Case Number: ITA 857/DEL/2021
Appellant: Casio India Company Pvt. Ltd., New Delhi
Respondent: DCIT, Circle-5(2), New Delhi
Assessment Year: 2016-17
Result: Appeal Allowed
Case Filed on: 2021-07-15
Order Type: Final Tribunal Order
Date of Order: 2022-05-26
Pronounced on: 2022-05-26
Casio India Company Pvt. Ltd., a subsidiary of Casio Japan, engaged in the distribution of Casio products in India, filed an appeal against the final assessment order passed by DCIT, Circle-5(2), New Delhi for the assessment year 2016-17. The primary contention was the addition of Advertising, Marketing, and Promotion (AMP) expenditure as an international transaction.
The case was heard by the Delhi Bench ‘I-1’ of the Income Tax Appellate Tribunal (ITAT), with Shri R. K. Panda, Accountant Member, and Shri Yogesh Kumar U.S., Judicial Member, presiding over the matter. The hearing took place on 12.04.2022, and the order was pronounced on 26.05.2022.
The key issues in the appeal were the addition of INR 17,40,55,504 to the total income of the appellant on account of AMP expenses, treated as an international transaction under Section 92B of the Income Tax Act, 1961, and the protective adjustment using the Bright Line Test (BLT).
Casio India, represented by Sh. Nageshwar Rao, Adv. and Ms. Deepika Aggarwal, argued that the AMP expenditure was not an international transaction and cited precedents from previous assessment years (AY 2010-11, AY 2011-12, AY 2012-13, AY 2013-14, and AY 2015-16), where similar issues were decided in their favor. They contended that the Assessing Officer (AO) and the Dispute Resolution Panel (DRP) failed to follow judicial discipline and ignored the principles laid down by higher courts.
The Revenue, represented by Sh. Surender Pal, CIT (DR), argued that the assessee had concealed certain information in previous years. The Revenue pointed to a memorandum of understanding between the assessee and its Associated Enterprises (AEs), suggesting that the AMP expenses were part of an international transaction.
The Tribunal noted that similar issues were previously adjudicated in favor of Casio India in AY 2010-11, AY 2011-12, AY 2012-13, AY 2013-14, and AY 2015-16. The Tribunal reiterated that AMP expenses incurred by the assessee were not international transactions and that the BLT approach was not sustainable. The Tribunal found no material evidence to suggest an explicit arrangement between Casio India and its AEs for incurring AMP expenses for brand promotion on behalf of the AEs.
The Tribunal also addressed the protective adjustment made by the AO using the BLT. The Tribunal held that the BLT had been rejected by the Hon’ble Delhi High Court and other judicial precedents. Thus, the protective adjustment was deemed not enforceable.
The Tribunal allowed the appeal, directing the deletion of AMP adjustments. The grounds of appeal regarding the treatment of AMP as an international transaction and the protective adjustment using BLT were upheld in favor of Casio India.
In conclusion, ITA No. 857/DEL/2021 was allowed, providing relief to Casio India Company Pvt. Ltd. by deleting the AMP adjustments and reinforcing the principles laid down in previous judicial decisions.
Order pronounced in the open court on 26th May 2022.
Sd/- (R. K. PANDA)
ACCOUNTANT MEMBER
Sd/- (YOGESH KUMAR U.S.)
JUDICIAL MEMBER
Date: 26.05.2022
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR: ITAT
Assistant Registrar, ITAT, New Delhi
Casio India vs DCIT: Dispute Over AMP Expenditure as International Transaction
Manage the increasing number of hearings effortlessly by leveraging the legal AI revolution We are India's Leading revolutionary AI-powered legal platform where you can get enough insights into top cases and judgements.
Research Platform