K.S.Jhaveri - (1.) By way of this appeal, the appellant has assailed the judgment and order of the tribunal whereby tribunal has partly allowed the appeal of the assesses and remitted the matter back to the AO.
(2.) Counsel for the appellant has framed following substantial questions of law:- "(1) Whether the Tribunal was legally justified in deleting the addition of Rs. 1,90,02,98,677/- being adjustment on account of compensation to be received by the assesses from its Associated Enterprise (AE) for creating marketing intangibles and promoting the brand name of its AE, specifically when the assesses company was promoting marketing intangibles of its AE though the brand belongs to the AE and not to the assesses and the products manufactured by the assesses are also manufactured by the AE and its other subsidiaries in different countries with the same name? (2) Whether the Tribunal was legally justified in holding that Advertisement, Marketing and Promotion (AMP) expenditure was not an international transaction under section 92B even though the assesses was performing Development, Enhancement, Maintenance, Protection and Exploitation (DEMPE) functions for its AE and doing activity of brand building? (3) Whether the Tribunal was legally justified in holding the ground of the revenue as infructous, that the selling expenses should be excluded from the AMP expenditure as well as to use the gross profit rate in the distribution segment as the mark-up on the AMP expenditure? (4) Whether the Tribunal was legally justified in deleting the addition of Rs. 8,92,06,347/- made on account of Arm's Length service fee payment to its Aes specifically when the assesses failed to submit cost benefit analysis for payment of services, proof for requisition of services, proof of availing services and comparison about the cost of services if these services were purchased in India itself? (5) Whether the Tribunal was legally justified in deleting the disallowance of Rs. 5,79,30,029/- made on account of inventories written off specifically when neither any details were furnished by the company nor there was any supporting evidence to justify and establish that the sam deduction was not claimed by it earlier as cost of goods sold? (6) Whether the Tribunal was legally justified in deleting the addition of Rs. 37,08,461/- made on account of travelling and conveyance expenses specifically when the company neither specified the nature and purpose of expenses nor any supporting evidence was filed to justify the claim? (7) Whether the Tribunal was legally justified in deleting the addition of Rs. 84,92,509/- made on account of miscellaneous expenses which were neither verifiable as no supporting evidence was available and also the same could not be established to have been incurred wholly and exclusively for the purpose of business?"
(3.) The facts of the case are that the respondent assesses derives income from manufacturing and trading of razors, blades and other shaving systems, grooming products, torchesdry battery cells etc. In this case draft assessment order under section 143(3) read with section 144C(1) was passed on 27.02.2015 whereby the total income was assessed at Rs. 3,80,74,59,631/- as against the returned income of Rs. 1,60,68,50,750/- by making the following additions/disallowances: (i) ALP adjustment of Rs. 2,13,04,77,882/- made on account of AMP expenses incurred for benefit of its AEs. (ii) Disallowance of Rs. 5,79,30,029/- on account of inventory written off. (iii) Disallowance out of travelling and conveyance expenses of Rs. 37,08,461/- (iv) Disallowance out of other expenses of Rs. 84,92,509/- Being aggrieved by the draft order of the Assessing Officer, the assesses filed objections before the DRP, New Delhi. The DRP issued directions under section 144C(5) on 23.11.2015 and directed the Assessing Officer to use the assesses gross profit rate in the distribution segment as the mark-up of the AMP expenditure taken for the TP adjustment as against the base rate of SBI in accordance with the decision of Hon'ble Delhi High Court in the case of Sony Ericsson. The DRP has raised following additional issues: (i) Royalty amounting to Rs. 6,72,27,640/-. (ii) Intra Group Services of Rs. 8,92,06,347/- (iii) Purchase of fixed assets of Rs. 51,33,22,090/-. ;