Beam Global Spirits & Wine (India) Pvt. Ltd. Vs. DCIT (ITAT Delhi)
Brief of assessee’s facts:
1. Beam India (the assessee), a wholly owned subsidiary of Beam USA, was engaged in the production and sale of alcoholic beverages in India.
2. During AY 2008-09, the assessee entered following ITs with its AE along with outcome of TPO Order:
| International Transaction | Amount in INR | Outcome of TP Order |
|---|---|---|
| Purchase of compound Alcoholic Preparation | 14,35,47,473 | Accepted |
| Provision of Marketing support services (‘MSS’) | 1,28,11,244 | Disputed |
| Reimbursement of expenses | 17,69,26,002 | Accepted |
3. Under the MSS segment, the assessee was providing marketing support services to JBB U.S to promote the duty-free sales of international brands of liquor products of JBB U.S.
4. Beam India also incurred certain advertising and brand promotion expenses which were reimbursed by JBB, U.S to the assessee on cost-to-cost basis without any mark-up. Basically such expenses were in the nature of pass through expenses.
5. TPO rejected the assessee’s economic analysis and proposed TP adjustment to the tune of Rs. 60,77,920.
Ld. TPO’s decision:
1. TPO completed the transfer pricing assessment and thereby:
a. rejected the economic analysis of the assessee;
b. undertook a fresh search using arbitrary quantitative and qualitative filters ;
c. considering AMP expenses while determining OPM of the assessee due to the very reason that such expenses fall within the scope of expenditure incurred for services; and
d. proposed an adjustment of Rs. 60,77,920/- to the income of the assessee.
Hon’ble DRP’s decision:
1. Directed the exclusion of following two companies from the comparables selected by the Ld. TPO:
a. Vapi Waste Management; and
b. Effluent Management Co & Rites Ltd.
Issue to be decided:
1. Aggrieved, the assessee filed an appeal before Hon’ble tribunal and challenged following comparables regarding their inclusion or exclusion:
