Income Tax - Case Law - BMW India Pvt. Ltd. Versus Addl. CIT, Gurgaon 2013 (9) TMI 124 - ITAT DELHI

Transfer pricing adjustments - receipt of reimbursement of Advertising and Marketing Promotion ( and ) expenses from the Associated Enterprises ( AEs ) - Intervention - Intervention in L.G Electronics case 2013 (6) TMI 217 - ITAT DELHI - Held that - assessee was not an intervener in the proceedings before the Special Bench in the case of L.G. Electronics as its name does not find a mention in the list of interveners and the affidavit dated 14.02.2013 of the Ld. AR Sh. Rahul Mitra addresses the background as to how after seeking permission to be impleaded as an intervener, the permission to withdraw was moved - it does not necessarily follow that the ruling of the Special Bench would not apply to the assessee wherever facts and law so demand. As such, the departmental stand that the said ruling is binding has to be upheld with the caveat to the extent facts and law support it Adjustment of transfer pricing - Reimbursement of Advertising and Marketing Promotion expenses - Comparison to other comparable companies - Service rendered to AE - Held that - on a consideration of the market conditions and the terms of the contract entered into in the Importation Agreement by the assessee with the AE, it necessarily leads us to the conclusion that the assessee has performed the function of sales promotion and advertisement in order to make a dent in the market while performing the functions of a distributor with greater intensity as opposed to a routine distributor - assessee has performed greater intensity of service than a normal distributor and has incurred expenditure for advertising marketing and promoting the brand of its AE. Whether on account of rendering of non-routine service was the assessee entitled to receive compensation with a mark-up from its AE - Held that - in the facts of the present case there was no occasion for the AE to further compensate the assessee for the services rendered towards building the brand of the AE as the same already stood factored in the pricing adjustment of the contract goods. As such the occasion to consider the applicability of mark-up does not arise. - Decided partly in favour of assessee............................... Income Tax - Case Law