RayBan Sun Optics India Ltd., Gurgaon V. DCIT, New Delhi

ITA 891/DEL/2015

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6447 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I2
• Next Hearing Date: 20-03-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 13-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T M SHIVAKUMAR
• Keywords: Transfer pricing; Business expenditure; International transaction; Onus to prove
• Section: 143(3); 92B; 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH I-2, NEW DELHI BEFORE SHRI J. S. REDDY, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER ITA NO.672/DEL/2014 ASSESSMENT YEAR : 2009-10 RAYBAN SUN OPTICS INDIA LTD., 7 TH FLOOR, TOWER 9B, DLF CYBER GREENS, GURGAON. VS. DCIT, CIRCLE- 15(1), NEW DELHI. PAN : AAACB 2586 M (APPELLANT) (RESPONDENT) ITA NO.891/DEL/2015 ASSESSMENT YEAR : 2010-11 RAYBAN SUN OPTICS INDIA LTD., 7 TH FLOOR, TOWER 9B, DLF CYBER GREENS, GURGAON. VS. DCIT, CIRCLE- 21(1), NEW DELHI. PAN : AAACB 2586 M (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI NAGESWAR RAO, ADV. RESPONDENT BY : SHRI T. M. SHIVAKUMAR, CIT(DR) DATE OF HEARING : 20-03-2017 DATE OF PRONOUNCEMENT : 24-03-2017 O R D E R PER J. S. REDDY, A.M : BOTH THE CAPTIONED APPEALS ARE FILED BY THE ASSESSE E FOR THE ASSESSMENT YEARS 2009-10 AND 2010-11. BOTH APPEALS ARE DIRECT ED AGAINST THE ORDER OF ASSESSING OFFICER PASSED U/S 143(3) R.W.S. 144C OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) DATED 30.12. 2013 FOR THE ASSESSMENT YEAR 2009-10 AND DATED NIL FOR ASSESSMENT YEAR 2010-11. 2 ITA NO.672/DEL/2014 ITA NO.891/DEL/2015 2. AS THE APPEALS BELONGING TO THE SAME ASSESSEE AN D AS THE ISSUES INVOLVED ARE COMMON, FOR THE SAKE OF CONVENIENCE THEY WERE H EARD TOGETHER AND DISPOSED OF BY THIS COMMON ORDER. ITA NO.672/DEL/2014 (A.Y. 2009-10) : 3. THE FACTS OF THE CASE, BROUGHT OUT BY THE ORDER OF THE TPO, ARE AS UNDER :- 2. PROFILE OF THE GROUP AND THE ASSESSEE: 2.1 RAY BAN INDIA IS HELD 44.15% BY RAY BAN HOLD INGS INC USA, WHICH IN TURN IS INDIRECTLY HELD 100% BY LUXOTTICA GROUP SPA ITALY. LUXOTTICA GROUP IS WORLD LEADER IN DESIGN, MANUFACTURE AND DISTRIBUTION OF SUNGLASS ES AND PRESCRIPTION FRAMES IN MID AND PREMIUM PRICE CATEGORIES. RAY BAN INDIA IS PRIM ARILY ENGAGED IN THE BUSINESS OF MANUFACTURING, IMPORTING AND SELLING OF SUNGLASSES AND PRESCRIPTION FRAMES IN INDIA BESIDES EXPORTING RAW, SEMI FINISHED SUNGLASS FRAME S TO LUXOTTICA GROUP. 3. INTERNATIONAL TRANSACTIONS 3.1 THE SUMMARY OF INTERNATIONAL TRANSACTION ENT ERED INTO BY THE ASSESSEE DURING THE YEAR IS AS UNDER: S. NO. NATURE OF TRANSACTION METHOD USED BY ASSESSEE AMOUNT 1. IMPORT OF RAW MATERIAL, COMPONENTS TNMM 4,55,69,881 2. EXPORT OF SEMI FINISHED GOODS 2,93,14,306 3. IMPORT OF CAPITAL GOODS 22,56,867 4. IMPORT OF FINISHED GOODS 13,69,25,246 5. PAYMENT OF LICENSES TRADE MARK FEES 15,34,019 6. PAYMENT OF TECHNICAL KNOW-HOW 7,54,67,700 7. REIMBURSEMENT OF EXPENSES BY AE N.A. 5,67,262 TOTAL 29,16,35,281 4. TRANSFER PRICING APPROACH OF THE ASSESSEE : 4.1 THE INTERNATIONAL TRANSACTIONS HAVE BEEN CATEGO RIZED IN 2 DIFFERENT CLASSES BASED ON ECONOMIC ANALYSIS AS BELOW : CLASS I: I) IMPORT OF RAW MATERIAL, COMPONENTS AND SEMI FINISHE D GOODS. II) EXPORT OF SEMI-FINISHED GOODS III) IMPORT OF CAPITAL GOODS, 3 ITA NO.672/DEL/2014 ITA NO.891/DEL/2015 IV) PAYMENT OF LICENSE TRADEMARK FEES, V) PAYMENT FOR TECHNICAL KNOW-HOW, CLASS II: I) IMPORT OF FINISHED GOODS. CLASS III: I) REIMBURSEMENT OF EXPENSES TO GROUP COMPANIES 4.2 CLASS I TRANSACTIONS HAVE BEEN BENCHMARKED USIN G TNNM AS THE MOST APPROPRIATE METHOD. THE PLI USED IS OP/TC. IN THE TP REPORT, THE OP/TC OF THE ASSESSEE IS SHOWN AT 28.25%. 3 COMPARABLES HAVE BE EN SELECTED BY THE ASSESSEE AND THEIR WEIGHTED AVERAGE MARGIN FOR 3 YEARS WAS SHOWN AT 12.87%. CLASS II TRANSACTIONS HAVE BEEN BENCHMARKED USING TNMM AS TH E MOST APPROPRIATE METHOD. THE PLI USED IS OP/SALES. IN THE TP REPORT, THE OP /SALE OF THE ASSESSEE IS SHOWN AT 6.53%. 11 COMPARABLES HAVE BEEN SELECTED BY THE AS SESSEE AND THEIR WEIGHTED AVERAGE MARGIN FOR 3 YEARS WAS SHOWN AT 2.70%. THE REIMBURSEMENT IN CLASS III ARE STATED TO BE ON A COST-TO-COST BASIS. 4. THE ASSESSING OFFICER, SUBSEQUENT TO THE DIRECTI ONS OF DRP, MADE A TRANSFER PRICING ADJUSTMENT OF RS.6,75,02,285/-. T HERE WAS ANOTHER DISALLOWANCE ON THE GROUND OF INCURRING NON-BUSINES S EXPENDITURE OF RS.9,52,719/-. 5. AGGRIEVED, THE ASSESSEE IS IN APPEAL ON THE FOLL OWING GROUNDS OF APPEAL :- 1. THAT ON FACTS AND IN LAW THE IMPUGNED ORDER/ DI RECTIONS PASSED BY LEARNED DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-15(1), NE W DELHI (HEREINAFTER REFERRED TO AS 'THE 'LEARNED AO') IN PURSUANCE TO THE DIRECT IONS OF THE HON'BLE DISPUTE RESOLUTION PANEL - II (HEREINAFTER REFERRED TO AS T HE HON'BLE DRP') UNDER SECTION 143(3) READ WITH SECTION 144C OF THE INCOME-TAX ACT , 1961 (ACT'), MAKING AN ADDITION OF RS. 68,455,055 TO THE TOTAL INCOME OF T HE APPELLANT ON ACCOUNT OF ADJUSTMENT IN THE ARM'S LENGTH PRICE AND DISALLOWAN CE OF BUSINESS EXPENDITURE IS BAD IN LAW. 2. THAT WITHOUT PREJUDICE, THE LEARNED AO HAS GROSS LY ERRED IN COMPUTING THE INCOME OF THE APPELLANT AT RS.315,238,052 AGAINST T HE RETURNED TOTAL INCOME AT RS.246,783,047. THUS, THE ADDITION OF RS.68,455,00 5 MADE TO RETURNED TOTAL INCOME IS HIGHLY UNJUSTIFIED AND IS APPARENTLY A CASE OF H IGH PITCHED ASSESSMENT. 3. THAT THE HON'BLE DRP HAS COMMITTED GROSS ERRORS IN CONFIRMING THE ADJUSTMENTS AGGREGATING TO RS. 67,502,286 OUT OF TH E TRANSFER PRICING ADJUSTMENT OF RS. 80,182,985 INITIALLY PROPOSED BY THE DEPUTY DIR ECTOR OF INCOME-TAX, TRANSFER PRICING OFFICER-II(5), NEW DELHI (HEREINAFTER REFER RED TO AS 'THE LEARNED TPO') UNDER 4 ITA NO.672/DEL/2014 ITA NO.891/DEL/2015 SECTION 92CA OF THE ACT AND ONLY GRANTING A PARTIAL RELIEF OF RS.12,680,699. 3.1 THE TPO/AO/DRP ERRED IN FACTS AND IN LAW IN HOL DING ADVERTISING, MARKETING AND PROMOTION ('AMP') EXPENDITURE AS A SEPARATE INT ERNATIONAL TRANSACTION UNDER SECTION 92B OF THE ACT, WITHOUT APPRECIATING THE FU NCTIONAL PROFILE OF THE APPELLANT ACCORDING TO WHICH INCURRING OF AMP EXPENSES WAS PA RT OF THE APPELLANT'S ROLES AND RESPONSIBILITIES AS A MANUFACTURER-CUM-DISTRIBUTOR AND THE APPELLANT'S REMUNERATION WAS FIXED ACCORDINGLY. 3.2 THE TPO/AO/DRP ERRED IN IGNORING THAT ACCORDING TO ITS COMPENSATION MODEL, THE APPELLANT WAS ALREADY REMUNERATED AT ARM 'S LENGTH IN RELATION TO ALL THE FUNCTIONS AND RISKS UNDERTAKEN BY IT (INCLUDING AMP ACTIVITY) AND BENCHMARKING OF THE SAME SEPARATELY AGAIN, HAS IN EFFECT, LED TO DO UBLE TAXATION. 3.3 THE TPO/AO/DRP FAILED TO APPRECIATE THAT ONCE T RANSACTIONAL NET MARGIN METHOD (TNMM') HAS BEEN ACCEPTED AS THE MOST APPROP RIATE METHOD, THEY CANNOT UNDERTAKE AN ANALYSIS OF THE INDIVIDUAL ELEMENTS OF COST AS THE APPROACH IS INCONSISTENT WITH THE TENETS OF APPLICATION OF TNMM AS PER RULE 10B(1)(E) OF THE ACT. 3.4 THE TPO/AO/DRP ERRED IN NOT APPRECIATING THAT T HE BENEFICIARY ON ACCOUNT OF INCURRING OF AMP EXPENSES WAS THE APPELLANT ITSE LF AND THE SAME DOES NOT REQUIRE TO BE COMPENSATED/REMUNERATED SEPARATELY BY THE ASS OCIATED ENTERPRISE (AE'). 3.5 THE TPO/AO/DRP ERRED IN APPLYING THE 'BRIGHT LI NE METHOD' TO DETERMINE THE EXCESSIVE/NON-ROUTINE AMP EXPENSES GIVEN THE FALLAC IES AND DEFICIENCIES IN APPLYING SUCH QUANTITATIVE PARAMETERS WITHOUT HAVING REGARD TO THE COMMERCIAL CIRCUMSTANCES OF THE CASE AND BY CONSIDERING INAPPROPRIATE SET OF COMPANIES AS COMPARABLE. 3.6 WITHOUT PREJUDICE TO THE CONTENTION THAT AMP EX PENSES WERE INCURRED FOR THE PURPOSE OF ENHANCING SALES IN INDIA, THE TPO/AO/ORP MADE A GROSS ERROR IN CONSIDERING REBATES AND DISCOUNTS, SALES PROMOTION AND SELLING EXPENDITURE AS A PART OF AMP EXPENSES WHILE APPLYING BRIGHTLINE. FURTHER , WHILE DOING SO, THE TPO/AO/ORP ERRED IN NOT FOLLOWING THE FINDINGS OF V ARIOUS BENCHES OF THE JURISDICTIONAL ITAT ON THIS ISSUE AND ALSO IGNORED THE FACT THAT IN AY 2007-08, THE LEARNED TPO HAD HIMSELF ACCEPTED THE APPELLANT'S PL EA OF EXCLUDING TRADE AND CHANNEL DISCOUNTS FROM ADVERTISEMENT EXPENSES FOR C OMPUTING THE BRIGHT LINE LIMIT. 3.7 THE TPO/AO/DRP ERRED IN FACTS AND IN LAW, IN HO LDING THAT THE APPELLANT HAS RENDERED A SERVICE TO ITS AE BY INCURRING AMP EXPEN SES AND BY HOLDING THAT A MARK- UP OF 12.75% ON THE EXPENSES INCURRED HAS TO BE EAR NED BY THE APPELLANT IN RESPECT OF THE ALLEGED EXCESSIVE AMP EXPENSES. FURTHER, WHILE DOING SO, THE TPO/AO/DRP ERRED IN APPRECIATING THAT IF AT ALL A MARK-UP OF 1 2.75% WAS TO BE APPLIED, THE SAME SHOULD HAVE BEEN APPLIED ONLY ON THE VALUE-ADDED EX PENSES (EXCLUDING THIRD PARTY COSTS) INCURRED BY THE APPELLANT FOR PROVIDING THE ALLEGED SERVICE IN THE NATURE OF BRAND PROMOTION AS CONTENDED BY THE TPO/AO AND CONF IRMED BY THE DRP. 4. THAT THE AO/DRP ERRED IN FACTS AND IN LAW, IN AD DING BACK AN AMOUNT OF RS. 952,719 TO THE RETURNED INCOME OF THE APPELLANT BY INAPPROPRIATELY CONSIDERING THE SAME AS AN EXPENSE INCURRED BY THE APPELLANT, WHERE AS THE SAME WAS INCURRED BY AN EX-EMPLOYEE OF THE APPELLANT. 5. THAT THE AO ERRED IN FACTS AND IN LAW, IN LEVYIN G CONSEQUENTIAL INTEREST UNDER SECTION 234B AND SECTION 234D OF THE ACT. 5 ITA NO.672/DEL/2014 ITA NO.891/DEL/2015 6. THAT THE AO ERRED IN FACTS AND IN LAW, IN INITIA TING PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT. THE ABOVE GROUNDS ARE WITHOUT PREJUDICE TO EACH OTH ER. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, VARY, OMI T OR SUBSTITUTE ANY OF THE AFORESAID GROUNDS OF APPEAL AT ANY TIME BEFORE OR A T THE TIME OF HEARING OF THE APPEAL. 6. THE MAIN ISSUE THAT IS AGITATED BEFORE US, IS TR ANSFER PRICING ADJUSTMENT ON ACCOUNT OF ADVERTISING, MARKETING AND PROMOTION ( AMP) EXPENDITURE. 7. WE HAVE HEARD SHRI NAGESWAR RAO, LD. COUNSEL FOR THE ASSESSEE AND SHRI T. M. SHIVAKUMAR, LD. DEPARTMENTAL REPRESENTATIVE ( DR) ON BEHALF OF THE REVENUE AND HAVE PERUSED THE DETAILED PAPER BOOK AN D SUBMISSIONS WERE FILED. AFTER CONSIDERING THE DETAILED SUBMISSIONS AND PERU SING THE PAPERS ON RECORD AS WELL AS THE ORDERS OF THE AUTHORITIES BELOW, WE HOL D AS FOLLOWS : 8. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE TPO IN HIS ORDER AT PARA 4.2 AND 5.1 NOTED THAT THE ECONOMIC ANALYSIS AND DOCUMENTATION RELATING T O THE INTERNATIONAL TRANSACTIONS REPORTED ABOVE WERE EXAM INED AND NO ADVERSE INFERENCE IS DRAWN WITH REGARD TO THE SAME DURING T HE YEAR UNDER CONSIDERATION . 9. HE FURTHER POINTED OUT THAT AT PARA 5.2, THE TPO NOTED THAT THE ASSESSEE SUBMITTED THE CURRENT YEAR MARGIN IN EACH SEGMENT V IDE REPLY DATED 28.06.2011, WHEREIN THE OP/OC OF THE COMPARABLE IN CLASS-I TRAN SACTION IS ARRIVED AT 8.58% COMPARED TO 28% OF THE TESTED PARTY AND OP/SA LES IN CLASS-II TRANSACTION IS 1.80% OF THE COMPARABLES COMPARED TO 6.53% OF THE TESTED 6 ITA NO.672/DEL/2014 ITA NO.891/DEL/2015 PARTY . HE SUBMITTED THAT TPO HAS PROCEEDED ON THE WRONG NOTION THAT THE ASSESSEE WAS A DISTRIBUTOR OF GOODS MANUFACTURED BY AES AND HENCE THE REASONING GIVEN BY THE TPO AT PARAS 15.1 AND 15.2 I S NOT CORRECT. HE FURTHER SUBMITTED THAT, BEFORE THE DRP ALTERNATIVE ARGUMENT S WERE TAKEN WITHOUT PREJUDICE TO EACH OTHER AND THERE WERE : (A) THAT THERE IS NO INTERNATIONAL TRANSACTIONS OF AMP. (B) SEPARATE TRANSFER PRICING ADJUSTMENT FOR AMP I S NOT PERMISSIBLE IN VIEW OF THE ASSESSEE UNDERTAKING ECONOMIC ANALYSIS BY APPLYING TRANSACTIONAL NET MARGIN METHOD (TNMM). 10. THE LD. COUNSEL FOR THE ASSESSEE FIRST ARGUED T HE ALTERNATE CONTENTION BY RELYING ON THE JUDGEMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF SONY ERICSSON MOBILE COMMUNICATIONS INDIA PVT. LTD. VS. CIT, (2015) 374 ITR 118 (DELHI) AND SUBMITTED THAT, WHEN THE TESTED PARTYS MARGIN IS MUCH HEALTHIER THAN THE MARGIN OF THE COMPARABLES, THEN ADJUSTMENT MADE BY TPO ON ACCOUNT OF AMP DESERVES TO BE DELETED. THIS ARGUMENT IS MA DE WITHOUT PREJUDICE TO THE MAIN CONTENTIONS OF THE ASSESSEE THAT AMP EXPENDITU RE DOES NOT RESULT IN SEPARATE INTERNATIONAL TRANSACTIONS AND THAT IT HAS BEEN ALREADY CONSIDERED AS A FUNCTION, WHILE BENCHMARKING THE BUNDLE OF INTERNAT IONAL TRANSACTIONS RELATING TO MANUFACTURE AND DISTRIBUTION. RELIANCE WAS ALSO PL ACED ON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF MARUTI SUZU KI INDIA LTD. VS. CIT, 381 7 ITA NO.672/DEL/2014 ITA NO.891/DEL/2015 ITR 117 (DELHI) AS WELL AS THE JUDGMENT IN THE CASE OF BAUSCH AND LOMB EYECARE (INDIA) PVT. LTD. VS. ADDL. CIT, 381 ITR 22 7 (DELHI). HE ALSO RELIED ON CERTAIN DECISIONS OF THE INCOME TAX APPELLATE TRIBU NAL BENCHES, WHEREIN THE PROPOSITION LAID DOWN BY THE HONBLE HIGH COURT ON THIS ISSUES WERE APPLIED. HE FURTHER ARGUED THAT THE DEPARTMENT HAS FAILED TO DISCHARGE ITS ONUS TO PROVE THE EXISTENCE OF INTERNATIONAL TRANSACTIONS. FOR T HIS PROPOSITION, THAT THE BURDEN OF PAY THAT THERE IS EXISTENCE OF AN INTERNATIONAL TRANSACTION IS ON REVENUE, HE RELIED ON THE FOLLOWING DECISIONS OF THE ITAT :- (A) ITA NO.5056/DEL/2011 (B) ITA NO.1804/DEL/2014 11. HE FURTHER SUBMITTED THAT, WORKING TO ESTABLISH INTENSITY OF THE AMP EXPENDITURE WOULD RESULT IN DELETION OF THE ADJUSTM ENT. THE ASSESSEE SUBMITTED THAT THE ADJUSTMENT SHOULD BE DELETED. 12. LD. DEPARTMENTAL REPRESENTATIVE, ON THE OTHER H AND, DISPUTED THE CONTENTIONS OF THE ASSESSEE AND SUBMITTED THE FOLLO WING IN WRITING :- 1. HON'BLE HIGH COURT OF DELHI HAS REMITTED THE MATTER FOR PROPER INVESTIGATION IN THE FIRST INSTANCE TO THE ITAT. TH E HON'BLE COURT HAS SPECIFICALLY REFERRED TO THE PARAGRAPHS 3 AND 4 OF ORDER OF HON'BLE ITAT TO ARRIVE AT ITS CONCLUSION. PERUSAL OF THE SAID TWO P ARAGRAPHS REVEAL THAT THE DECISION IN WAS MAINLY BASED UPON APPLICATION O F THE RATIO IN THE CASE OF LG ELECTRONICS (140 ITD 41) (SB) TO THE APP ELLANT'S FACTS. 2. SUBSEQUENTLY, THE HON'BLE HIGH COURT OF DELHI CONS IDERED THE DECISION OF THE SPECIAL BENCH IN THE CASE OF LG ELE CTRONICS INDIA (140 ITD 41) IN THE CASE OF SONY ERICSSON MOBILE COMMUNICATI ONS (REPORTED IN 374 ITR 118) AND HELD AMP TO BE AN INTERNATIONAL TRANSA CTION. HOWEVER, THE BRIGHT LINE TEST (BLT) WAS NOT APPROVED. THE HON'BL E HIGH COURT OF DELHI 8 ITA NO.672/DEL/2014 ITA NO.891/DEL/2015 HAS LAID DOWN DETAILED PROCEDURES TO BE FOLLOWED IN BENCHMARKING THE AMP TRANSACTIONS. IT HAS SET ASIDE THE MATTER FOR D E NOVO BENCH MARKING OF THE INTERNATIONAL TRANSACTION INVOLVING THE AMP EXP ENDITURE DE HORS THE BLT. 3. THE AUTHORITIES BELOW NAMELY TPO AND DRP HAD PROCE EDED TO COMPLETE THE ASSESSMENT WITH THE UNDERSTANDING THAT THEY HAVE THE BLT TOOL TO BENCH MARK THE INTERNATIONAL TRANSACTION OF AMP EXPENDITURE. EVEN HON'BLE ITAT ACCEPTED THAT STAND. HON'BLE HIGH COUR T HAS, HOWEVER, NEGATED THEIR APPROACH. SUCH LEGAL STANDARD AND RAT IO AS UNDERSTOOD AND APPLIED BY TPO AND DRP AS WELL AS HON'BLE ITAT HAS BEEN FOUND TO BE INCORRECT. 4. IN SONY ERICSSON MOBILE COMMUNICATIONS (SUPRA) HON' BLE COURT HAS SET ASIDE THE MATTER TO HON'BLE ITAT FOR DE NOVO CONSIDERATION ON THE REASONING THAT THE LEGAL STANDARDS OR RATIO ACCEPTE D AND APPLIED BY THE TRIBUNAL WERE ERRONEOUS AND FACTS HAVE TO BE ASCERT AINED AND APPLIED ON THE BASIS OF THE LEGAL RATIO EXPOUNDED IN THAT DECI SION. THIS IS EVIDENT FROM PARA 193 OF THE SAID JUDGMENT. THE RELEVANT PO RTION IS REPRODUCED BELOW: 193. WE WOULD NOT LIKE TO GO INTO SEVERAL FACTUAL ASPECT S FOR THE FIRST TIME, FOR THE FACTUAL MATRIX HAS NOT BEEN EXAMINED AND ASCERTAINED BY THE TRIBUNAL. MOREOVER, IN TERMS WITH OUR LEGAL FINDING, FACTUAL FINDINGS WILL HAVE TO BE EXAMINED. AN ORDER OF REMAND FOR DE NOVO CONSIDERATION TO THE TRIBUNAL WOULD BE APPROPRIATE BECAUSE THE LEGAL STANDARDS OR RATIO ACCEPTED AND APPLIED BY THE TRIBUNAL WAS ERRONEOUS. ON THE BASIS OF THE LEGAL RATIO EXPOUNDED IN THIS DECISION, FACTS HAVE TO BE ASCERTAINED AND APPLIED. IF REQUIRED AND NECESSARY, THE ASSESSED AND THE REVENUE SHOULD BE ASKED TO FURNISH DETAILS OR TABLES. (EMPHASIS SUPPL IED). 5. IT IS SUBMITTED THAT THE HON'BLE COURT DID NOT D ELETE THE ADDITION OR ADJUSTMENT MADE BY THE AO /TPO ON THIS ISSUE. THE D ECISION HAS IMPLIEDLY SUPPORTS THE FOLLOWING OBSERVATIONS HON'B LE SPECIAL BENCH OF ITAT IN THE CASE OF AZTEC SOFTWARE AND TECHNOLOGY VS ACIT (2007) 294 ITR 32 (BANG): 133 .. HAVING REGARD TO THE PURPOSE OF THE LEGISLATION AND APPLICATION OF SIMILAR ENACTMENT WORLD OVER, IT MUS T FURTHER BE HELD THAT ADJUSTMENTS MADE ON ACCOUNT OF ALP BY TAX AUTHORITI ES CAN BE DELETED IN APPEAL ONLY IF THE APPELLATE AUTHORITIES ARE SATISFIED AND RECORDS A FINDING THAT ALP SUBMITTED BY THE ASSESSEE IS FAIR AND REASONABLE. MERELY BY FINDING FAULTS WITH THE TRANSFER PRICE DETERMINE D BY THE REVENUE AUTHORITIES (A. 0. / TPO), ADDITION ON ACCOUNT OF 'ADJUSTMENTS' CANNOT B E DELETED. THIS IS BECAUSE THE MANDATE OF SECTION 92(1) IS THAT IN EVERY CASE OF INTERNATIONAL TRANSACTION, INCOME HAS TO BE DETE RMINED HAVING REGARD TO ALP. THEREFORE, UNLESS ALP FURNISH ED BY THE TAXPAYER IS SPECIFICALLY ACCEPTED, THE APPELLATE AUTHORITIES ON THE BASIS OF MATERIAL 9 ITA NO.672/DEL/2014 ITA NO.891/DEL/2015 AVAILABLE ON RECORD HAS TO DETERMINE ALP ITSELF. SU BJECT TO STATUTORY PROVISIONS, APPELLATE AUTHORITIES CAN DIRECT LOWER REVENUE AUTHORITIES TO CARRY THIS EXERCISE IN ACCORDANCE WITH LAW. THE MAT TER CANNOT BE LEFT HANGING IN BETWEEN. ALP OF INTERNATIONAL TRANSACTIO N HAS TO BE DETERMINED IN EVERY CASE. 6. IT IS SUBMITTED THAT THE AUTHORITIES BELOW AS WE LL AS HON'BLE ITAT DID NOT HAVE THE BENEFIT OF THE LEGAL REQUIREMENTS AND THE RATIO AS EXPOUNDED BY THE HON'BLE HIGH COURT IN THE CASE OF SONY ERICS SON MOBILE COMMUNICATIONS (SUPRA). THE WHOLE APPROACH OF THE A PPELLANT, BEFORE TPO, WAS TO SHOW THAT AMP WAS NOT AN INTERNATIONAL TRANSACTION AND THAT IT DID NOT REQUIRE ANY TP ADJUSTMENT OR BENCHM ARKING. ON THE OTHER HAND THE APPROACH OF THE TPO WAS EXACTLY THE OPPOSI TE - TO SHOW THAT AMP WAS INDEED AN INTERNATIONAL TRANSACTION AND THA T IT DID REQUIRE THE BENCHMARKING. NOW THE HON'BLE COURT HAS, IN SONY ER ICSSON MOBILE COMMUNICATIONS (SUPRA), REJECTED THE PLEA THAT THE AMP WAS NOT AN INTERNATIONAL TRANSACTION. BUT ALSO REJECTED BLT. IN THE RESULT THE ONLY TASK REMAINING TO BE COMPLETED IS THE BENCH MARKING OF AMP, IN THE MANNER AS EXPOUNDED NOW BY THE HON'BLE HIGH COURT. IT IS FOR THIS REASON THAT THE MATTER MAY BE REMANDED TO TPO FOR A SCERTAINMENT OF CORRECT FACTS AND APPLICATION OF THE RATIO OF THE J UDGMENT TO THOSE SET OF FACTS. 7. FURTHER, THE ASSESSEE IS A DISTRIBUTOR OF FOREIGN MADE, FOREIGN BRANDED SPECTACLE FRAMES AND GLASSES. IT ALSO MANUF ACTURES SOME FRAMES IN INDIA. THE BRAND BUILDING WAS THE RESPONSIBILITY OF AE AS NOTED IN THE TP STUDY OF A.Y.2008-09. THE RELEVANT PARA HAS BEEN OMITTED BY THE ASSESSEE IN THE CURRENT YEAR'S TP STUDY (AS NOTED B Y TPO AT PAGES 7 AND 8 OF HIS ORDER). THE RATIO OF SONY ERICSSON (SUPRA) I S APPLICABLE TO THE PRESENT ASSESSEE BEING A DISTRIBUTOR OF FINISHED PR ODUCTS IMPORTED FROM AE. THE DETAILED FACTUAL EXAMINATION IN THE LIGHT O F THE MACHINERY PROVISION SET OUT BY HON'BLE HIGH COURT IN SONY ERI CSSON CASE (SUPRA) AND BENCHMARKING OF AMP TRANSACTION WITHOUT THE HELP OF BLT, WOULD INVOLVE THE FAR ANALYSIS, CHOOSING THE MOST APPROPRIATE MET HOD, SELECTING THE FILTERS, QUALITATIVE ANALYSIS FOR CHOOSING THE COMP ARABLES ETC. IT IS SUBMITTED THAT THIS FORUM IS NOT EQUIPPED TO COMPLE TE SUCH TASK WHICH CAN BE CARRIED OUT BY LD TPO UNDER DIRECTIONS OF THE HON'BLE ITAT, IN THE LIGHT OF THE LAW AS EXPOUNDED BY HON'BLE HIGH COURT . 8. IT IS THEREFORE PRAYED THAT THE MATTER MAY BE REMI TTED TO THE FILE OF THE AO /TPO FOR REDOING THE ASSESSMENT ON THE ISSUE AS PER THE LAW AS EXPOUNDED BY HON'BLE HIGH COURT AS HAS BEEN DONE BY VARIOUS BENCHES OF HON'BLE ITAT ON AMP ISSUE POST DECISIONS OF SONY ERICSSON AND MARUTHI SUZUKI. 13. IN OUR CONSIDERED OPINION, THESE ISSUES I.E. (A ) WHETHER THE AMP EXPENDITURE IN THE CASE ON ONE HAND AN INDEPENDENT INTERNATIONAL TRANSACTION OR 10 ITA NO.672/DEL/2014 ITA NO.891/DEL/2015 NOT AND (B) WHETHER THE ALTERNATIVE CONTENTION OF T HE ASSESSEE THAT, NO SEPARATE ADJUSTMENT IS CALLED FOR ON ACCOUNT OF AMP EXPENDIT URE AS THE MARGIN OF ASSESSEE IS MUCH HEALTHIER THAN THE MARGIN OF THE C OMPARABLES ETC. HAS TO BE FACTUALLY EXAMINED BY THE TPO. 14. THE ITAT IN ITA NO.1334/CHANDI/2010 IN THE CASE OF M/S PEPSI FOODS PVT. LTD. VS. ADDL. CIT, ORDER DATED 05.10.2016 AT PARA 5 HELD AS UNDER :- 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE LD. AR TRIED TO HARP ON CERTAIN AGREEM ENTS AND OTHER DOCUMENTS TO BUTTRESS HIS POINT THAT THERE WAS NO INTERNATIONAL TRANSACTION ON ACCOUNT OF AMP EXPENSES IN TERMS OF THE JUDGMENT IN THE CASE OF WH IRPOOL (SUPRA) ETC. ON PERUSAL OF THE ORDER OF THE TPO, IT EMERGES THAT WHILE HOLDING THE AMP EXPENSES TO BE AN INTERNATIONAL TRANSACTION, HE DID NOT HAVE THE BENE FIT OF THE JUDICIAL VIEW NOW AVAILABLE FOR CONSIDERATION, IN SOME OF WHICH, THE TRANSACTION OF AMP HAS BEEN HELD AS AN INTERNATIONAL TRANSACTION, IN OTHERS AS NOT A N INTERNATIONAL TRANSACTIONS, WHILE STILL IN SOME OTHERS, THE MATTER HAS BEEN RESTORED FOR FRESH CONSIDERATION IN THE LIGHT OF THE JUDGEMENT IN SONY ERICSSON (SUPRA), IN WHICH TH E AMP EXPENSES AS AN INTERNATIONAL TRANSACTION HAS BEEN ACCEPTED. RESPE CTFULLY FOLLOWING THE PREDOMINANT VIEW OF THE HONBLE HIGH COURT AND CO-ORDINATE BENC HES OF THE TRIBUNAL, WE ARE OF THE CONSIDERED OPINION THAT IT WOULD BE IN THE FITN ESS OF THINGS IF THE IMPUGNED ORDER IS SET ASIDE AND THE MATTER IS RESTORED TO THE FILE OF TPO/AO FOR A FRESH DETERMINATION OF THE QUESTION AS TO WHETHER THERE EXISTS AN INTERNAT IONAL TRANSACTION OF AMP EXPENSES. IF THE EXISTENCE OF SUCH AN INTERNATIONAL TRANSACTI ON IS NOT PROVED THE MATTER WOULD END THERE AND THEN, CALLING FOR NO TRANSFER PRICING ADDITION. IF, ON THE OTHER HAND, THE INTERNATIONAL TRANSACTION IS FOUND TO BE EXISTING, THEN THE TPO WOULD DETERMINE THE ALP OF SUCH AN INTERNATIONAL TRANSACTION IN THE LIG HT OF THE RELEVANT JUDGEMENTS OF THE HONBLE HIGH COURT, AFTER ALLOWING A REASONABLE OPP ORTUNITY OF BEING HEARD TO THE ASSESSEE. 15. CONSISTANT WITH VIEW TAKEN THEREIN, WE SET ASID E THE ISSUE TO THE FILE OF THE ASSESSING OFFICER TO DE-NOVA ADJUDICATE BOTH THESE ISSUES. WE ALSO DIRECT THE ASSESSING OFFICER TO EXAMINE THE ALTERNATIVE CONTEN TION OF THE ASSESSEE IN VIEW OF THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF SONY ERICSSON MOBILE COMMUNICATIONS INDIA PVT. LTD. (SUPRA) AS WE LL AS IN THE CASE OF MARUTI 11 ITA NO.672/DEL/2014 ITA NO.891/DEL/2015 SUZUKI INDIA LTD. (SUPRA). HENCE, WE SET ASIDE THE SE ISSUES TO THE FILE OF THE ASSESSING OFFICER/TOP. 16. IN THE RESULT, THIS APPEAL OF THE ASSESSEE IS A LLOWED FOR STATISTICAL PURPOSES. ITA NO.891/DEL/2015 (A.Y. 2010-11) : 17. IN SO FAR AS, APPEAL OF THE ASSESSEE IN ITA NO. 672/DEL/2014 FOR THE ASSESSMENT YEAR 2009-10 IS CONCERNED, THE ISSUE INV OLVED IS IDENTICAL AND THE DECISION FOR ASSESSMENT YEAR 2009-10 SHALL APPLY MUTATIS-MUTANDIS IN THIS APPEAL ALSO. ACCORDINGLY, THE APPEAL OF THE ASSESS EE IN ITA NO.891/DEL/2015 FOR THE ASSESSMENT YEAR 2010-11 IS HEREBY ALSO ALLO WED FOR STATISTICAL PURPOSES. 18. RESULTANTLY, BOTH THE CAPTIONED APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 24 TH DAY OF MARCH, 2017. SD/- SD/- (AMIT SHUKLA) (J. S. REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 24-03-2017. SUJEET COPY OF ORDER TO: - 1) THE APPELLANT 2) THE RESPONDENT 3) THE DRP-II, NEW DELHI. 4) THE DR, I.T.A.T., NEW DELHI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, NEW DELHI