ABBOTT INDIA LTD,MUMBAI vs. ACIT, RANGE 2(1)(1), MUMBAI

Ground no.2: Advertising, marketing and promotion ('AMP') adjustment 2. 1. On the facts and in the circumstances of the case and in Iaw, the Ld. CIT-A erred in confirming the action of the TPO / AO of treating the AMP spend incurred by the Appellant in India as an international transaction under Section 92B of the Income tax Act, 1961 (the Act') thus ignoring the principles laid down in case of Maruti Suzuki India Limited VS: CIT ([2016] 381 ITR 117 (Delhi)) . 2. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT-A erred in confirming an adjustment of Rs.2,78,79,928 (out of the total adjustment of Rs. 3, 31,- 53,037 made by the AO/Transfer Pricing Officer ( 'TPO')) to the income of the Appellant by treating it as a provision of service by the Appellant to the Associated Enterprises ('AEs') without providing any evidence of a direct benefit to the AEs. In doing so the Ld. CIT-A has grossly erred in agreeing with the TPO's action of: a) failing to appreciate that transfer pricing is not applicable in the instant case as no income is arising from or expenses are 5 Abbott India Ltd; incurred in an international transaction; b) applying Indian transfer pricing regulations to the transaction between the Appellant and third-parties although there was no reference made by the Ld. AO to the Ld, TPO in this regard; c) alleging that there exists an arrangement between the appellant and the AEs for incurring AMP expenses thereby concluding that they directly benefit the AEs for augmenting the brand globally; and d) applying the bright line test ("bright line") as a Comparable Uncontrolled Price (CUP) method for determining the compensation towards the AMP expenses without appreciating that no such method has been prescribed under the Act and Income-Tax Rules, 1062 ("the Rules"). The Appellant therefore prays that the addition of Rs. 2,78,79,928 confirmed by the Ld. CIT-A, out of the total adjustment of Rs. 3, 31,- 53,037 made by the AO under Section 143(3) read with Section 144(C) on the basis of the order passed by the TPO under Section 92CA(3) of the Act, be deleted. 3 Ground No 3: Characterisation and principles laid down by the Hon'ble Delhi High Court in case of Sony Ericsson 3. 1. Without prejudice to the above, on the facts and in the circumstances 0f the case and in law, the Ld. CIT-A has erred in ignoring the characterisation and principles laid down by the Delhi High Court in the case of Sony Ericsson. The Ld. CIT-A disregarded the fact that the marketing activity undertaken by the Appellant is inextricably linked to the international transaction of distribution of goods and accordingly segregation of AMP expenses as a separate international transaction will lead to an anomaly as the alleged AMP adjustment is not offset by the excess operating profits earned from the pure distribution segment: In view to the above, the Ld. CIT ~A erred in not passing an order based on the principles laid down by the Delhi High Court in the case of Sony Ericsson: 4 Ground No 4: Application of bright line, components of AMP and others 4. 1. Without prejudice to the above; on the facts and in the circumstances of the case and in Iaw, the Ld. CIT-A has erred in Abbott India Ltd. upholding the application of the bright line for determining the arm'$ length price towards the alleged AMP expense as follows: a)arbitrarily upholding TPO's action of adoption of internal non- AE segment of Novo-Nordisk for application of bright line without providing concrete reasons for the same and disregarding Appellant's submissions and factual contentions; b)disregarding Appellant's without prejudice AMP analysis vis-a - vis external comparables, which was submitted upon request of the TPO and established to be at arm's length by the Appellant; c)rejecting the external comparables adopted by the Appellant for benchmarking its distribution function by relying on data obtained from the internet without providing any opportunity to the Appellant to rebut the same, thereby violating the principles of natural justice; iv) disregarding the principles laid down in Sony Ericsson and numerous rulings of the Hon'ble Tribunal erroneously treating expenses such as market research, marketing studies, technical literature, medical conference and other marketing expenses for computing the AMP spend ratio of the Appellant although such expenses are either selling or routine business expenses and do not result in any enduring benefit to the AES: In doing SO, the Ld. CIT-A failed to appreciate Appellant's submission that the Ld. TPO himself, in the subsequent year (i.e; AY 2011-12), excluded the abovementioned expenses for computing the AMP spend ratio; and eJupholding the TPO's action of applying a mark-Up of 12.25%/ on the alleged excessive AMP expenses without providing cogent reasons for the same and failing to appreciate Appellant's contentions on the inappropriateness of the comparables adopted by the TPO and that the search process for arriving at the final set of comparable companies was not shared with the Appellant, thus violating the principles of natural justice 7 Considered rival submissions and perused material on record Before uS, both the leaned Counsel appearing for the parties fairly agreed that identical issues arising out of the aforesaid grounds of appeal have been decided by the Tribunal in assessee's own case for the assessment year 2012-13 in ITA no.1535/Mum./2017, order dated Abbott India Ird, 18th November 2019, wherein, the Tribunal vide Para-2, has decided identical issues in favour of the assessee. The relevant observations of the Tribunal are extracted below:

We have considered the submissions of both the parties and perused the material available on record. A perusal of grounds of appeal reveals that the assessee has raised as many as six grounds of appeal; however, as per our considered view, the sole and foremost ground of appeal relates to AMP expenses adjustment suggested by TPO and affirmed by Ld. DRP The Ld. AR of the assessee while making the submission has strongly relied upon the decision of Delhi High Court in Maruti Suzuki India Ltd. (supra): The Hon'ble Delhi High Court held that AMP expenses cannot be treated and categorised as an international transaction. Considering the aforesaid ratio of decision of Hon'ble Delhi High Court wherein it was held that AMP expenses is not a international transaction, thus, respectfully following the decision of the Hon'ble Delhi High Court in Maruti Suzuki India Ltd, (supra), we hold that the aforesaid adjustment suggested by TPO in respect of AMP expenses is not in consonance with the decision of Hon'ble Delhi High Court: The Id. DR for the revenue has not brought any fact or law to our notice to take a contrary view: Therefore, we direct the AO / TPO to delete the adjustment: In the result the grounds of appeal raised by the assessee are allowed. 8 It is not out of place to mention here that the leaned Counsel for the assessee in support of his claim has also placed reliance on Maruti Suzuki India Ltd , [2015] 64 taxmann.com 150 (Del.); (ii) Nivea India Pvt. Ltd. , [2018] 92 taxmann com 165 (Mum ) (Trib:) and (iii) L'Oreal India Pvt: Ltd , [2020] 116 taxmann com 149 (Mum:) (Trib.) which we have considered while deciding this issue; The facts of the issues before uS being similar to the facts of the issues decided by the Tribunal as aforesaid in assessee's own case, respectfully following the 8 Abbott India Lta. same, we set aside the impugned order passed by the DRP and allow the grounds of appeal raised by the assessee. 9 Insofar as ground no.5 is concerned , during the course of hearing before uS, the leaned Counsel for the assessee filed a letter dated 3ra March 202, vide which he has expressed his intention not to press this ground_ Consequently, ground no.5, raised by the assessee is dismissed as "not pressed" 10 Ground no.6, raised by the assessee relates to disallowance of ? 33,07,200, on account of additional depreciation 11_ After hearing both the parties and on a perusal of the material available on record and in the light of the decisions relied upon by the learned Counsel for the assessee, we find that identical issue has been consistently decided in favour of the assessee and against the Revenue by the Co-ordinate Bench of this Tribunal in assessee's own case for the assessment years 2006-07, 2007-08, 2008-09 and 2009-10. Since the facts of the issue before us is similar to the facts of the issue decided by the Co-ordinate Bench in assessee's own case, therefore, respectfully following the precedence as stated above, consequently, we set aside the impugned order passed by the learned Commissioner (Appeals) and allow the ground no.6, raised by the assessee Abbott Irdla Ltd. 12 Insofar as additional ground no.1 is concerned, the issue relates to disallowance of deduction on account of education cess.

During the course of hearing, the learned Counsel for the assessee submitted before uS that recently the Hon'ble Jurisdictional High Court in Sesa Goa Ltd. v/s JCIT, 107 CCH 376, has allowed the claim made by assessee (Sesa Goa Ltd.) by filing an additional ground of appeal in respect of education cess, where the Hon'ble Court has allowed the claim of the assessee: The learned Counsel in support of his claim, also relied upon the following grounds of appeal: - i) Sesa Goa Ltd. v/s JCIT , 107 CCH 376 (Bom:) ; ii) Chambal Fertilizers and Chemical Ltd., ITA no.52/2018 (Raj:); & iii) Grasim Industries Ltd. v/s ACIT , ITA no.2525/Mum./2014. 14_ Considered rival submissions and perused the material on record We find that the issue of deduction claimed in respect of education cess is now legally settled by the Hon'ble Jurisdictional High Court in Sesa Goa Ltd (supra) wherein the Hon'ble Court has allowed the claim made by assessee Sesa Goa Ltd_ by filing an additional ground of appeal in respect of education cess wherein it has been held that education cess is allowable as a deduction while computing the business income. Since the issue before uS is mutatis mutandis identical to the issue decided by the Hon'ble Jurisdictional High Court in Sesa Goa Ltd (supra), respectfully following the same, we set aside 10 Apbott India Irda the impugned order passed by the learned CIT(A) on this issue and allow the ground of appeal raised by the assessee. 15 Additional ground no.2, relates to refund of dividend distribution tax paid in respect of non-resident shareholders. 16 Before US, the learned Counsel for the assessee prayed before uS that this additional ground in respect of refund of dividend distribution tax be restored to the file of Assessing Officer for verification considering the recent decision of ITAT, Delhi Bench, which allowed the above said claim in favour of the assessee in Maruti Suzuki India Ltd, v/s DCIT , ITA no.916/Del./2015 The learned Departmental Representative did not object to the above proposition relied upon by the learned Counsel for the assessee. 17 Considering the submissions of both the parties and on a perusal of the material on record as well as in the facts and circumstances of the case Keeping in view of the submissions made by the learned Counsel for the assessee, vide Para-16 above, we deem it fit to restore this issue to the file of the Assessing Officer for further verification and direct him to decided the issue in accordance with Iaw and keeping in view the decision of the Tribunal, Delhi Bench, in Maruti Suzuki India Ltd_ v/s DCIT , ITA no.916/Del./2015. The Assessing Officer is also directed to provide reasonable opportunity of being 11 Abbott India Ltd: heard to the assessee before deciding the issue. Thus, this ground is allowed for statistical purposes. 18_ In the result, assessee's appeal is partly allowed: ITAno.4882[Mum L2012 Assessment Year 2011-12 19 The following grounds of appeal have been raised by the assessee: "A. Transfer pricing grounds on Advertising Marketing and Promotion ('AMP'Ladjustment Presumption of transaction in the nature of 'provision of brand promotion services 1 _ Erred in confirming the adjustment of Rs. 1,85,23,808 (to be reduced to Rs.1,77, 42,918 post order giving effect to learned CIT(A)'s order is passed) made by the Assessing Officer ('AO') Transfer pricing Officer(TPO' ) to the income of the Appellant alleging that the AMP expense incurred by the Appellant is a separate purported international transaction under Section 928 of the Act; 2. Erred in ignoring that the alleged AMP expenses incurred by the Appellant represents only domestic transactions undertaken with third parties and hence in absence of a valid international transaction, the adjustment is outside the purview of the jurisdiction of learned TPO; 3. Erred in not appreciating that there is no arrangement whatsoever between the Appellant and its Associated Enterprises ('AE') for promotion of AE's brand by incurring AMP expenses on behalf of the AE; 4, Erred in concluding that the Appellant has entered into an international transaction of providing brand promotion services to its AE; 5. Erred in violating the principles of judicial discipline by not 12 Abbott India Ltd. following the decision of Hon'ble Delhi High Court in case of Maruti Suzuki India Limited (381 ITR 117), wherein AMP expenditure is held not to be an international transaction falling under section 928 of the Act; 6. Erred in incorrectly interpreting and applying the provisions of explanation (i)(d) to section 928(2) of the Act dealing with provision of services including market research, market development, etc: which is not applicable to the facts of the Appellant'$ case; AMP activity alleged as promotion of AE's brand in India 7. Erred in holding that by incurring the impugned AMP expenses, the Appellant was promoting AE's brand instead of appreciating that the Appellant was only carrying out its business by using the well-established brand name of Abbott and any benefit derived by the AE is purely incidental in nature; Transactional Net Margin Method ('TNMM'): Bundled Approach 8 Erred in not appreciating that once an international transaction entered by the Appellant is accepted at ALP on the basis of TNMM, it would be illogical and improper to treat AMP activity, being one of the functions of distribution activity performed by the Appellant, as a separate international transaction which is inconsistent with the tenets of application of TNMM; Application of Bright Line Test ('BLT')

Erred in concluding that the Appellant has rendered a service to the AE by incurring the AMP expenses and by holding that the excessive AMP expenses under BLT should be reimbursed by the AE; 10 Without prejudice to the_above, erred in applying the BL T to determine the arm's length price of the AMP expenses incurred by the Appellant, without appreciating that no such method has been prescribed under the Act and the Income-tax Rules, 1962; Comparable companies for BLT 11. Without_prejudice_to_the_above, arbitrarily upholding TPO's action of adoption of internal non-AE segment of Novo-Nordisk for application of BL T without providing concrete reasons for the same and disregarding Appellant's submissions and factual contentions; 13 Abbott Indlia Ltd: 12.Without_prejudice to the above_disregarding Appellant's AMP analysis vis-a-vis external comparables which was established to be at arm's length by the Appellant; Certain expenses are not in nature of AMP expenses 13. Erred in ignoring the fact that the AMP spend of the Appellant primarily consists of selling expenses/ non-brand related expenses hugely benefitting the Appellant and therefore should not be considered as part of brand building expenses for the purpose of determining the AMP expense of the Appellant; 14. Without_prejudice to the_above,_erred in including market research and post market study report expenses as part of AMP expenses; Mark-Up on AMP expenses 15, Without_prejudice to the_above; erred in holding that the Appellant should have earned a mark-Up of 9.29% on the alleged excessive AMP expenses to be reimbursed to the Appellant; 16. Without_prejudice to the_above erred in not adopting 3 scientific search process to identify companies comparable to the Appellant, for computing the mark-up to be applied to the alleged excessive AMP expenses and considering inappropriate comparables; B Corporate tax grounds 17. Erred in rejecting and dismissing ground No 2 of the Appellant for quantification of current year and earlier years long term capital loss of Abbott India Limited (Amalgamated Company) of Rs. 22,= 55,28,801. 18 Erred in considering Rs: 22,55,28,801 as the long term capital loss belonging to Solvay Pharma Private Limited (the amalgamating entity) and not appreciating that it was a loss of Abbott India Limited (amalgamated company) and; therefore, section 72A was not applicable: 19. The Appellant submits that considering the facts and circumstances Of its case and the law prevailing on the subject, it is entitled to carry forward the long term capital loss of Rs. 22,55,28,801 to the subsequent assessment years as claimed by it in the return of income in accordance with provisions of section 74 of the Act; 20. The Appellant prays that the AO be directed to quantify the 14 Abbott India Lrd, long term capital loss to be carried forward to subsequent assessment years in accordance with the law: 20. The first issue which arose out of grounds no.1 to 16, relates to Transfer Pricing Adjustment of ? 1,85,23,808 on account of alleged excessive advertisement, marketing and promotion expenses (AMP) expenses_ 21. Before uS, the leaned Counsel for the assessee submitted that the expenditure incurred on AMP is not an international transaction. In support of this contention, he relied upon the decision of the Tribunal rendered in assessee's own case in ITA no.1535/Mum./2017, dated 18th November 2019, for the assessment year 2012-13. He also relied upon the decision in Maruti Suzuki India Ltd [2015] 64 taxmann:com 150 (Del. ) ; Nivea India P Ltd _ [2018] 92 taxmann.com 165 (Mum:); and LOreal India Pvt. Ltd_ [2020] 116 taxmann.com 149 (Mum.). 22_ The learned Departmental Representative relied upon the observations of the authorities below 23. Considered the submissions of both the parties and perused the material on record in the light of the decisions relied upon by the learned Counsel for the assessee: We find that identical issue on similar set of facts and circumstances has been decided by uS in assessee's appeal being ITA no.3068/Mum./2016, in assessment year 15 Abbott India Lta. 2010-11, vide ground no.2 (sub-grounds no.2.1 to 2.3) in Para-7 to 8 above, consistent with the view taken therein, we set aside the impugned order passed by the learned CIT(A) and allow these grounds raised by the assessee for this year also. Thus, grounds no.1 to 16 are allowed 24_ Grounds no.17 to 20, relates to quantification of current year and carry forward long term capital loss to subsequent assessment year earlier years. 25 The Transfer Pricing Officer in his order discussed the issue the contents of which are reproduced below: "3.1 It appears from the assessment order that the AO has disallowed the claim for long term capital losses of the company which amalgamated with it under section 72A of the IT Act, 1961, on the ground that the section 72A speaks about carry forward to only "accumulated loss and unabsorbed depreciation and accumulated loss as defined in sub section 7 of section 72A of the IT Act 1961 reads as follows: Section 72A(1) [Provisions relating to carry forward and set off of accumulated loss and unabsorbed depreciation allowance in amalgamation or demerger, etc: 72A (1) Where there has been an amalgamation of _ (a) A company owing an industrial undertaking or a ship or & hotel with another company; or (b) a banking company referred to in clause (c) of section 5 of the Banking Regijiation Act, 1949 (10 of 1949 with a specified bank; or (C) one or more public sector company or companies engaged in 16 Abbott India Ard, the business of operation of aircraft with one or more public sector company or companies engaged in similar business, then, notwithstanding anything contained in any other provision of this Act, the accumulated loss and the unabsorbed depreciation of the amalgamating company shall be deemed to be the loss Or, as the case may be, allowance for unabsorbed depreciation of the amalgamated company for the previous year in which the amalgamation was effected, and other provisions of this Act relating to set off and carry forward of loss and allowance for depreciation shall apply accordingly.]' Section 72A(7): - "(7 For the purposes of this section,- 1 ~[(a) "accumulated loss means SO much of the loss of the predecessor firm or the proprietary concern or the private company Or unlisted public company before conversion into limited liability partnership Or the amalgamating company or the demerged company, as the case may be, under the head "Profits and gains of business or profession (not being a loss sustained in a speculation business) which such predecessor firm Or the proprietary concern or the company 0r amalgamating company Or demerged company, would have been entitled to carry forward and set off under the provisions of section 72 if the reorganisation of business or conversion or amalgamation Or demerger had not taken place,] (aa) "industrial undertaking" means any undertaking which is engaged in_ (i) the manufacture or processing of goods. or (ii) the manufacture of computer software; or (iii) the business of generation or distribution of electricity or any other form of power; or (iiia) the business of providing telecommunication services, whether basic or cellular, including radio paging, domestic satellite service, network of trunking, broadband network and internet services; or] (iv) mining; Or (v) the construction f ships, aircrafts or rail systems; ] 1-7(b) "unabsorbed depreciation means SO much of the allowance for depreciation of the predecessor firm Or the proprietary concern Or the private company or unlisted public company before conversion into limited liability partnership Or the amalgamating company or the demerged company, as the case may be, which remains to be allowed and which would have been allowed to the predecessor firm or the proprietary concern Or the company or amalgamating company Or demerged company, as the case may be, under the provisions of this Act, if 17 Abbott India Lrd, the reorganisation of business or conversion or amalgamation or demerger had not taken place;]] 1(c) "specified bank" means the State Bank of India constituted under the State Bank of India Act, 1955 (23 of 1955) or 3 subsidiary bank as defined in the State Bank of India (Subsidiary Banks) Act, 1959 (38 of 1959) Or a corresponding new bank constituted under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970) or under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act: 1980 (40 of 1980).]" 3.2 The AO held that the claim for set off was under section 72A of the IT Act 1961 and not under section 72 and 74 which are general provisions relating to set off and carry forward of long term capital losses and these general provisions will not apply to assessee's case since the provisions of section 72A of the IT Act 1961 applied only to business loss and unabsorbed depreciation as defined in sub section 72A (1) and 72A (7) of the IT Act 1961 and sections 72 and 74 had no relevance and applicability to provisions of section 72A of the IT Act 1961 since it was a code by itself specifically applicable to certain cases in certain situations as specified in section 72A of the IT Act 1961. Appellant's submissions - 3.3 In this connection assessee has submitted as follows in the statement of facts: - 3 Quantification of the current year long term capital loss and carry forward of losses to subsequent assessment years in the order; 3.1 During the previous year relevant to the above assessment year, the appellant incurred long term capital loss on the sale of units of mutual funds amounting to Rs.3 01,87,960/- 3.2 The following long term capital losses were brought forward from the earlier assessment years details whereof are given as under. Long term capital loss on Assessment Year sale of unit of Mutual fund (amount in Rs) 2007-08 8,60,50,127 2008-09 5,67,72,944 18 Abbott India Itd; 2009-10 5,25,17,770 19, 53, 40,841 Total 3.3 The aforesaid long term capital loss aggregating to Rs.22,5528,801 (Rs.3,01,87,960 incurred during the captioned assessment year and Rs.19,53,40.841 brought forward from earlier years) is to be carried forward to subsequent years u/s 74 of the Income Tax Act, 1961 and the same needs to be mentioned in the assessment order in terms of section 157 of the Income Tax Act, 1961, 3.4 However, in the order passed u/s 143(3) r W. S. 144C(3) , the long term capital loss aggregating to Rs.22,55,28 801 has been left out to be quantified and mentioned as to be carried forward to the subsequent years for setting off. 26_ The assessee being aggrieved by the aforesaid decision of the Transfer Pricing Officer , went in appeal before the first appellate authority, wherein the learned CIT(A) rejected the issue and directed the Assessing Officer to check the applicability of section 115JB of the Act vis-a-vis the provision of section 72A of the Act and take appropriate action as per law_ The relevant observations of the learned CIT(A) on this issue are reproduced below: "Decision: - 3.4 I have considered the facts of the case and seen that the assessee has not furnished any further submissions and explanations in this regard and hence the ground of appeal is decided on the basis of the assessment order and statement of facts. Prima facie if the long term capital losses relate to the amalgamated company which amalgamated with the assessee and the claim is to be considered only under section 72A of the IT Act 1961, otherwise the claim for even the set off of and carry forward of unabsorbed business losses and un absorbed depreciation 0f the amalgamated company will not be sustainable under the law. However the assessee has refrained from furnishing details and documents and a copy of the P&L Account 19 Abbott India Lrd. for the same and hence the ground of appeal is adjudicated on the basis of the assessment order and statement of facts and ground of appeal number 2. Prima facie if the long term capital losses are those of the amalgamated company, then the set off of and carry forward of long term capital losses of the amalgamated company of Rs.22,55,28,801/- are not allowable u/s. 72A of the IT Act 1961 and as such when section 72A of the IT Act 1961, provisions of section 72 and 74 of the IT Act 1961 are not applicable to the facts of the case: In nutshell, assessee'S ground of appeal number 2 is rejected in facts of the case and in law: The AO is also directed to check the applicability of section 115JB of the IT Act 1961 vis-a-vis the provisions of section 72A of the IT Act 1961 and take appropriate action as per law. 5, In nutshell, the appeal of the assessee is Partly Allowed. 27 Still aggrieved , the assessee is in further appeal before the Tribunal: 28 The learned Counsel for the assessee submitted before us that provisions of section 74 of the Act does not restrict the set-off and carry forward of losses under the head Capital Gains of the amalgamating company to the amalgamated company. Further, it does not specifically require that the same assessee shall be eligible for claiming set-off of carried forward capital loss. The learned Counsel further prayed that the Assessing Officer be directed to quantify the long term capital loss to be carried forward to subsequent assessment years. 29 Considered the submissions of both the parties and perused the material on record in the light of the decisions relied upon by the 20 Abbott India Ltd. learned Counsel for the assessee: We notice that the assessee is carrying forward the long term capital loss incurred by the amalgamating company_ The Assessing Officer applied the provisions of section 72A of the Act to deny the benefit of set-off and carry forward of such long term capital loss. The Revenue Authorities failed to appreciate that the provision of section 72A of the Act applies on to the profit computed under the head Income From Business or Profession. It does not apply to long term capital gain 7 gains. The definition given in section 72A(7) deals only with the terms relating to computation of business profit like accumulated loss, accumulated depreciation, etc The conditions specified in section 72A of the Act all relevant for computation of business profit only. The computation or quantification of set-off or carry forward of capital gains are dealt with by section 74 of the Act. Therefore, we are in agreement with the submissions of the learned Authorised Representative. Consequently, we are inclined to direct the Assessing Officer to quantify the set-off of current and earlier year long term capital loss of the amalgamating company as per section 74 of the Act. Accordingly, the grounds raised by the assessee are allowed for statistical purposes_ 30. Insofar as additional ground no.1 is concerned, the issue relates to disallowance of deduction on account of education cess. 21 Abbott India Lta.

Considered the rival submissions and perused the material on record The related facts and circumstances of the issue raised by the assessee are materially identical to the issue decided by uS vide ground no.14, raised by the assessee in its appeal being ITA no. 3046/Mum./2016, vide Para-14 above, wherein we have set aside the impugned order passed by the learned CIT(A) and allowed the ground of appeal: Consistent with the view taken therein , we set aside the impugned order passed by the learned CIT(A) and allow the additional ground no.1 raised by the assessee: 32 Additional ground no.2, relates to refund of dividend distribution tax paid in respect of non-resident shareholders. 33 Considering the submissions of both the parties and on a perusal of the material on record as well as in the facts and circumstances of the case, we find that this issue is exactly similar to the issue decided by us in ITA no_ 3068/Mum./2016, vide Para-17 above, wherein, for the reason stated therein, we have restored this issue to the file of the Assessing Officer for further verification directing him to decided the issue in accordance with Iaw after providing reasonable opportunity of being heard to the assessee: Thus, this additional ground no.2, is allowed for statistical purposes. 34 In the result, assessee's appeal is partly allowed 22 Abbott Irdia Ltd; ITAno.Z168/Mum L2012 Assessment Year 2013-14 35_ The grounds of appeal raised by the assessee are reproduced below: 13 On the facts and in the circumstances of the case and in Iaw, reference by the AO to the TPO is bad in Iaw, illegal and void-ab- initio and therefore all adjustments made vide order dated 16 November 2017 by the TPO are consequentially bad and illegal and be ordered to be deleted. On the facts and in the circumstances of the case and in law, the learned DRPITPOJAO has: Presumption of transaction in the nature of 'provision of brand promotion services 2 . Erred in proposing an adjustment Of Rs. 2,17,40,964 to the income of the Appellant alleging that the AMP expense incurred by the Appellant is a separate purported international transaction under Section 928 of the Act; 3 not considering the merits in the case of the Appellant and with the sheer motive of keeping the issue alive and to protect the interest of the Department, upheld the reasons of TPO; 4 Erred in ignoring that the alleged AMP expenses incurred by the Appellant represents only domestic transactions undertaken with third parties and hence in absence of a valid international transaction, the adjustment is outside the purview of the jurisdiction of learned TPO; 5 Erred in not appreciating that there is no arrangement whatsoever between the Appellant and its Associated Enterprises ('AE') for promotion of AE's brand by incurring AMP expenses on behalf of the AE; 6 Erred in concluding that the Appellant has entered into an international transaction of providing brand promotion services to its AE; 7. Erred in violating the principles of judicial discipline by not following the decision of Hon'ble Delhi High Court in case of Maruti Suzuki India Limited (381 ITR 117), wherein AMP 23 Abbott India Lta. expenditure is held not to be an international transaction falling under section 928 of the Act; 8. Erred in incorrectly interioretigg32 and applying the provisions of explanation (i)(d) to section of the Act dealing with provision of services including market research, market development, etc: which is not applicable to the facts of the Appellant'$ case; AMP activity alleged as promotion of AE'$ brand in India 9 Erred in holding that by incurring the impugned AMP expenses, the Appellant was promoting AE'$ brand instead of appreciating that the Appellant was only carrying out its business by using the well-established brand name of Abbott and any benefit derived by the AE is purely incidental in nature; Transactional Net Margin Method ( 'TNMM') : Bundled Approach 10. Erred in not appreciating that once an international transaction entered by the Appellant is accepted at ALP on the basis of TNMM; it would be illogical and improper to treat AMP activity, being one of the functions of distribution activity performed by the Appellant, as a separate international transaction which is inconsistent with the tenets of application of TNMM; Application of Bright Line Test ('Bl T') 11 Erred in concluding that the Appellant has rendered a service to the AE by incurring the AMP expenses and by holding that the excessive AMP expenses under BL T should be reimbursed by the AE; 12. Without prejudice_to the above erred in applying the BL T to determine the arm'$ length price of the AMP expenses incurred by the Appellant; without appreciating that no such method has been prescribed under the Act and the Income-tax Rules, 1962; Comparable companies for Bl T 13 Without_prejudice to the_above, arbitrarily upholding TPO's action of adoption of internal non-AE segment of Novo-Nordisk for application of BLT without providing concrete reasons for the same and disregarding Appellant's submissions and factual contentions; 14._ Without prejudice to theabovez disregarding Appellant's AMP analysis vis-a-vis external comparables which was established to be at arm's length by the Appellant; 24 Abbott India (td; Certain expenses are not in nature of AMP expenses 15. Erred in ignoring the fact that the AMP spend of the Appellant primarily consists of selling expenses/ non-brand related expenses hugely benefitting the Appellant and therefore should not be considered as part of brand building expenses for the purpose of determining the AMP expense of the Appellant; 16, Without_prejudice to the_abovez erred in including market research and post market study report expenses as part of AMP expenses; Mark-Up on AMP expenses 17. Without_prejudice to the_above erred in holding that the Appellant should have earned a mark-Up Of 9.11 % on the alleged excessive AMP expenses to be reimbursed to the Appellant; 18. Without prejudice to the above, erred in not adopting a scientific search process to identify companies comparable to the appellant, for computing the mark-Up to be applied to the alleged excessive AMP expenses and considering inappropriate comparables: 36_ Ground no.1, being general in nature, do not require separate adjudication. 37 The issue arising out of grounds no.2 to 18, relates to Advertising, Marketing and Promotion adjustment presumption of transaction in the nature of provisions of brand promotion services 38 Before uS, the leaned Counsel for the assessee submitted that the expenditure incurred on AMP is not an international transaction_ In support of this contention, he relied upon the decision of the Tribunal rendered in assessee's own case in ITA no.1535/Mum./2017, dated 18th November 2019, for the assessment year 2012-13. He also relied upon the decision in Maruti Suzuki India Ltd [2015] 64 taxmann.com 25 Abbott India Ltd; 150 (Del.) ; Nivea India P Ltd _ [2018] 92 taxmann com 165 (Mum:); and LOreal India Pvt. Ltd. [2020] 116 taxmann com 149 (Mum.)_ 39 The learned Departmental Representative relied upon the observations of the authorities below 40 . Considered the submissions of both the parties and perused the material on record_ We find that identical issue on similar set of facts and circumstances has been decided by us in assessee's appeal being ITA no.3068/Mum./2016, in assessment year 2010-11, vide ground no.2 (sub-grounds no.2.1 to 2.3) in Para-7 to 8 above, consistent with the view taken therein, we set aside the impugned order passed by the learned CIT(A) and allow these grounds raised by the assessee for this year also. Thus, grounds no.2 to 18 are allowed_ 41_ Insofar as additional ground no.1 is concerned, the issue relates to disallowance of deduction on account of education cess. 42 Considered the rival submissions and perused the material on record The related facts and circumstances of the issue raised by the assessee are materially identical to the issue decided by uS vide ground no.14, raised by the assessee in its appeal being ITA no. 3046/ Mum./2016, vide Para-14 above, wherein, for the reason stated therein, we have set aside the impugned order passed by the learned 26 Abbort Indla Ltd; CIT(A) and allowed the ground of appeal: Consistent with the view taken therein, we set aside the impugned order passed by the learned CIT(A) and allow the additional ground no.1 raised by the assessee_ 45 Additional ground no.2, relates to refund of dividend distribution tax paid in respect of non-resident shareholders. 46 Considering the submissions of both the parties and on a perusal of the material on record as well as in the facts and circumstances of the case, we find that this issue is exactly similar to the issue decided by us in ITA no: 3068/Mum./2016, vide Para-17 above, wherein for the reason stated therein , we have restored this issue to the file of the Assessing Officer for further verification directing him to decide the issue in accordance with law after providing reasonable opportunity of being heard to the assessee: Thus, this additional ground no.2, is allowed for statistical purposes. 47 In the result, assessee's appeal is partly allowed 48 To sum Up, all the appeals are partly allowed_ Order pronounced open court on 02.06.2021 - - RAVISH SOOD S. RIFAUR RAHMAN; ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 02.06.2021 27 Abbott India Ltd; Copy of_the order forwarded to: (1) (2) (3) (4) (5) (6) The Assessee; The Revenue; The CIT(A); The CIT , Mumbai City concerned; The DR, ITAT, Mumbai; Guard file. By Order Pradeep J. Chowdhury Sr. Private Secretary Assistant Registrar ITAT, Mumbai