2015 (12) TMI 634 - DELHI HIGH COURT

Transfer pricing adjustment - determination of arm’s length price (‘ALP’) of the advertisement, marketing and sales promotion (‘AMP’) expenses incurred by the Assessee, MSIL - Held that:- Question stands answered by the judgment in Sony Ericsson viz. [2015 (3) TMI 580 - DELHI HIGH COURT ] that the TPO could have examined the question whether AMP expenses by themselves constitute an international transaction in the absence of any specific reference being made in that behalf by the AO.

Whether under Chapter X of the Income Tax Act, 1961, a transfer pricing adjustment can be made by the Transfer Pricing Officer/ Assessing Officer in respect of expenditure treated as AMP Expenses and if so in which circumstances? - Held that:- Question No.2 is answered in the negative i.e. in favour of the Assessee and against the Revenue. In other words, it is held that AMP expenses incurred by MSIL cannot be treated and categorised as an international transaction under Section 92B of the Act.

Since answer to Question above is in favour of the Assessee, the question of the TPO making any transfer pricing adjustment in respect of such transaction Chapter X does not arise and, therefore, question (3) is answered in the negative and in favour of the Assessee and against the Revenue.

Whether the Income Tax Appellate Tribunal was right in directing that fresh bench marking/comparability analysis should be undertaken by the Transfer Pricing Officer by applying the parameters specified in paragraph 17.4 of the order dated 23.01.2013 passed by the Special Bench in the case of LG Electronics India (P) Ltd. [2013 (6) TMI 217 - ITAT DELHI ]?” - Held that:- Question is answered in the negative i.e. in favour of the Assessee and against the Revenue. It is held that the ITAT was not right in directing a fresh benchmarking comparative analysis to be undertaken by the TPO in view of the decision of the Special Bench of the ITAT in LG Electronics India Pvt. Ltd.