Case Law Details
Whirlpool of India Ltd. Vs DCIT (ITAT Delhi)
Conclusion: Bright line test is not an appropriate yardstick for determining existence of an international transaction for calculating arm’s length price.
Held: Assessee was a subsidiary of Whirlpool USA, and was engaged in production, sale and distribution of Whirlpool appliances. During the year, assessee incurred advertising, marketing and promotional (AMP) expenses. TPO proposed adjustment on account of AMP expenses by applying bright line test. It was held on perusal of orders passed by TPO/AO/DRP for year under consideration, it was observed that AMP expenditure had been considered to be international transaction by applying bright line test, whereby TPO proposed an adjustment of 243.8 crores. Since basis on which adjustment had been made being bright line test itself had been rejected by Hon’ble Delhi High Court in assessee’s own case for Assessment Year 2008-09, no further interference could be called for at this stage. Issue was set aside to TPO to pass fresh order considering decision of Supreme Court.
FULL TEXT OF THE ITAT JUDGEMENT
Present appeal has been filed by assessee against order dated 26/02/20 15 passed by DCIT LTU-1, New Delhi under section 143(3) read with 1 44C of the Income Tax Act, 1961 (the Act). At the outset Ld. Counsel submitted that, grounds raised by assessee in all years under consideration are same and identical. This fact has not been disputed by Ld.CIT DR and therefore, we have taken these appeals to be disposed off, by way of common order. For sake of convenience, grounds for assessment year 2010-11 are reproduced hereunder:
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