Case Law Details
Yakult Danone India Pvt. Ltd. Vs DCIT (ITAT Delhi)
The issue involved in that appeal is also with respect to the determination of ALP of AMP functions. In para number 6.10 of that order the coordinate bench has rejected the Bright line test applied by the learned transfer pricing officer and further held that AMP expenditure cannot be considered as an international transaction in the facts and circumstances of the case of the assessee. The learned departmental representative could not show us any reason to deviate from such an order in assessee’s own case for earlier year. Even in this particular order of the learned transfer pricing officer for the impugned assessment year, we do not find that the learned transfer pricing officer has first established that there is an international transaction entered into by the assessee by incurring a higher AMP expenditure. Unless first the international transaction is established by the learned transfer pricing officer, question of determination of its arm’s-length price does not arise. Therefore respectfully following the decision of the coordinate bench in assessee’s own case for assessment year 2011 – 12, we also hold that the approach of the learned transfer pricing officer of determining ALP of international transaction of incurring of higher AMP expenditure cannot be benchmarked either on Bright line test bases or on transactional net margin method unless first it is established that there existed an international transaction. Accordingly all the grounds of the appeal of the assessee relating to the transfer pricing adjustment are allowed.
FULL TEXT OF THE ITAT JUDGEMENT
1. This is an appeal filed by Yakult Danone India Private Limited [Assessee/ Appellant] against the order of The Deputy Commissioner Of Income Tax, Circle 27 – 2, New Delhi (Ld AO ) dated 16.01.2017 for the Assessment Year 2012-13 passed u/s 143 (3) read with Section 144C (1) of The Income Tax Act, 1961 (The Act) determining total income of the assessee at a loss of ₹ 254,406,708 against the loss as per return filed 30/11/2012 of ₹ 333,665,022.
2. The only dispute in appeal is with respect to the addition of ₹ 79,258,314 made in pursuance of the order of the learned t Deputy Commissioner Of Income Tax, Transfer Pricing Officer – 3 (3) (2) New Delhi (the learned TPO) passed u/s 92CA (3) of the act on 30 January 2016 which was subject to the direction of the learned Dispute Resolution Panel dated 9 December 2016 relating to determination of ALP of AMP expenses.
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