OF A TRANSACTION AS ENVISAGED UNDER SECTION 92F OF THE ACT BETWEEN APPELLANT AND ITS AE FOR BRAND PROMOTION OR FOR ESTABLISHING A MARKETING INT ANGIBLE, THE TPO HAD NO JURISDICTION TO PROPOSE AN ADJUSTMENT ON ACCOUNT OF AMP EXPENSES. 3. THAT THE TRANSFER PRICING ADJUSTMENT OF RS.24,04 ,09,550/- ON ACCOUNT OF ADVERTISEMENT, MARKETING AND SALES PR OMOTION (AMP) EXPENSES BEING THE AGGREGATE OF : (I) PROTECTIVE ADJUSTMENT RS. 21,18,92,792/- (II) SUBSTANTIVE ADJUSTMENT RS. 2,85,16,758/- IS BAD IN LAW, ILLEGAL AND UNCALLED OR BOTH ON FAC TS AND IN LAW. 3.1 THAT ON FACTS AND IN LAW THE DRP ERRED IN : (A) OBSERVING THAT THE APPELLANT HAS NOT FURNISHED COMPLETE / ADEQUATE DETAILS BEFORE TPO / DRP. (B) OBSERVING THAT THE TPO HAS CARRIED OUT AN AMP INTENSITY ADJUSTMENT, AND THIS ADJUSTMENT NOT DEPENDENT UPON EXISTENCE OF AN INTERNATIONAL TRANSACTION FOR AMP. (C) ISSUING DIRECTIONS CONTRARY TO PROVISIONS OF SE CTION 144C(8) OF THE ACT. 77 STAY NO. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) 3.2 THAT ON FACTS AND IN LAW THE TPO/DRP ERRED IN I GNORING AND NOT FOLLOWING THE ORDERS OF HONBLE ITAT AND HIGH C OURT IN THE APPELLANTS OWN CASE FOR THE AYS 2007-08, 2008-09, 2009-10 AND 2010-11, DULY PLACED ON RECORD. 3.3 THAT ON FACTS AND IN LAW THE TPO/DRP ERRED IN D ISPROVING THE BENCHMARKING ANALYSIS ADOPTED BY THE APPELLANT WITHOUT FOLLOWING THE METHODOLOGY AND APPROACH RECOGNIZED U NDER SECTION 92C(3) OF THE ACT. 4. THAT ON FACTS AND IN LAW THE TPO ERRED IN HOLDIN G AND THE DRP INTER ALIA ERRED IN UPHOLDING / OBSERVING THAT : (I) APPELLANT HAD INCURRED AMP EXPENDITURE TOTALING TO RS.20,21,41,620/- ON PROMOTION OF PROPRIETARY MARKS AND FOR DEVELOPMENT OF MARKETING INTANGIBLE FOR THE BEN EFIT OF AE. (II) AMP EXPENDITURE OF RS. 20,21,41,620/- INCURRED BY THE ASSESSEE IS AN INTERNATIONAL TRANSACTION U/S 92B OF THE ACT. (III) EXPENDITURE OF RS.18,19,16,969/- INCURRED BY THE ASSESSEE ON PAYMENT OF INCENTIVES TO SUBSCRIBERS IS IN THE N ATURE OF AMP. (IV) BY INCURRING EXCESS / EXTRAORDINARY AMP EXPENS E THE APPELLANT HAD RENDERED INTRA GROUP SERVICES TO ITS AE. (V) AE IS DIRECTLY BENEFITED BY ANY EXPENDITURE INC URRED BY ASSESSEE ON AMP. (VI) AE DIRECTS THE AMP STRATEGY AND THE EXPENDITUR E INCURRED BY APPELLANT IN INDIA. 78 STAY NO. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) (VII) LEGAL OWNERSHIP OF THE MARKETING INTANGIBLE W OULD GET TRANSFERRED TO THE AE WITHOUT ANY CONSIDERATION ON TERMINATION OF THE DISTRIBUTION AGREEMENT. (VIII) APPELLANT HAS FAILED TO FURNISH ANY MATERIAL TO DEMONSTRATE THAT IT ENJOYED ECONOMIC OWNERSHIP OF BRAND. (IX) APPELLANT HAS FAILED TO SHOW THAT FOR EXCESSIV E AMP EXPENDITURE IT WAS COMPENSATED BY THE AE THROUGH A SET-OFF. (X) MARGINS EARNED BY THE APPELLANT (APPLYING TNMM) IS NOT SIGNIFICANTLY MORE THAT THE MARGINS OF THE COMPARAB LE COMPANIES. 5. 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 CARRIE D ON BY THE APPELLANT AND HENCE IT CANNOT BE SEGREGATED AND BEN CHMARKED ON A STAND-ALONE BASIS. 5.1 THAT ON FACTS AND IN LAW THE AO/TPO/DRP ERRED I N HOLDING THAT THERE IS NO SUITABLE COMPARABLE AVAILABLE FOR BENCHMARKING THE ALLEGED INTERNATIONAL TRANSACTION OF INCURRIN G EXCESSIVE AMP EXPENSE BY APPLYING THE AGGREGATED APPROACH. 5.2 THAT ON FACTS AND IN LAW THE DRP ERRED IN HOLDI NG THAT APPELLANT HAS NOT BEEN ABLE TO SUBSTANTIATE BENCHMA RKING OF ALLEGED AMP TRANSACTION FOLLOWING AN AGGREGATE AP PROACH. 6. THAT ON FACTS AND IN LAW THE TPO/AO/DRP ERRED IN MAKING/UPHOLDING PROTECTIVE TP ADJUSTMENT ON ACCOUN T OF AMP EXPENSES INVOKING BRIGHT LINE METHOD. 79 STAY NO. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) 6.1 THAT ON FACTS AND IN LAW THE DRP ERRED IN HOLDI NG THAT USE OF BRIGHT LINE METHOD IS SUPPORTED BY RULE 10AB OF I NCOME TAX RULES. 7. THAT ON FACTS AND IN LAW THE AO/DRP ERRED IN MAK ING / UPHOLDING SUBSTANTIVE ADJUSTMENT ON ACCOUNT OF AMP EXPENSES INVOKING COST PLUS METHOD. 8. THAT WITHOUT PREJUDICE, WHILE BENCHMARKING ALLEG ED AMP AS A SEPARATE TRANSACTION TPO HAS ERRED IN : (A) APPLYING A MARK-UP OF 41% WHILE COMPUTING ADJUS TMENT ON A SUBSTANTIVE BASIS, AND (B) APPLYING A MARK-UP OF 12.87% (UPHELD BY DRP AS AN AMP INTENSITY ADJUSTMENT) WHILE COMPUTING ADJUSTMENT ON A PROTECTIVE BASIS. 9. THAT ON FACTS AND IN LAW THE AO/DRP ERRED IN MAK ING / UPHOLDING DISALLOWANCE OF RS.37,74,997/- U/S 14A OF THE ACT. 9.1 THAT ON FACTS AND IN LAW THE AO/DRP ERRED IN NO T APPRECIATING THAT PROVISIONS OF SECTION 14A ARE NOT APPLICABLE AS NO EXEMPT INCOME WAS EARNED BY THE APPELLANT DURING THE YEAR UNDER CONSIDERATION. 10. THAT ON FACTS AND IN LAW THE AO ERRED IN LEVYIN G INTEREST U/S 234B OF THE ACT. 18.0 FROM PERUSAL OF RECORD, IT IS OBSERVED THAT R ELEVANT FACTS AND ISSUE INVOLVED IN THIS APPEAL FOR A.Y. 2013-14 ARE SIMILAR TO THOSE INVOLVED IN THE APPEAL FOR A.Y. 2012-13. THIS IS AL SO ACCEPTED BY BOTH THE PARTIES BEFORE US. AS SUCH, IT IS DIRECTED THAT THE FINDINGS RECORDED 80 STAY NO. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) AND CONCLUSIONS DRAWN BY US FOR A.Y. 2012-13 WOULD APPLY MUTATIS MUTANDIS TO THE APPEAL FOR AY 2013-14 AS WELL. WE DIRECT AC CORDINGLY. 19.0 IN THE RESULT, ITA NO. 7691/DEL/2017 STANDS A LLOWED. 20.0 IN THE FINAL RESULT, THE THREE APPEALS FILED BY ASSESSEE/APPELLANT ARE ALLOWED. 21.0 SINCE WE HAVE DISPOSED OFF THE APPEALS, STAY PETITIONS FOR AYS 2012-13 AND 2013-14 IN STAY NOS. 475-476/DEL/20 18 ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27.02.2019. SD/- SD/- (N.S.SAINI) (SUDHANSHU SRIVASTAVA ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 27.02.2019 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT TRUE COPY ASSISTANT REGISTRAR ITAT NEW DELHI 81 STAY NO. 475, 476/D/2018& ITA NO. 1662/D/2016 (AMADEUS INDIA P. LTD.) DATE OF DICTATION DICTATED ON DRAGON DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 27.02.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER 27.02.2019 DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS 27.02.2019 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 27.02.2019 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 27.02.2019 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 27.02.2019 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER