SWATCH GROUP (INDIA) PRIVATE LIMITED,NEW DELHI vs. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 22(2), C.R. BUILDING

4. In view of the discussions made by the TPO in his order u/s 92CA(3) of the Act dated 10.11.2022, the TPO issued a show cause notice dated 05.10.2023 and 11.10.2023 (as referred in para 12 of page no. 11 of its order placed at pg. no. 119- 120 of the Appeal set) as to why adjustment in the AMP expenses should not be made by applying Bright Line Test. The relevant extract of the said show cause notice is reproduced as under:

“Advertising, marketing expenditure incurred on behalf of AE On perusal of information submitted by Assessee it is seen that it is actively promoting brands of AEs such as Omega, Rado, Tissotetc and also ensures spare parts are available with service centers and by doing so it is increasing customer satisfaction and brand value of such brands in India and thereby creating valuable intangible. It is not clear from information submitted by Assessee whether it is entitled to any consideration if such brands are sold by AEs to any other entity. Accordingly, this office deems it fit that an appropriate consideration should have been received by Assessee for creating such valuable marketing intangible for AEs in India. Primary Approach -Bright Line In relation to advertising, marketing and promotion expenses, this office has taken a stand that bright line test should be applied and any non-routine expenditure 3 ITA No.- 5929/Del/2024 Swatch Group (India) Pvt. Ltd. incurred by the assessee in excess of the expenditure incurred by the comparables should be considered as the expenditure incurred by the assessee for the benefit of the parent AE and corresponding adjustment should be made. The Hon'ble High Court in case of Sony Ericsson has rejected the contention of revenue on the applicability of bright line test and corresponding calculations. The Department has filed an appeal against the order of the Hon'ble High Court and contested the judgment before the Hon'ble Supreme Court. The Hon'ble Supreme Court has rejected the petitioner's application for stay of the order of the Hon'ble High Court. Accordingly, the primary contention of this office remains the same as mentioned above. The comparables identified for this approach are same as the comparables considered in the case of alternative approach discussed below. In view of the Hon'ble Supreme Court order refusing the stay, the alternative approach in line with the directions/judgment of the Hon'ble High Court on AMP in case of Sony Ericsson is discussed below. ……………………….xxx………………….

4.1 The assessee submitted its reply to the above show-cause notice which was summarized by the TPO in para no. 13 (placed at page no. 122 of the appeal set) which is reproduced as under:

REPLY GIVEN BY THE ASSESSEE: The assessee company has given its replies in the matter vide submission dated 19.10.2023, and has raised following issues/points: i. AMP Expenses is not an international Transaction. ii. The AMP expenditure incurred, is only for promoting sales of its products in India / Swatch Group India is not engaged in Brand Building activities. iii. The assessee submitted that the primary reliance on brightline approach is erroneous. iv. Arguments for certain adjustments in comparability v. Arguments against the substantive adjustment basis intensity. vi. The assessee objected to the selection of comparables.

(emphasis supplied by us)

ITA No.- 5929/Del/2024 Swatch Group (India) Pvt. Ltd. 5. However, the AO did not accept the above contentions of the assessee and applied Bright Line Test for making adjustment in the AMP expenses and proposed an adjustment of Rs. 3419.25 lacs. The relevant discussion by the TPO in para no. 15 to 20 (placed at page no. 123-125 of the Appeal set) are reproduced as under:

“BRIGHT LINE APPROACH 15. As far as the primary reliance of this office on segmentation estimating the segregation of routine promotional expenditure for purchase resale of products from the expenditure on marketing and market development service to the AE termed as brightline approach is concerned, it has already been discussed above that the Revenue Department has proposed a SLP before the Hon’ble Supreme Court of India. The assessee has pointed out that the rejection of stay by the Hon'ble Supreme Court was limited to the objection of the assesse on the existence of the international transaction and the same was not on the rejection of brightline. The assessee has not produced any order of the Hon'ble Court which has led it to believe so. Since the judgment of the Hon'ble High Court has not been stayed and in view of the objections of the Revenue to the judgement in the case of Sony Ericsson coupled with the fact of proposing an SLP on this issue, the contention to not consider Brightline analysis as primary method is not found acceptable. Moreover, this method is in accordance with the provisions of rule 10AB as already discussed in details above.

Keeping alive such stand of the revenue, benchmarking of International transaction for marketing and development of market services for the AE is carried out as under: 16. The ratio of AMP expenditure to sales in the case of the assessee is determined as given below:

Sl. Nature of Transactions FY 2020-21 (Amount No. in Rs. lacs) 1 Advertisement expenseS 2111.63 2. Selling and distribution expenses 81.09 3. Point of sale material 494.04 4. Trade Discount 902.17 Total AMP Expenditure by the 3588.73 assessee Gross sales of the assessee 38548.73 AMP to gross sales (AMP /Sales) 9.31% ITA No.- 5929/Del/2024 Swatch Group (India) Pvt. Ltd.

Sl. No. Company Name AMP / Sales 1 Ethos Ltd. 4.06% 2 Kapoor Watch Co. Pvt. 0.99% Ltd. 3 Johnson Watch 0.76% company Pvt. Ltd. Arithmetic Mean 1.94%

18. The amount which represents the bright line and the amount that should have been compensated to the assessee company are computed hereunder:

Value (Rs. in Lacs) Particulars Value of gross sales of A 38,548.73 assessee Arithmetic mean of B 1.94% AMP / Sales of comparables Amount that represents C=B*A 747.85 price for routine AMP activities Total expenditure D 3,588.93 incurred by assessee on AMP Arm’s Length Price of E=D-C 2,841.08 the service / expenditure for creation of marketing intangible in India in favour of the AE Mark -up @ 20.35% F=20.35% of E 578.16 The amount by which G=E+ F 3,419.25 the assessee company should have been reimbursed by A.E, and for which the adjustment is proposed to be made ITA No.- 5929/Del/2024 Swatch Group (India) Pvt. Ltd. Price received from the H 0 AE for creation of marketing Adjustment required to I=G-H 3,419.25 be made for creation of marketing intangibles

19. The mark-up is considered at 20.35%, being the same as considered in the alternative analysis discussed below.

6.1 Accordingly, the TPO in para no. 31 and 31.1 of its order (placed at pg. no. 137 of the Appeal set) determined the adjustment by adopting Bright Line Test approach at Rs. 34,19,25,000/- as under:

“31. Since the margin earned by the assessee i.e. 16.45% (OP/OR is more than the average of comparable, the adjustment is not required by adopting intensity based approach. 7 ITA No.- 5929/Del/2024 Swatch Group (India) Pvt. Ltd. 31.1 Accordingly, as discussed in para 18 above (AMP adjustment by adopting BLT approach) the following adjustments may be made to the income of the assessee, being the difference between the arm's length price and the price charged by the assessee on incurring AMP expense for branding AE's intangibles S.No. Segment Adjustment in INR 1. Advertising and marketing 34,19,25,000/- expenditure

7. The AO passed a draft assessment order u/s 144C(1) of the Act, dated 11.12.2023 by incorporating the above finding of the TPO and determined the total income of the assessee at Rs. 41,07,12,920/- (placed at pg. no. 107 of the appeal set) as under:

Sl. No. Description Amount (in INR) 1 Income as per Return of Income Filed 6,87,87,920/- 2 Income as computed u/s 143(1)(a) 6,87,87,920/- 3 Variation as discussed in Para 3.7 34,19,25,000/- 4 Total income / Loss determined as per 41,07,12,920/- the above proposal

“7.3 Ground No. 7- That on the facts and circumstances of the case and in law, Ld. AO/Ld. TPO have erred in proposing adjustment to the income of the Assessee on ITA No.- 5929/Del/2024 Swatch Group (India) Pvt. Ltd. protective basis without appreciating that there are no underlying provisions in the Act that support protective adjustment making the order bad in law.

Ground No. 8- That on the facts and circumstances of the case and in law, the Ld. AO/Ld. TPO have erred in proposing protective adjustment applying bright line test ("BLT") as a 'tool' to benchmark the alleged international transaction, even though BLT has been jettisoned by jurisdictional Hon'ble High Court. Ground No. 9- That on the facts and circumstances of the case and in law, Ld. AO/ TPO have erred by not appreciating that BLT is not a prescribed method under the purview of section 92C of the Act. Ground No. 10- That on facts and circumstances of the case and in law, Ld. AO/Ld. TPO have erred in proposing an adjustment of INR 34,19,25,000/- on protective basis applying the BLT. 7.3.1 Directions of DRP: 1. The above grounds are interrelated and hence are being taken up together.

2. Panel has considered rival contentions. In the submissions, assessee has mentioned that bright line limit is not a method to benchmark transactions. Since assessee has not considered AMP as an international transaction, it has neither mentioned it in form 3CEB nor carried out a study on it, it was contingent upon TPO to carry out this exercise. In the preceding paras it has been discussed that AMP activities of the assessee is an international transaction in consonance with Income tax and Rules. However, the transaction under reference has its under aspects which do not fit in the traditional way MAMs are interpreted. In order to make comparison studies more accurate, certain adjustments have to be made to the typical MAMs. TPO has used modified cost-plus method, which is also called bright line test or BLT in common parlance, to make comparison more accurate and relevant to the case of the assessee. Despite all the confusion around BLT as a method of calculating arm's length price, BLT is nothing but cost-plus method. it is a statistical tool used for transfer pricing calculations.

3. The basic objective of making this comparability analysis is to determine limit of AMP Expenditure, beyond which since the assessee who is not the owner of brand name/intangible, therefore it is not expected to use/spend resources on enhancement of intangible property for the brand owner, just like a third party would not. In order to benchmark the transactions, TPO compared AMP expenditure of the assessee, with AMP expenditure of other comparables engaged in same/similar business. He used AMP (including trade discount and volume rebate) to the sales ratio for comparability analysis.

13. This ground of objection is accordingly disposed off.”

9. After the receipt of the directions of the Ld. DRP, the AO passed the final assessment order on 02.09.2024, reducing amount the adjustments from Rs. 34,19,25,000/- to Rs. 22,35,89,000/- as per the directions of the Ld. DRP.

10. Aggrieved with the said order, the assessee is in appeal before us on the following grounds of appeal:

“ 1. That on the facts and circumstances of the case and in law, the order passed by the Ld. Assessing Officer ("Ld. AO") under Section 143(3) read with section 144C(13) read with section 144B of the Act is bad in law and liable to be quashed to the extent it confirms the additions/ disallowances made in the assessment order.

2. That the Ld. AO/Learned Transfer Pricing Officer ("Ld. TPO")/ Hon'ble Dispute Resolution Panel ("DRP") have erred in enhancing the income of the Appellant by INR. 22,35,89,000/-in respect of the advertising and marketing ("AMP") expenditure incurred by the Appellant.

4. That on the facts and circumstances of the case and in law, the Ld. AO/Ld. TPO/ Hon'ble DRP have failed to appreciate that assumption of existence of an international transaction without having any valid agreement as basis has been overruled by the Hon'ble High Court numerous instances.

6. That on the facts and circumstances of the case and in law, the Ld. AO/Ld. TPO/Hon'ble DRP have erred in not appreciating that marketing is one of the primary functions undertaken by the Appellant and the beneficiary on account of incurring of AMP expenses was the Appellant itself and the same does not require to be compensated/remunerated separately by the AE for any incidental benefits endured by the AE.

7. That the Ld. TPO/Ld. AO/ Hon'ble DRP has erred in not proposing the said adjustment as protective' in nature as has been done in the past by the Ld. TPO/Ld. AO/Hon'ble DRP.

8. That on the facts and circumstances of the case and in law, the Ld. AO/Ld. TPO/Hon'ble DRP have erred in making adjustment applying bright line test ("BLT") as a 'tool' to benchmark the alleged international transaction, even though BLT has been jettisoned by jurisdictional Hon'ble High Court.

9. That on the facts and circumstances of the case and in law, Ld. AO/Ld. TPO/ Hon'ble DRP have erred by not appreciating that BLT is not a prescribed method under the purview of section 92C of the Act.

10. That on facts and circumstances of the case and in law, Ld. AO/Ld. TPO/ Hon'ble DRP have erred in making an adjustment of INR 22,35,89,000/- on non-protective basis applying the BLT.

11. That on the facts and circumstances of the case and in law, the Ld. AO/Ld. TPO/ Hon'ble DRP have erred by wrongfully selecting inappropriate comparables for determining the BLT.

ITA No.- 5929/Del/2024 Swatch Group (India) Pvt. Ltd.

12. That the Ld. TPO/Ld. AO/Hon'ble DRP erred in including 'Point of Sales Material' expenses in computing the AMP expenses of the Appellant.

13. That on facts and circumstances of the case and in law, Ld. TPO/Ld. AO/Hon'ble DRP have erred, by inappropriately loading a return of 20.35 percent in respect of allegedly incurred excessive AMP expenditure.”

11. Grounds nos. 1 and 2 of the appeal are general in nature and do not require any separate adjudication.

12. Ground no. 3 to 5 of the appeal challenges the finding of the AO that advertising and marketing (AMP) expenditure amounts to ‘international transaction’. These ground of the appeal in view of the discussion as later made in this order become academic and kept open in this appeal.

13.1 In this regard, the assessee has filed a ‘case synopsis’, the relevant extract of which is reproduced as under; ‘V. BLT is not an appropriate benchmarking approach In the order, the Ld. AO / Ld. TPO had proposed adjustment on account of AMP expenditure by undertaking comparability analysis, the basic premise of which was BLT. BLT does not have a statutory mandate and cannot be applied in order to determine the international transaction of incurring of AMP expenses on behalf of AE. BLT approach has been jettisoned by the Hon'ble High Court in the below pronouncements:

ITA No.- 5929/Del/2024 Swatch Group (India) Pvt. Ltd.

13.2 Further, in this regard, the assessee has also filed a written submission at page no. 457 to 462 of the paper book, in respect of its grounds nos. 8,9, & 10 challenging the application of Bright Line Test for marking the adjustment in respect of AMP expenses which are reproduced as under:

ITA No.- 5929/Del/2024 Swatch Group (India) Pvt. Ltd. “ Ground No. 8, Ground No. 9 and Ground No. 10 "That on the facts and circumstances of the case and in law, the Ld. AO/Ld. TPO have erred in proposing protective adjustment applying bright line test ("BLT") as a 'tool' to benchmark the alleged international transaction, even though BLT has been jettisoned by jurisdictional Hon'ble High Court; That on the facts and circumstances of the case and in law, Ld. AO/ TPO have erred by not appreciating that BLT is not a prescribed method under the purview of section 92C of the Act; and That on facts and circumstances of the case and in law, Ld. AO/Ld. TPO have erred in proposing an adjustment of INR 34,19,25,000/- on protective basis applying the BLT." In this regard, the Assessee wishes to submit as under: In the Order, the Ld. AO/Ld. TPO had proposed adjustment on account of AMP expenditure by undertaking comparability analysis, the basic premise of which was BLT. BLT does not have a statutory mandate and cannot be applied in order to determine the international transaction of incurring of AMP expenses on behalf of AE. In the case of Widex India Private Limited, Chandigarh Tribunal has held that AMP intensity approach is just another manner of applying BLT and since BLT has been discarded by High Court, AMP intensity approach can also not be applied. Relevant extract from the ruling is provided below: " 18.2 We will come to the decisions and the provisions subsequently as first we must also set out the other applicable, well settled legal position namely that the Hon'ble Delhi High Court in the case of Sony Ericsson also unambiguously held that Bright Line Test was an act of judicial legislation and the Court held that by validating the bright line test, the Special Bench in LG Electronics case went beyond Chapter-X of the Act. The Court while arriving at the conclusion was conscious of the international tax jurisprudence and was constrained to hold that even international tax jurisprudence and commentaries do not recognize the bright line test for bifurcation of routine and non routine expenses. The purpose why we feel the need to address which we thought was a well settled legal position is on account of the resort to the bright line test not only by the TPO despite the available judicial opinion to the contrary but this lapse, we note unfortunately was not addressed by the DRP also who instead have tried to do some skillful tip toeing around the issue and did not clearly refer to the settled legal position thereon and left the conclusion arrived at by the Hon'ble High Court in ambiguity, When we consider how "Intensity approach" as a method which has been carved out by the DRP which we have referred to in the earlier part of this order while adverting to the objections posed by the taxpayer, we find ourselves in agreement to the objections posed and we have no hesitation in holding that what applies to bright line test fully applies to the Intensity approach as worked out in the facts of the present case as it is a reverse of bright line test as its mirror image. The said mental acrobatics and athletics do not have any judicial sanction and cannot be approved." Hence, the use of BLT is without any statutory mandate with a single-minded objective of imputing Transfer Pricing adjustment. 16 ITA No.- 5929/Del/2024 Swatch Group (India) Pvt. Ltd. The Ld. AO/Ld. TPO has proposed the BLT when computing the AMP adjustment in the case of the Assessee although this approach has been rejected by Delhi High Court in case of Sony Ericsson Mobile Communications India Private Limited & Others (ITA No. 16/2014 & connected matter wherein it was held that the BLT is not a correct method under Indian TP regulations. The relevant extracts from the said ruling are given below for ready reference: 120. Notwithstanding the above position, the argument of the Revenue goes beyond adequate and fair compensation and the ratio of the majority decision mandates that in each case where an Indian subsidiary of a foreign AE incurs AMP expenditure should be subjected to the bright line test' on the basis of comparables mentioned in paragraph 17.4. Any excess expenditure beyond the bright line should be regarded as a separate international transaction of brand building. Such a broad-brush universal approach is unwarranted and would amount to judicial legislation. During the course of arguments, it was accepted by the Revenue that the TPOs/Assessing Officers have universally applied bright line test' to decipher and compute value of international transaction and thereafter applied Cost Plus Method' or Cost Method' to compute the arm's length price. The said approach is not mandated and stipulated in the Act or the Rules.... 121..... The TPO can then apply an appropriate method and compute the arm's length price of the two independently and even by applying separate methods. This will be in terms of the provisions of the Act and the Rules and also as per the general principles of international taxation accepted and applied universally. On the other hand, as recorded by us above, applying 'bright line test' on the basis of parameters prescribed in paragraphs 17.4 and 17.6 would be adding and writing words in the statute and the Rules and introducing a new concept which has not been recognised and accepted in any of the international commentaries or as per the general principles of international taxation accepted and applied universally. There is nothing in the Act or the Rules to hold that it is obligatory that the AMP expenses must and necessarily should be subjected to 'bright line test' and the non-routine AMP expenses as a separate transaction to be computed in the manner as stipulated. In view of the above, the Assessee submits that the concept of the BLT has been squarely rejected by the High Court and that the principle has been clearly laid down that in the case that a taxpayer is adequately compensated by its AE by adhering to the arm's length principle then no separate benchmarking of AMP expenses is required. Furthermore, Assessee would like to submit that in the case of the Maruti Suzuki India (supra), the taxpayer initially filed a writ petition before the high court questioning the jurisdiction of the TPO on the issue. The high court set aside the matter for the fresh assessment for the TPO with reference to the guidance provided in the ruling. Thereafter the taxpayer challenged the matter in the Supreme Court. The Hon'ble Supreme Court remitted back the matter to the TPO, with liberty to proceed with the matter uninfluenced by the observations of the high court. The Hon'ble SC set aside the order passed by the Hon'ble high court to the extent of providing guidance on the issue of AMP. Post Supreme Court order, the order of the Hon'ble high court has been nullified and therefore cannot be relied upon. Thus, relying upon the order is in contradiction of the order of the Hon'ble Supreme Court. 17 ITA No.- 5929/Del/2024 Swatch Group (India) Pvt. Ltd. Later on, the Hon'ble high court in the same case of Maruti Suzuki passed an order on appeal filed by the Assessee against the order of the tribunal. The Hon'ble High Court in the Maruti Suzuki Ruling (subsequent ruling passed pursuant to order of Tribunal) also held that the sine qua non for commencing the transfer pricing exercise is to show the existence of an international transaction. The next step is to determine the price of such transaction. The third step would be to determine the arm's length price by applying one or the five methods specified in section 92C of the Act. The fourth step would be to compare the price of the international transaction with the comparables and make transfer pricing adjustment by substituting the arm's length price for the contract price, wherever required. In respect of AMP expenses, the Hon'ble High Court held that the Revenue first arrived at the BLT by comparing the AMP expenses incurred by taxpayer with the average percentage of the AMP expenses incurred by the comparable entities. Since on applying BLT, the AMP spend of taxpayer was found to be 'excessive', the Revenue deduced the existence of an international transaction. It then added back the excess expenditure as the transfer pricing 'adjustment'. The Hon'ble High Court highlighted that this runs counter to legal position explained in CIT v. EKL Appliances Ltd. (2012) 345 ITR 241 (Del), which required a TPO "to examine the 'international transaction' as he actually finds the same." Further, it was also held in the Maruti Suzuki Ruling that since BLT has been rejected by the Hon'ble High Court in the case of Sony Ericsson both for forming the base and determining if there is an international transaction and also for purpose of determining the ALP, then there is no basis on which it can be said that there is an international transaction as a result of AMP expenses incurred by taxpayer. The relevant extract is provided below for ready reference. "

TPO (In its show cause notice dated 11.10.2023 as reproduced earlier in para no. 4 of this order).

Primary Approach – Bright Line In relation to advertising, marketing and promotion expenses, this office has taken a stand that bright line test should be applied and any non-routine expenditure incurred by the assessee in excess of the expenditure incurred by the comparables should be considered as the expenditure incurred by the assessee for the benefit of the parent AE and corresponding adjustment should be made. The Hon'ble High Court in case of Sony Ericsson has rejected the contention of revenue on the applicability of bright line test and corresponding calculations. The Department has filed an appeal against the order of the Hon'ble High Court and contested the judgment before the Hon'ble Supreme Court. The Hon'ble Supreme Court has rejected the petitioner's application for stay of the order of the Hon'ble High Court. Accordingly, the primary contention of this office remains the same as mentioned above. The comparables identified for this approach are same as the comparables considered in the case of alternative approach discussed below. In view of the Hon'ble Supreme Court order refusing the stay, the alternative approach in line with the directions/judgment of the Hon'ble High Court on AMP in case of Sony Ericsson is discussed below.

DRP (In para 15 of the TPO order as reproduced earlier in para no. 5 of this order)

BRIGHT LINE APPROACH 15. As far as the primary reliance of this office on segmentation estimating the segregation of routine promotional expenditure for purchase resale of products from 21 ITA No.- 5929/Del/2024 Swatch Group (India) Pvt. Ltd. the expenditure on marketing and market development service to the AE termed as brightline approach is concerned, it has already been discussed above that the Revenue Department has proposed a SLP before the Hon’ble Supreme Court of India. The assessee has pointed out that the rejection of stay by the Hon'ble Supreme Court was limited to the objection of the assesse on the existence of the international transaction and the same was not on the rejection of brightline. The assessee has not produced any order of the Hon'ble Court which has led it to believe so. Since the judgment of the Hon'ble High Court has not been stayed and in view of the objections of the Revenue to the judgement in the case of Sony Ericsson coupled with the fact of proposing an SLP on this issue, the contention to not consider Brightline analysis as primary method is not found acceptable. Moreover, this method is in accordance with the provisions of rule 10AB as already discussed in details above.

(In para no. 12 of its order as reproduced earlier in para no. 8 of this order.)

….However, since the Hon'ble Delhi High Court rejected the approach of the department with regard to BLT in the case of Sony Ericsson, which has been challenged by the Department in the Hon'ble Supreme Court (the Department has also challenged other similar decisions in the Hon'ble Supreme Court and the Hon'ble High Court against the decisions of the Hon'ble High Court/ITAT), the adjustment on the basis of BLT is proposed on protective basis till the issue in this regard is settled by the Hon'ble Supreme Court. The method applied for this purpose is 'such other method as prescribed by the Board' provided in section 92C(1) (f) read with Rule 10B(1) (f) and Rule 10AB.

15.1 Further, on similar facts, the co-ordinate bench of Tribunal, in the case of Louis Vuitton India Retail Pvt. vs. DCIT (supra) allowed the appeal of the assessee wherein the assessee had challenged the adjustment made in respect of AMP expenses by the TPO by applying the Bright Line Test. The relevant extract of the said order in para no. 21 to 26 are reproduced as under:

“21. Ground No. 4 is regarding adjustment of Rs. 1,84,35,150/-on protective basis on the ground of excess advertisement, marketing and promotion expenditure.

ITA No.- 5929/Del/2024 Swatch Group (India) Pvt. Ltd.

15.2 Therefore, respectfully relying upon the above decisions we agree with the submission of the assessee that the adjustment made by the AO by applying Bright Line Test, in respect of AMP expenses is not sustainable in the eyes of law. We, therefore, delete the adjustment / addition of Rs. 22,35,89,000/- made by the AO and allow the grounds no. 7 to 13 of the appeal.

ITA No.- 5929/Del/2024 Swatch Group (India) Pvt. Ltd. 17. Ground no. 14 of the appeal is reproduced as under:

“ That on facts and circumstances of the case and in law, the Ld. AO has erred in making considering additions of INR 832,809,482 while computing total income in the computation sheet forming part of the assessment order passed under section 143(3) read with section 144C(13) read with section 144B of the Act, despite no such additions being made in the assessment order.

17.1 The above claim of the assessee is restored to the file of the AO and the AO is directed to verify and pass necessary orders as per law. Ground no. 14 of the appeal is allowed for statistical purposes.

“ That on facts and circumstances of the case and in law, Ld. AO has erred in considering 'Income from Other Sources' amounting to INR 65,386,787 twice (as part of the erroneous addition of INR 832,809,482) while computing total income in the computation sheet forming part of the assessment order passed under section 143(3) read with section 144C(13) read with section 144B of the Act.

18.1 The AO is directed to verify the above claim of the assessee and pass necessary orders as per law. Ground no. 15 of the appeal is allowed for statistical purposes.

ITA No.- 5929/Del/2024 Swatch Group (India) Pvt. Ltd. 20. In the result, the appeal of the assessee is partly allowed.

Order pronounced in the open court on 14th January, 2026