DCIT Vs Make My Trip India Pvt. Ltd. (ITAT Delhi)
ITAT Delhi held that Advertisement, Marketing & Promotion expense [AMP expense] incurred by Make My Trip wholly and exclusively for the business is not capital in nature. Further, since AMP expense is not an international transaction, adjustment by TPO rightly deleted.
Facts- Revenue has preferred the present appeal mainly contesting that CIT(A) has erred in rejecting the Transfer Pricing approach of the TPO on short charge by the assessee to its US AE. It is also contested that CIT(A) erred in rejecting the internal comparison made by the TPO wherein both the segments were involved in performing similar functions and utilizing same assets and undertaking similar risks. Further, CIT(A) erred in accepting the transfer pricing approach of the assessee on short charge by Assessee from its US AE whereas in A.Y. 2007-08 the CIT (A) has upheld the adjustment albeit to the extent of Rs. 50000/-. Further, various other points were also contested by the revenue vide the present appeal.
Conclusion- Tribunal, in assessee’s own case for A.Y. 2007-08 and 2009-10, held that the AMP expense of appellant is wholly and exclusively for the purposes of its business and further it is not capital in nature. The AO has not given any reasons in his order to substantiate his observations that AMP expense of the appellant are not wholly and exclusively for the purpose of its business and these are in nature of capital expenses. Since, it has been held that the appellant does not render any services in connection with promotion of marketing intangibles which accrue to the benefit of MMT Mauritius; there is no question of applying a mark up for determining the compensation. Therefore, addition made on account of AMP expense is deleted.
