Case Law Details
DCIT Vs Ferrero India Pvt. Ltd (ITAT Pune)
The main contention that was advanced by the assessee in this case before the Tribunal was that the existence of international transaction cannot be inferred by the T.P.O in the absence of any actual transaction and the presumption by the lower authorities that the benefit had endured to its foreign AE is merely based on the conjectures. In the absence of any agreement between the assessee and its foreign AE to incur any A & M expenses to the benefit of its foreign AE, the presumption of existence of international transaction is incorrect.
Reverting to the facts of the present case before us, the Revenue was unable to prove existence of any agreement between the assessee and the foreign AE for incurring advertisement and marketing expenses for the benefit of such foreign AE. That, no interference can be drawn as to the existence of international transaction on mere incurring excess expenditure on those items as compared to expenditure incurred by comparables as chosen by the T.P.O. The Revenue also could not demonstrate the presence of any machinery provision to compute Arm’s Length Price nor could demonstrate existence of any agreement between the assessee and its AE that the expenses on AMP was incurred for enhancing the brand value of the AE. That, even the bright line method cannot be used either to determine the existence of international transaction or ALP of international transaction. Merely because on account of expenditure incurred by the assessee the third party also benefits thereby, the expenditure cannot be disallowed. We are of the considered view in this case, there does not exist any international transaction and therefore, the question of determination of ALP of such transaction does not arise. Furthermore as we have examined from the case-law cited above, the onus is on the Revenue for establishing that there is an international transaction has not been discharged in this case. Consequently, the relief provided by the learned CIT(A) to the assessee is sustained and furthermore since there is no international transaction at all, the question of determining ALP does not exist.
FULL TEXT OF THE ORDER OF ITAT PUNE
This Appeal preferred by the Revenue and corresponding Cross Objection preferred by the assessee emanates from the order of the learned CIT(A) Pune-13, dated 28-10-2020 for the A.Y. 2011-12 as per the following grounds of appeal.
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