Case Law Details
Brief of the Case
ITAT Bangalore held in the case of M/s Essilor India Pvt. Ltd. vs. DCIT that no TP adjustment can be made by deducing from the difference between AMP expenditure incurred by assessee and AMP expenditure of comparable entity, if there is no explicit arrangement between the assessee and its foreign AE for incurring such expenditure. The fact that the benefit of such AMP expenditure would also benefit to its foreign AE is not sufficient to infer existence of international transaction. The onus lies on the revenue to prove the existence of international transaction involving AMP expenditure between the assessee company and its foreign AE. We also hold that that in the absence of machinery provisions to ascertain the price incurred by the assessee to promote the brand values of the products of the foreign entity; no TP adjustment can be made.
Facts of the Case
The assessee is engaged in the business of trading in finished, semi-finished opthalmic lenses, optical meters and processing of semi-finished ophthalmic lenses. It is wholly owned subsidiary of Essilor International SA, France. The license to use quoting technology is granted by AE. The assessee-company had filed its return of income for the assessment year 2009-10 on 30/09/2009 declaring a total income of Rs.13,48,74,129/-. The assessee-company reported the various international transactions. The assessee-company sought to justify the consideration paid for the international transactions entered into with the AE to be at ALP. According to the assessee, since its PLI was more than the average PLI of the comparables, it was claimed that these transactions with its AE are at arm’s length price (ALP).
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