SONY INDIA PRIVATE LIMITED,DELHI V. ACIT CIRCLE 22(2), , DELHI

ITA 3851/DEL/2024

AI Insights

Sony India Private Limited appealed against the assessment order for the Assessment Year 2020-21, which included various transfer pricing adjustments and other tax-related issues. The main contention revolved around the incorrect application of transfer pricing methods for royalty payments and adjustments related to AMP expenses. The Tribunal considered previous rulings and the legal framework governing international transactions and transfer pricing, leading to the deletion of certain adjustments and the remittance of others back to the AO for re-evaluation. The case also involved discussions on the treatment of Dividend Distribution Tax, which was decided against the assessee based on existing legal precedents.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 784666 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-11-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: H
• Assessment Year: misc
• Appeal Filed On: 23-08-2024
• Other Referred Cases: National Thermal Power Co. Ltd. vs. CIT, Maruti Suzuki vs. CIT, Casio India Company Private Limited vs. DCIT, Sony Ericsson Mobile Communication India (P.) Ltd. vs. CIT, MSD Pharmaceuticals (P.) Ltd. vs. ACIT, Toshiba India (P.) Ltd. vs. ACIT, Nikon India (P.) Ltd. vs. DCIT, Bacardi India Pvt. Ltd. vs. ACIT, Samsung India Electronics Pvt. Ltd. vs. DCIT, Widex India (P.) Ltd. vs. ACIT, Beam Global Spirits & Wine (India) Pvt. Ltd. vs. ACIT, CIT vs. Woodword Governor India (P.) Ltd.
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S.K. JADHAV
• Assessee Lawyers: NAGESHWAR RAO; INCLUDING EXPENSES LIKE RATES; DECISION OF SPECIAL
• Keywords: Transfer pricing; International transaction; Question of law; Commercial expediency; Royalty expenses; FORM 26AS
• Section: 143(3)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘H’: NEW DELHI BEFORE SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER and MS. MADHUMITA ROY, JUDICIAL MEMBER ITA No.3851/DEL/2024 (Assessment Year: 2020-21) Sony India Private Limited, vs. ACIT, Circle 22 (2), A – 18, Mohan Cooperative Indl. Area, New Delhi. Mathura Road, New Delhi – 110 044. (PAN :AABCS1571Q) (APPELLANT) (RESPONDENT) ASSESSEE BY : Shri Nageshwar Rao, Advocate Shri Parth, Advocate REVENUE BY : Shri S.K. Jadhav, CIT DR Date of Hearing : 23.09.2025 Date of Order : 12.11.2025 O R D E R PER S. RIFAUR RAHMAN, ACCOUNTANT MEMBER : 1. This appealpreferred by the assesseeis directed against the assessment order dated 30.07.2024passed by the Assessment Unit, Income Tax Department under section 143(3) read with section 144C(13) r.w.s. 144Bof the Income-tax Act, 1961 (for short ‘the Act”) for Assessment Year 2020- 21pursuant to the directions of the Dispute Resolution Panel u/s 144C(5) of the Act raising following grounds of appeal :- Printed from counselvise.com 2 ITA No.3851/DEL/2024 “1. On the facts and circumstances of the case, the final assessment order is bad in law and void as it does not conform to binding directions of ld. DRP. 2. On facts and circumstances of the case and in law, the Ld. AO has erred in not excluding the adjustments that ought to be deleted pursuant to DRP directions while computing income tax demand of INR1,42,56,69,665. 3. Impugned order is bad in law as it seeks to make multiple transfer pricing adjustments by subjecting the same business and resultant profits to multiple tests under different methods and PLIs, on pretext of different international transactions. Transfer Pricing adjustment in respect of transaction of payment of royalty: 4. Impugned order erred in law and in facts in considering arm's length price of international transaction of payment of royalty as NIL: 4.1 Ld. DRP has erred in upholding the adjustment by relying on its directions for AY 2015-16 despite being intimated that the matter has been decided in favour of the Appellant by the Tribunal for AY 2016-17. 4.2 Impugned order exceeds its jurisdiction firstly in questioning and then disregarding commercial expediency for royalty payment including the cost benefit analysis and the Appellant's business model of receiving assured arm's length margins on revenue. 4.3 Impugned order errs in rejecting combined transaction approach & TNMM adopted by Appellant for benchmarking royalty payment. 4.4 Impugned order erred in incorrectly applying Comparable Uncontrolled Price (\"CUP\") method as outlined in Rule 10B(1) (a). 4.5 Without prejudice Impugned order errs in disregarding external benchmarking analysis undertaken using CUP by Appellant to demonstrate arm's length nature of royalty payments. Transfer Pricing adjustment in respect of import of finished goods for the alleged AMP function under intensity approach [Relevant only when royalty adjustment / stock valuation loss adjustment is deleted by Hon'ble Tribunal: In law and facts of present case: 5. Impugned order errs in re-writing transactions on imaginary basis and does not benchmark the same as ‘entered into’. 6. Impugned order errs in assuming DEMPE function were performed by Associated Enterprise (AE\") and making 'intensity adjustment' to adjust net Printed from counselvise.com 3 ITA No.3851/DEL/2024 profit margin of comparable companies purportedly to equalise functions. 'Intensity adjustment' is mirror image of Bright Line Test (BLT) both are already invalidated by Hon'ble Courts. 7. Without prejudice to all other grounds, impugned order errs in quantifying AMP expense of appellant by including expenses like rates and taxes, carriage and freight, warranty, rebates and discounts and sales promotion expenses. 8. Impugned order errs in treating \"service income and miscellaneous income\" as non-operating in nature while computing the profitability of the Appellant. 9. Impugned order erred in making several adjustments for determining margins comparable companies inconsistent with provisions of law resulting in unlawful adjustments to ALP. 10. Impugned order erred in making adjustment to costs reported in audited accounts. 11. Without prejudice to all other grounds, impugned order errs in inappropriate selection of companies as comparable to Appellant's distribution activity and alleged marketing function for benchmarking transaction of import of goods 12. Without prejudice to all other grounds, impugned order errs in inappropriate rejection of comparable companies for benchmarking transaction of import of goods and alleged marketing function. Protective Transfer Pricing adjustment in respect of import of finished goods [Relevant only when royalty adjustment / stock valuation loss adjustment is deleted by Hon'ble Tribunal]: In law and facts of present case: 13, Impugned order errs in considering \"service income and \"miscellaneous income as non-operating in nature while computing Appellant's net margin under TNMM. 14. Impugned order errs in selecting inappropriate comparable companies for benchmarking the transaction of import of finished goods. Protective Transfer Pricing Adjustment in respect of international transaction for Marketing and Market Development functions (\"MMDF\") based on Bright Line Test (\"BLT\") approach In law and facts of present case: Printed from counselvise.com 4 ITA No.3851/DEL/2024 15. Impugned order errs in retaining protective assessment based on BLT Contrary to Hon'ble jurisdiction High Court decision. Further such adjustment is based on incorrect presumptions and ignores relevant factors laid down by Hon'ble Court. 16. Impugned order errs in holding that MMDF expenditure incurred by the Appellant, is an 'international transaction'. 17. Without prejudice to other grounds, impugned order errs to determine the excessive/non-routine MMDF expenses 17.1 by considering the expenses like rates and taxes, carriage and freight, warranty, rebates and discounts and sales promotion expenses which cannot be attributed to brand promotion. 17.2 in modifying MMDF expenses by grossing up the Appellant's costs by the amount of reimbursements received by Appellant from its AEs. 17.3 by determining the arm's length level of routine MMDF expenses by considering inappropriate companies where material differences in functions, risks and assets exist as comparable uncontrolled transactions. 17.4 In levying a further mark-up of service providers on MMDF expenses by considering inappropriate set of comparables. 18. Without prejudice to any of the other grounds, the Ld. AOTPO has erred in not netting off reimbursement from final adjustment amount and granting other computational relief in relation to margin correction of comparable companies as specifically directed by DRP. Grounds against adjustment made on corporate tax issues Disallowance of stock valuation loss 19. That on the facts and in law, Hon'ble DRP/ Ld. AO have grossly erred in treating difference of INR 13,15,00,000 between Net Realizable Value of closing stock and its cost, as a notional loss and adding the same in computing taxable income under normal provisions of the Act. 20. That on the facts ant in law, Hon’ble DRP/ Ld. AO have grossly erred in treating the difference of INR 13,15,00,000 between Net Realizable Value of closing stock and its cost, as a provision for diminution in value of asset. 21. That the ld. DRP has grossly erred in facts and law, by relying on its directions for AY 2015-16 and in not flowing the decision of Hon'ble Income Tax Appellate Tribunal in Appellant’s own case for the AY 2016-17 (having ITA No. 4930/Del/2021) wherein the subject issue was decided in favour of the Appellant despite the same being duly intimated to Ld DRP. Printed from counselvise.com 5 ITA No.3851/DEL/2024 Disallowance of royalty expenses by holding that the Appellant had no liability to pay such royalties 22. That on facts and in law, Hon'ble DRP/Ld. AO have grossly erred in disallowing Royalty expenditure incurred by Appellant, by holding that the Appellant had no liability to pay such royalties 23. That on facts and in law, Hon'ble DRP) Ld. AO have grossly erred by ignoring various judicial precedents wherein it has been settled that the manner in which commercial decisions are undertaken by the taxpayer, cannot be dictated by an income tax authority. 24. That the Ld. DRP has grossly erred in facts and law, by relying on its directions for AY 2015-16 and in not following the decisions of Hon'ble Income Tax Appellate Tribunal, Delhi ' Bench in Appellant’s own case for the AY 2016-17 (having ITA No.493/DEL/2021), wherein the subject issue was decided in favour of the Appellant despite the same being intimated to DRP, Penalty proceeding initiated u/s 270A r.w.s 155(18) of the Act on the Education Cesssuo-moto offered by the Appellant 25. That on the facts and circumstances of the case and in law, Ld. AO has erred in proposing to initiate the penalty proceeding in accordance with the provisions of Section 155(18) r.w.s. 270A of the Act even though the section 155(18) of the Act is not applicable on the Appellant as the cumulative requirement of section 155(18) of the Act, i.e. claimed and allowed, is not fulfilled. 26. That the Ld. AO has grossly erred in initiating the penalty proceeding u/s 270A of the Act by ignoring that prior to the amendment made in Finance Act, 2022, the issue of deductibility of education cess was debatable in nature and there were multiple judicial precedents in favour of the deduction. Credit of Dividend Distribution Tax deposited by the Appellant not granted 27. That on the facts and circumstances of the case and in law, Ld. A has grossly erred in short granting the credit of Dividend Distribution Tax of Rs.3,05,68,841/- as against of Rs.9,88,30,565/- paid on 26 August 2019 vide challan no.07294 having BSR Code 0011349 even though the said challan is also appearing in Form 26AS of the subject year. Miscellaneous contentions 28. Ld. AO has erred in initiating penalty proceedings under section 270A.” Printed from counselvise.com 6 ITA No.3851/DEL/2024 2. Ld. AR of the assessee also submitted additional ground no.29 vide application dated 01st September 2025 as under :- “Ground 29 : Without prejudice to other grounds, the Hon’ble DRP has erred in passing a non-speaking order by falling to address the Appellant’s objections regarding : (i) including of Sonal Infosoft and exclusion of Annaie Information Pvt. Ltd. and Saitech Instruments Private Limited by the TPO for benchmarking the distribution business, and (ii) incorrect classification of service income as non-operating while computing the Appellant’s Profit Level Indicator (PLI).” 3. Ld. AR prayed that in the interest of justice, the aforesaid additional ground may be admitted. 4. Ld. DR of the Revenue objected to the admission of the aforesaid ground and relied on the TPO report dated 18.09.2025 in response to the additional ground taken by the assessee. 5. In rejoinder, with regard to ld. TPO’s report dated 18.09.2025 on assessee’s additional ground no.29 submitted by ld. DR during the hearing on 23.09.2025, ld. AR submitted his written submissions dated 24.09.2025 which read as under :- “1. Ld. TPO has contended that the additional grounds raised by the Assessee before this Hon'ble Tribunal are not admissible in law. In paragraph 2 of his report, reliance has been placed on the decision of Hon'ble Supreme Court in National Thermal Power Co. Ltd. vs. CIT, 229 ITR 383 to assert that additional grounds may be admitted by this Hon'ble Tribunal only if they are purely legal in nature and do not involve investigation into new facts. It is thereafter contended that through the additional grounds, Assessee is challenging findings of Ld. TPO and Ld. DRP relating to comparability analysis and classification of income, which are entirely factual matters. Printed from counselvise.com 7 ITA No.3851/DEL/2024 2. Assessee-Appellant submits that the above contention of the Ld. TPO is incorrect, on account of the following: a. It may be noted that Ld. TPO has contended that additional ground cannot be entertained if it involves investigation into new facts. However, Ld. TPO has not elaborated or established on how Assessee's challenge to Ld. DRP's findings on selection of Sonal Infosoft, Annaie Information Pvt. Ltd. and Saitech Instruments Pvt. Ltd.; and treatment of service income as non- operating in nature, as being 'non- speaking' amounts to investigation into new facts. All submissions of the Assessee in relation to these above two issues are already on record, as would be evident from: i. For inclusion of Sonal Infosoft India – Pg. 212 of Appeal set and Pg. 1175-1177 of Paperbook 2 ii. For exclusion of Annaie Information Pvt. Ltd. - Pg. 217 of Appeal set and Pg. 1186-1188 of Paperbook iii. For exclusion of Saitech Instruments Pvt. Ltd. - Pg. 217 of Appeal set and Pg. 1188-1189 of Paperbook iv. Treatment of service income as non-operating in nature - Pg. 184 of Appeal set b. Ld. TPO has lost sight of the fact that vide additional ground no. 29, the Assessee is contending that Ld. DRP has passed a non-speaking order on above issues. Assesse could have challenged the non-speaking nature of Ld. DRP's directions only before Hon'ble Tribunal. No other appellate forum exists between the two. 3. In paragraphs 3 and 4 of the Ld. TPO's report, he has contended that Ld. DRP has given detailed findings on inclusion of Sonal Infosoft India, exclusion of Annaie Information Pvt. Ltd. and Saitech Instruments Pvt. Ltd. and treatment of service income as non-operating in nature while computing Assessee PLI. The fallacy in the said contention shall be outrightly evident by referring to the direction of Ld. DRP on the above issues from pg. 313 to 350 with Ld. DRP's finding at para 4.3 on pg. 350 of Appeal set. Printed from counselvise.com 8 ITA No.3851/DEL/2024 In view of the above, Ld. TPO's report and contentions therein deserve to be rejected, and Assessee's additional ground no. 29 must be admitted for adjudication. It is our humble prayer, as also placed during the course of oral hearing, that since Ld. TPO has already given his view on the above issues and only Ld. DRP has failed to pass a speaking order, the above issues can be remanded to Ld. DRP for passing a speaking order.” 6. After considering the rival submission, TPO’s report on additional groundand the reply of the ld. AR on the TPO’s report, we are inclined to admit the aforesaid additional ground in the interest of justice. 7. With regard to ground nos.1 and 2, at the time of hearing, it is brought to our notice that while computing the tax demand, AO has not given relief granted by the DRP and also raised interest levied u/s 234A to 234C on the above said demand on the basis of draft assessment order, therefore, we are inclined to remit this issue back to the file of AO to verify the claim of the assessee and do the needful as per law. With regard to Ground no 3, this is general ground and no specific submissions were made by both the parties, hence, these are not adjudicated and treated as general in nature. 8. With regard to ground nos. 4 to 4.5 regarding transfer pricing adjustment in respect of transaction of payment of royalty, at the outset, ld. AR submitted that this issue is covered in assessee’s own case by the decision of coordinate Bench in AYs 2015-16, 2017-18 & 2018-19 order dated 08.08.2025 and AY 2016-17 order dated 17.10.2022 and submitted that Printed from counselvise.com 9 ITA No.3851/DEL/2024 Hon’ble High Court vide order dated 30.09.2024 passed in ITA 551/2023 in AY 2016-17 upholding the order of the Tribunal dated 17.10.2022 in ITA No.493/Del/2021 for AY 2016-17 and accordingly, prayed to allow this ground. 9. On the other hand, ld. DR of the Revenue could not controvert the aforesaid proposition made by the ld. AR. 10. Considered the rival submissions and material placed on record. We observe that this issue is covered by the decisions of the coordinate Benches. Further we observe that Hon’ble High Court vide order dated 30.09.2024 for AY 2016-17 (supra) has upheld the decision of the coordinate Bench by observing as under :- “12. The assessee had entered into different types of international transactions with AEs. The same also included payment of royalty of a total value of ₹14,69,89,634/-. The said payment was subject to examination by the learned TPO for determining whether the same was on arm’s length basis. The assessee had explained that there were certain categories of products where the manufacturing activities were outsourced to the OEMs (original equipment manufacturers) appointed by Sony Corporation, Japan. The assessee had obtained the license for manufacturing and selling of various products including blank optical disc of CD-R, CD-RW, DVD + R, DVR-R, DVD-RW and USB Memory under the Sony brand name. 13. The products were manufactured by the OEMs and supplied to the assessee. The learned TPO held that since the goods were manufactured by the OEMs, the same did not justify any payment of royalty by the assessee to the AE. Accordingly, the TPO held that royalty amount of ₹2,79,43,965/- paid in respect of goods manufactured by MBIL and ₹10,04,88,528/- in respect of goods manufactured by CTTL were required to be benchmarked at Nil. Thus, according to the learned TPO, no royalty was payable on the goods of Sony brand dealt with by the assessee, which were manufactured by MBIL and CTTL. 14. The assessee had furnished the agreements with the concerned parties. It submitted that Sony Corporation, Japan had not licensed any technology to MBIL and CTTL but had only set out terms and conditions, which would Printed from counselvise.com 10 ITA No.3851/DEL/2024 govern the transactions between Sony Corporation or any of its subsidiaries with MBIL and/or CTTL. The assessee had also set out the commercial arrangement between the assessee and the AEs, which required payment of royalty. 15. The Tribunal referred to the decision of this Court in Commissioner of Income Tax-I v. M/s Cushman and Wakefield (India) Pvt. Ltd., Neutral Citation No. 2014:DHC:2764-DB and faulted the learned TPO for ignoring the commercial expediency and benchmarking the payment of royalty at Nil. The Tribunal held that the learned TPO was required to conduct a study to determine the arm’s length price and not to determine the commercial expediency of the international transactions with the AEs. The Tribunal also accepted that Sony Corporation, Japan had invested significant amount for intangible properties, which the assessee has the license to use. The Tribunal examined the agreement between the assessee and Sony Corporation, Japan in respect of LCD TV products and other related components, whereby Sony Corporation, Japan had granted certain license for intangible properties to the assessee. The relevant extract of the said agreement, which indicates the scope of license, under the said agreement, as noted by the Tribunal is reproduced below: (1) SONY hereby grants to SID a non-exclusive, indivisible, non- assignable and non-transferable and non-sublicensable license under the LICENSED PATENTS and/or the LICENSED KNOW-HOW (i) to manufacture or have the SUBCONTRACTOR manufacture the LICENSED PRODUCTS in the TERRITORY by using the COMPONENTS, and (ii) to sell, use lease or otherwise dispose of such LICENSED PRODUCTS in the TERRH ORY. (2) SONY hereby grants to SID, a non-exclusive, indivisible, non- assignable, non-transferable and non-subliceasable license to use the LICENSED TRADEMARKS in the TERRITORY (i) to manufacture or have the SUBCONTRACTOR manufacture the LICENSED PRODUCT’S which shall meet the quality requirements to which reference is made in Paragraph (1) of ARTICLE V of this Agreement, and (ii) to sell, use, lease, otherwise dispose of the” 16. In terms of the said agreement referred to by the Tribunal, the assessee had agreed to pay the royalty equal 2% on the net sales (as determined in terms of the agreement) as license fee. 17. On the basis of the material on record, the Tribunal concluded that MBIL and CTTL were manufacturing sub-contractors and the assessee had been granted the license for use of the license patents, license know-how, and license trademarks. The assessee was also entitled to get the products manufactured through sub-contractors. The Tribunal also observed that it was not the Revenue’s case that MBIL and CTTL had paid royalty to Sony Corporation, Japan for manufacturing their products and using the licensed Printed from counselvise.com 11 ITA No.3851/DEL/2024 patents, know-how and trademarks. The said finding of fact is not controverted. 18. In view of the above, we are unable to accept that any question of law arises regarding disallowance on account of royalty paid by the assessee to the AEs. It is not disputed that the learned TPO is not required to examine the efficacy of commercial transactions and its role is confined to determining the price or value of the transactions on an arm’s length basis. We find no infirmity with the conclusion of the Tribunal.” 11. Respectfully following the decision of Hon’ble High Court in assessee’s own case and decisions of coordinate Benches, we allow these ground nos.4 to 4.5 raised by the assessee. 12. With regard to ground nos.5 to 12 regarding transfer pricing adjustment in respect of AMP expenses on substantive basis by applying intensity approach, ld. AR submitted that coordinate Benches of ITAT in Widex India (P.) Ltd. vs. ACIT Circle 2(1), Chandigarh, [2019] 108 taxmann.com 125 (Chandigarh - Trib.) in Para 18.2 has already held intensity is mirror image of BLT and disapproved such mental acrobatics and submitted that this is followed in ACIT vs. Bacardi India Pvt. Ltd., 4069/DEL/2019 – Para 15 and Samsung India Electronics Pvt. Ltd. vs. DCIT, [2020] 120 taxmann.com 283 (Delhi-Trib.) – Para 23. He also relied on the decision of the coordinate Bench in assessee’s own case in AYs 2015-16, 2017-18 & 2018-19 order dated 08.08.2025 wherein the assessee is decided in favour of the assessee. Accordingly, he prayed to allow these grounds. 13. Ld. DR of the Revenue relied on the findings of the lower authorities. Printed from counselvise.com 12 ITA No.3851/DEL/2024 14. Considered the rival submissions and material placed on record. We find that this issue is covered by the ITAT decision in assessee’s own case in AYs 2015-16, 2017-18 & 2018-19 vide order dated 08.08.2025(supra). The relevant finding of the coordinate Bench is reproduced below:- “8. Now in regard to use of appropriate method for benchmarking AMP transactions while finding BLT to not be a method recognized under the Act and Rules. Hon’ble Delhi High Court in Casio India Company Private Limited vs. DCIT in ITA 814/2017, order dated 10th February, 2025, has considered the decision of in Maruti Suzuki (2015) 381 ITR 117 (Delhi), and relevant para of Maruti Suzuki decision (supra) are reproduced below : “70. What is clear is that it is the 'price' of an international transaction which is required to be adjusted. The very existence of an international transaction cannot be presumed by assigning some price to it and then deducing that since it is not an ALP, an 'adjustment' has to be made. The burden is on the Revenue to first show the existence of an international transaction. Next, to ascertain the disclosed 'price' of such transaction and thereafter ask whether it is an ALP. If the answer to that is in the negative the TP adjustment should follow. The objective of Chapter X is to make adjustments to the price of an international transaction which the AEs involved may seek to shift from one jurisdiction to another. An 'assumed price cannot form the reason for making an ALP adjustment. 71. Since a quantitative adjustment is not permissible for the purposes of a TP adjustment under Chapter X, equally it cannot be permitted in respect of AMP 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 determining whether the AMP spend of the Assessee on application of the BLT, is excessive, thereby evidencing the existence of an international transaction involving the AE. The quantitative determination forms the very basis for the entire TP exercise in the present case. 72. As rightly pointed out by the Assessee, while such quantitative adjustment involved in respect of AMP expenses may be contemplated in the taxing statutes of certain foreign countries like U.S.A., Australia and New Zealand, no provision in Chapter X of the Act contemplates such an adjustment. An AMP TP adjustment to which none of the substantive or procedural provisions of Chapter X of the Act apply, cannot be held to be permitted by Chapter X. In other words, with neither the substantive nor the machinery provisions of Chapter X of the Act being applicable to an AMP TP adjustment, the inevitable conclusion is that Chapter X as a whole, does not permit such an adjustment.” Printed from counselvise.com 13 ITA No.3851/DEL/2024 8.1 Then Hon’ble Delhi High Court in PCIT-1 vs. Beam Global Spirits & Wine (India) Pvt. Ltd., ITA 155/2022 & 156/2022, order dated 7.3.2025 in para 22 has categorically discarded benchmarking of AMP expenses which was commenced solely on the basis of a perceived excessive expenditure incurred by an assessee. Similar is the case before us. 18 8.2 Then in Addl. CIT vs. Bacardi India Pvt. Ltd., ITA Nos.4069 & 4070/Del/2019, order dated 20.05.2022, the Co-ordinate bench at Delhi in para 15 has held as follows:- “15. Having said so, the ld. CIT(A) held that there is a rationale to factor in AMP intensity adjustment while equating the functional profit into the comparables in TNMM benchmarking. The “bright line test” which is the mirror image of intensity approach has no statutory mandate. Hence, cannot be upheld.” 8.3 Similarly in Samsung India Electronics (P) Ltd. Versus DCIT Circle 2(2) reported in (2020) 120 taxmann.com 283 (Delhi Trib) has relied the decision of Chandigarh Bench in Widex India (P) Ltd. Versus ACIT (2019) 108 taxmann.com 125 (Chandigarh) to approve that what applies to BLT also applies to ‘intensity approach’ as a method for making ALP adjustment. 9. On the basis of aforesaid discussion we have no hesitation to uphold the contention of ld. Counsel that either applying BLT or by way of intensity approach alone the adjustments to AMP were not in accordance with law. Thus this issue and corresponding grounds are decided in favour of the assessee. Both substantive and protective adjustments to AMP shall stand deleted.” 15. In view of the above and respectfully following the aforesaid order, we allow ground nos.5 to 12 raised by the assessee. 16. With regard to ground nos.13 & 14 regarding transfer pricing adjustment in respect of transaction of import of finished goods on protective basis, a time of hearing it is brought to our notice that Ld DRP has not passed any speaking order, hence, it was submitted that this ground may be remitted back to the file of DRP to verify the claim of the assessee and pass the relevant findings for the objections raised before them. For the same of Printed from counselvise.com 14 ITA No.3851/DEL/2024 justice, we are inclined to remit this issue back to the file of Ld DRP to verify the submissions and address the objection and material submitted before them and pass the speaking order as per law. In the result, these grounds are allowed for statistical purpose. 17. With regard to ground nos.15 to 18 regarding transfer pricing adjustment in respect of AMP on protective basis by applying BLT, ld. AR submitted that BLT stands invalidated by Hon’ble Delhi High Court in Sony Ericsson Mobile Communication India (P.) Ltd. vs. CIT [2015] 374 ITR 118. Further he submitted that protective adjustments made on BLT have been consistently deleted by the Tribunal and reliance is placed on decision of :  Sony Mobile Communication India (P.) Ltd. vs. ACIT [2019] 10  taxmann.com 496 (Delhi - Trib.) – Para 11  MSD Pharmaceuticals (P.) Ltd. vs. ACIT, [2017] 88 taxmann.com 54 (Delhi - Trib.) – Para 6  Toshiba India (P.) Ltd. vs. ACIT, [2018] 95 taxmann.com 344 (Delhi - Trib.) – Para 8  Nikon India (P.) Ltd. vs. DCIT, [2018] 95 taxmann.com 537 (Delhi - Trib.) – Para 7  Casio India Company (P.) Ltd. vs. DCIT, [2019] 102 taxmann.com 492 (Delhi-Trib.) – Para 8 18. On the other hand, ld. DR of the Revenue relied on the findings of the lower authorities. 19. Considered the rival submissions and material placed on record. We observe that this issue is covered by the decision of ITAT in assessee’s Printed from counselvise.com 15 ITA No.3851/DEL/2024 own case in AYs 2015-16, 2017-18 & 2018-19 vide order dated 08.08.2025 in paras 3 to 9. This issue is also covered by the aforesaid decisions of Hon’ble High Court referred by the ld. AR of the assessee. Accordingly, we allow ground nos.15 to 18 raised by the assessee. 20. With regard to ground nos.19 to 21 regarding disallowance of stock valuation loss (normal provisions and section 115JB), ld. AR submitted that vide order dated 08.08.2025 (supra) in assessee’s own case, these grounds are covered in favour of the assessee and accordingly, these grounds may be allowed. 21. On the other hand, ld. DR of the Revenue relied on the findings of the lower authorities. 22. Considered the rival submissions and material placed on record. We observe that this issue is covered by the decision of ITAT in assessee’s own case in AYs 2015-16, 2017-18 & 2018-19 vide order dated 08.08.2025 (supra) in paras 16 to 17.1 and also in AY 2016-17 vide order dated 17.10.2022 (supra) which was upheld by Hon’ble Delhi High Court in order dated 30.09.2024 (supra). For the sake of brevity, relevant paras of Hon’ble Delhi High Court’s order are extracted below :- “19. The assessee had valued its opening stock and closing stock on the basis of cost or net realisable value, whichever is low. The AO had faulted the assessee from valuing the stock at a value lower than the cost. There is no dispute that the assessee had been consistently valuing its stock – both opening stock and closing stock – on the basis of cost or realisable value, whichever is lower. Printed from counselvise.com 16 ITA No.3851/DEL/2024 The aforesaid basis is well accepted for valuation of stock. The said basis was also noted by the Supreme Court in CIT v. Woodword Governor India (P.) Ltd.: (2009) 312 ITR 254. The learned counsel for the Revenue also does not dispute that if the aforesaid basis is followed consistently, the assessee’s income for the year would be fully captured as the element of profit would also not be included in the opening stock. 20. The finding of the Tribunal cannot be faulted. Clearly, no substantial question of law arises from the decision of the Tribunal to delete the addition made on account of the valuation of closing stock.” 23. Respectfully following the aforesaid decision, we allow ground nos.16 to 21 raised by the assessee. 24. With regard to ground nos.22 to 24 regarding disallowance of royalty expenses, ld. AR submitted that this issue is covered by the decision of ITAT in assessee’s own case in order dated 08.08.2025 (supra) vide paras 20 & 21 of the order and also in AY 2016-17 vide paras 63-65 of the order dated 17.10.2022 (supra), which was upheld by the Hon’ble Delhi High Court vide paras 12 to 18 of the order (supra) and pleaded to allow the grounds. 25. On the other hand, ld. DR of the Revenue relied on the findings of the lower authorities. 26. Considered the rival submissions and material placed on record. We observe that this issue is covered by the decision of ITAT in assessee’s own case in AYs 2015-16, 2017-18 & 2018-19 and also in AY 2016-18 which was confirmed by the Hon’ble Delhi High Court. The Hon’ble Printed from counselvise.com 17 ITA No.3851/DEL/2024 Delhi High Court in pars 12 to 18 has decided the issue in favour of the assessee and the same paras are reproduced in our order above. Respectfully following the aforesaid decisions, we allow ground nos.22 to 24 raised by the assessee. 27. With regard to ground nos.25, 26 & 28 regarding penalty and interest, the same are consequential in nature. 28. With regard to ground no.27 regarding Dividend Distribution Tax, ld. AR submitted that this issue is covered in assessee’s own case vide order dated 08.08.2025 (supra) in para 21. He further submitted that ITAT in DCIT vs Total Oil, [2023] 104 ITR(T) 1 (Mumbai-Trib.) (SB)andspecial bench of ITAT has held this issue against assessee, the controversy has not been decided conclusively and sameis now pending before Hon’ble Delhi High Court and submitted that assessee reserves its right to contest the same before Delhi High Court. 29. On the other hand, ld. DR of the Revenue submitted that this issue is settled against the assessee. 30. Considered the rival submissions and material available on record. We observe that the special bench of ITAT has decided this issue against the assessee and similarly in AY 2015-16, 2017-18 & 2018-19 vide order dated 08.08.2025 (supra). The relevant para of the said order is reproduced below :- Printed from counselvise.com 18 ITA No.3851/DEL/2024 “26. Tenth issue. The issue is relevant to AY 2015-16. The next issue relates to the Dividend Distribution Tax. Additional ground was raised seeking application of lower rate of DDT. Such claim though not made in original return or assessment proceedings raises only legal issues and facts of DDT are part of record. The issue stands settled against the assessee by decision of special bench in DCIT Versus Total Oil (2023) 104 ITR (Mumbai Tribunal). Thus issue and corresponding grounds are settled against the assessee.” 31. Respectfully following the coordinate Bench decision as aforesaid, we dismiss this ground raised by the assessee. 32. With regard to additional ground i.e. ground no.29, ld. AR submitted that ld. DRP has not passed a speaking order. Further he submitted that ld. DRP failed to pass speaking order regarding: (i) inclusion of Sonal Infosoft and exclusion of Annaie Information Pvt. Ltd. and Saitech Instruments Private Limited by the TPO for benchmarking the distribution business. He further submitted that ld. DRP failed to pass speaking order regardingincorrect classification of service income as non- operating while computing the assessee’s PLI. Accordingly, he pleaded that this issue may be restored back to ld. DRP to decide by passing a speaking order. 33. On the other hand, ld. DR of the Revenue did not have any objection in restoring this issue to the file of ld. DRP. 34. Considered the rival submissions and material placed on record. We have gone through the order of ld. DRP and observed that this issue was not Printed from counselvise.com 19 ITA No.3851/DEL/2024 dealt with by passing a speaking order, hence, we restore the additional ground i.e. ground no.29 to the file of ld. DRP to decide by passing a speaking order, accordingly, ground no.29 is allowed for statistical purposes. 35. In the result, appeal filed by the assessee is partly allowed as indicated above. Order pronounced in the open court on this 12TH day of November, 2025. SD/- SD/- (MADHUMITA ROY) (S.RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 12.11.2025 TS Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals). 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI Printed from counselvise.com "