Sony India Pvt Ltd. v. Addl. C.I.T .

PER BHAVNESH SAINI, J.M. This appeal by Assessee has been directed against the assessment order dated 26.11.2012 passed by the Addl. CIT, Range-9, New Delhi, under section 143(3) r.w.s. 144C of the I.T. Act, 1961.

2. This appeal by Assessee is heard pursuant to the directions of the Honble Delhi High Court. The Honble ITA.No.6389/Del./2012 & SA.No.871/Del./2018 M/s. Sony India Private Limited, New Delhi. Delhi High Court vide Order dated 23.07.2018 in ITA.Nos.508 and 509 of 2013 and ITA.No.148 and 149 of 2014 has remitted the following issue for fresh adjudication in the light of decision of the Honble Delhi High Court in the case of Sony Ericson Mobile Communication India Private Limited vs. CIT (2015) 374 ITR 118 (Del.). Whether the advertisement and marketing expenditure incurred by the appellant-assessee can be treated as international transaction and made subject matter of adjustment in arms length pricing ?

3. This issue was remitted for A.Ys. 2007-2008 and 2008-2009. Learned Counsel for the Assessee, therefore, submitted that in the present appeal Ground Nos. 3 to 16 are relevant on this issue, which shall have to be adjudicated upon. The Grounds 3 to 16 are reads as under :

3. That the TPO erred in assuming jurisdiction in respect of the advertising, marketing and promotion (AMP) expenditure when such expenditure did not satisfy the requisites of ITA.No.6389/Del./2012 & SA.No.871/Del./2018 M/s. Sony India Private Limited, New Delhi. being an international transaction under section 92B of the Act.

4. That the TPO also erred in not appreciating that even post the amendments by Finance Act 2012, he was not empowered to deem a transaction to be an international transaction.

5. That the Honble Dispute Resolution Panel (hereinafter referred as DRP)/learned AO erred in making an adjustment aggregating to INR 1,126,715,023 out of the proposed adjustments made by the TPO u/s 92CA aggregating to INR 1,218,822,482 and only granting a partial relief of INR 92,107,459.

6. That the learned DRP has completely misconceived the facts and has grossly erred in endorsing the findings of the TPO that the appellant was promoting Sony brand instead of appreciating that the assessee company was only carrying out its business by using the well established brand name of Sony. ITA.No.6389/Del./2012 & SA.No.871/Del./2018 M/s. Sony India Private Limited, New Delhi.

7. That the learned DRP has further failed to comprehend that, the appellant had not incurred any expenditure to promote the brand name of Sony and that the entire expenditure as had been incurred by it on advertisement and marketing, had been incurred by it, solely for the purpose of its own business in India and any incidental benefit arising to its parent could not result in an adjustment in the hands of the appellant.

8. That on the facts and the circumstances of the case and in law, the learned TPO/ Honble DRP has erred in ignoring that the advertisement and marketing expenses incurred by the appellant represents only domestic transaction(s) undertaken with third parties, which under the amended law (Finance Act 2012) were also outside the purview of section 92BA of the Act and hence no adjustment could be made in respect of the same. ITA.No.6389/Del./2012 & SA.No.871/Del./2018 M/s. Sony India Private Limited, New Delhi.

9. That on the facts and circumstances of the case and in law, the learned TPO has grossly erred in applying the bright line method for determining the arms length advertisement and marketing expenditure incurred by the assessee as the same is not a prescribed method under the provisions of section 92C of the Act nor is the same notified by the Central Board of Direct Taxes under section 92C(1)(f) of the Act.

10. That learned DRP has failed to appreciate that once the TPO has accepted that the Transactional Net Margin Method (TNMM) was the most appropriate method, he cannot undertake an analysis of the individual elements of cost as the approach is inconsistent with the tenets of application of TNMM.

11. That, the learned TPO has incorrectly held both on facts and in law that, the AMP expenses incurred by the appellant to be excessive on the basis of a bright line limit arrived at by considering ITA.No.6389/Del./2012 & SA.No.871/Del./2018 M/s. Sony India Private Limited, New Delhi. inappropriate comparables not having similar product, brand profile and market circumstances as the appellant.

12. That the learned TPO/DRP has made a gross error in considering rebates and cash discounts given to dealers, point of sales expenditures and other sales promotion expenditures as a part of the advertisement and marketing expense for computation of transfer pricing adjustment.

13. That the learned AO/TPO/Hon'ble DRP have failed to comprehend that to the extent of expenditure of INR 190,489,900/- incurred on advertising and sales promotion, there has been double disallowance/addition as this expenditure has been treated as 'capital' by the learned AO, and hence entirely disallowed under section 37(1) in computing the taxable income whereas the said amount has been included by the learned TPO while computing the alleged excessive AMP expenditure. ITA.No.6389/Del./2012 & SA.No.871/Del./2018 M/s. Sony India Private Limited, New Delhi.

14. That the learned DRP has erred in endorsing the approach followed by the TPO who has erroneously held that the appellant has rendered a service to the AEs by incurring the advertisement and marketing expense and by holding that a markup of 12.5% has to be earned by the appellant in respect of the alleged excessive AMP expenses.

15. That the learned TPO has erred in law by assuming that no benefit has accrued to the assessee from the AMP expenditure incurred by it without having regard to the functions, assets and risks profile of the AEs and the assessee.

16. The learned DRP erred in law in not applying the Proviso to section 92C of the Act and has failed to allow the Appellant the benefit of upward variation of 5 percent in determining the Arms Length Price. 3.1. Learned Counsel for the Assessee, at the outset, submitted that the appeal of assessee for the A.Y. 2007- ITA.No.6389/Del./2012 & SA.No.871/Del./2018 M/s. Sony India Private Limited, New Delhi. 2008 have been decided afresh by ITAT, Delhi Bench in ITA.No.4978/Del./2011 vide Order dated 21.12.2018. The Order of the Tribunal is reproduced as under : IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI E BENCH, NEW DELHI BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER, AND MS. SUCHITRA KAMBLE, JUDICIAL MEMBER ITA No. 4978/DEL/2011 [A.Y 2007-08] M/s Sony India Pvt Ltd Vs. The Addl. C.I.T A 31, Mohan Co-operative Range - 9 Industrial Estate New Delhi Mathura Road, New Delhi PAN : AABCS 1571 Q [Appellant] [Respondent] Date of Hearing : 12.12.2018 Date of Pronouncement : 21.12.2018 Assessee by : Shri Nageshwar Rao, Adv. Shri Sandeep Karhail, Adv Revenue by : Shri H.K. Chaudhary, CIT- DR Smt. Namita Pandey, Sr. DR ITA.No.6389/Del./2012 & SA.No.871/Del./2018 M/s. Sony India Private Limited, New Delhi. ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER, This appeal by the assessee is heard pursuant to the directions of the Hon'ble High Court of Delhi.

2. The Hon'ble High Court, vide order dated 23.07.2018 in ITA Nos. 508 & 509/2013 and 148 & 149/2014 has remitted the following issues for fresh adjudication in the light of the decision of the Hon'ble High Court in the case of Sony Ericson Mobile Communication of India Private Limited

374 ITR 118 : Whether the Advertisement and marketing expenditure incurred by the appellant assessee can be treated as international transaction and made subject matter of adjustment in arms length pricing?

3. The relevant findings of the Hon'ble High Court in the case of Sony Ericson Mobile Communication India P. Ltd read as under: We would not like to go into several factual aspects for the first time, for the factual matrix has not been ITA.No.6389/Del./2012 & SA.No.871/Del./2018 M/s. Sony India Private Limited, New Delhi. examined and ascertained by the Tribunal. Moreover, in terms with our legal finding, factual findings will have to be examined. An order of remand for de novo consideration to the Tribunal would be appropriate because the legal standards or ratio accepted and applied by the Tribunal was erroneous. On the basis of the legal ratio expounded in this decision, facts have to be ascertained and applied. If required and necessary, the assessed and the Revenue should be asked to furnish details or tables. The Tribunal, at the first instance, would try and dispose of the appeals, rather than passing an order of remand to the Assessing Officer/TPO. The endeavour should be to ascertain and satisfy whether the gross/net profit margin would duly account for AMP expenses. When figures and calculations as per the TNM or RP Method adopted and applied show that the net/gross margins are adequate and acceptable, the appeal of the assessed should be accepted. Where there is a doubt or the other view is plausible, an order of remand for reexamination by the Assessing Officer/TPO would be justified. A practical approach is required and the tribunal has sufficient discretion and flexibility to reach a fair and just conclusion on the arms length price. ITA.No.6389/Del./2012 & SA.No.871/Del./2018 M/s. Sony India Private Limited, New Delhi.

4. Pursuant to the order of the Hon'ble High Court dated 23.07.2018 and in the light of the judgment of the Hon'ble High Court in the case of Sony Ericson Mobile Communication India Private Limited [supra], we heard the rival representative at length and have carefully perused the orders of the authorities below qua the issue and the relevant documentary evidences brought on record in the light of Rule 18(6) of the ITAT Rules.

5. While delivering the judgement in the case of Sony Ericson Mobile Communication India Private Limited [supra], the Hon'ble High Court has enlisted its findings as under:

(i) In case of a distributor and marketing AE, the first step in transfer pricing is to ascertain and conduct detailed functional analysis, which would include AMP function/expenses.

(ii) The second step mandates ascertainment of comparables or comparable analysis. This would have reference to the method adopted which matches the ITA.No.6389/Del./2012 & SA.No.871/Del./2018 M/s. Sony India Private Limited, New Delhi. functions and obligations performed by the tested party including AMP expenses.

(iii) A comparable is acceptable, if based upon comparison of conditions a controlled transaction is similar with the conditions in the transactions between independent enterprises. In other words, the economically relevant characteristics of the two transactions being compared must be sufficiently comparable. This entails and implies that difference, if any, between controlled and uncontrolled transaction, should not materially affect the conditions being examined given the methodology being adopted for determining the price or the margin. When this is not possible, it should be ascertained whether reasonably accurate adjustments can be made to eliminate the effect of such differences on the price or margin. Thus, identification of the potential comparables is the key to the transfer pricing analysis. As a sequitur, it follows ITA.No.6389/Del./2012 & SA.No.871/Del./2018 M/s. Sony India Private Limited, New Delhi. that the choice of the most appropriate method would be dependent upon availability of potential comparable keeping in mind the comparability analysis including befitting adjustments which may be required. As the degree of the comparability increases, extent of potential differences which would render the analysis inaccurate necessarily decreases.

(iv) The assessed, i.e. the domestic AE must be compensated for the AMP expenses by the foreign AE. Such compensation may be included or subsumed in low purchase price or by not charging or charging lower royalty. Direct compensation can also be paid. The method selected and comparability analysis should be appropriated and reliable so as to include the AMP functions and costs.

(v) Where the Assessing Officer/TPO accepts the comparables adopted by the assessed, with or without making adjustments, as a bundled transaction, it would ITA.No.6389/Del./2012 & SA.No.871/Del./2018 M/s. Sony India Private Limited, New Delhi. be illogical and improper to treat AMP expenses as a separate international transaction, for the simple reason that if the functions performed by the tested parties and the comparables match, with or without adjustments, AMP expenses are duly accounted for. It would be incongruous to accept the comparables and determine or accept the transfer price and still segregate AMP expenses as an international transaction.

(vi) The Assessing Officer/TPO can reject a method selected by the assessed for several reasons including want of reliability in the factual matrix or lack / non- availability of comparables. (see Section 92C(3) of the Act).

(vii) When the Assessing Officer/TPO rejects the method adopted by the assessed, he is entitled to select the most appropriate method, and undertake comparability analysis. Selection of the method and ITA.No.6389/Del./2012 & SA.No.871/Del./2018 M/s. Sony India Private Limited, New Delhi. comparables should be as per the command and directive of the Act and Rules and justified by giving reasons.

(viii) Distribution and marketing are inter-connected and intertwined functions. Bunching of inter-connected and continuous transactions is permissible, provided the said transactions can be evaluated and adequately compared on aggregate basis. This would depend on the method adopted and comparability analysis and the most reliable means of determining arms length price.

(ix) To assert and profess that brand building as equivalent or substantial attribute of advertisement and sale promotion would be largely incorrect. It represents a coordinated synergetic impact created by assortment largely representing reputation and quality. Brand has reference to a name, trademark or trade name and like goodwill is a value of attraction to customers arising from name and a reputation for skill, integrity, efficient business management or efficient service. Brand ITA.No.6389/Del./2012 & SA.No.871/Del./2018 M/s. Sony India Private Limited, New Delhi. creation and value, therefore, depends upon a great number of facts relevant for a particular business. It reflects the reputation which the proprietor of the brand has gathered over a passage or period of time in the form of widespread popularity and universal approval and acceptance in the eyes of the customer. Brand value depends upon the nature and quality of goods and services sold or dealt with. Quality control being the most important element, which can mar or enhance the value.

(x) Parameters specified in paragraph 17.4 of the order dated 23rd January, 2013 in the case of L.G. Electronics India Pvt Ltd (supra) are not binding on the assessed or the Revenue. The bright line test has no statutory mandate and a broad-brush approach is not mandated or prescribed. We disagree with the Revenue and do not accept the overbearing and orotund submission that the exercise to separate routine and non-routine AMP or ITA.No.6389/Del./2012 & SA.No.871/Del./2018 M/s. Sony India Private Limited, New Delhi. brand building exercise by applying bright line test of non-comparables should be sanctioned and in all cases, costs or compensation paid for AMP expenses would be NIL, or at best would mean the amount or compensation expressly paid for AMP expenses. It would be conspicuously wrong and incorrect to treat the segregated transactional value as NIL when in fact the two AEs had treated the international transactions as a package or a single one and contribution is attributed to the aggregate package. Unhesitatingly, we add that in a specific case this criteria and even zero attribution could be possible, but facts should so reveal and require. To this extent, we would disagree with the majority decision in L.G. Electronics India Pvt. Ltd. (supra). This would be necessary when the arms length price of the controlled transaction cannot be adequately or reliably determined without segmentation of AMP expenses. ITA.No.6389/Del./2012 & SA.No.871/Del./2018 M/s. Sony India Private Limited, New Delhi.

(xi) The Assessing Officer/TPO for good and sufficient reasons can de-bundle interconnected transactions, i.e. segregate distribution, marketing or AMP transactions. This may be necessary when bundled transactions cannot be adequately compared on aggregate basis.

(xii) When segmentation or segregation of a bundled transaction is required, the question of set off and apportionment must be examined realistically and with a pragmatic approach. Transfer pricing is an income allocating exercise to prevent artificial shifting of net incomes of controlled taxpayers and to place them on parity with uncontrolled, unrelated taxpayers. The exercise undertaken should not result in over or double taxation. Thus, the Assessing Officer/TPO can segregate AMP expenses as an independent international transaction, but only after elucidating grounds and reasons for not accepting the bunching adopted by the ITA.No.6389/Del./2012 & SA.No.871/Del./2018 M/s. Sony India Private Limited, New Delhi. assessed, and examining and giving benefit of set off. Section 92(3) does not bar or prohibit set off.

(xiii) CP Method is a recognised and accepted method under Indian transfer pricing regulation. It can be applied by the Assessing Officer/TPO in case AMP expenses are treated as a separate international transaction, provided CP Method is the most appropriate and reliable method. Adoption of CP Method and computation of cost and gross profit margin comparable must be justified.

(xiv) The object and purpose of Transfer Pricing adjustment is to ensure that the controlled taxpayers are given tax parity with uncontrolled taxpayers by determining their true taxable income. Costs or expenses incurred for services provided or in respect of property transferred, when made subject matter of arms length price by applying CP Method, cannot be again factored or included as a part of inter-connected ITA.No.6389/Del./2012 & SA.No.871/Del./2018 M/s. Sony India Private Limited, New Delhi. international transaction and subjected to arms length pricing

6. The first point is to ascertain and conduct detailed functional analysis which would include AMP expenses. The Transfer Pricing Officer has mentioned the copy of Advertisement Agreement which was entered into on 01.04.2005 but there is no reference to any advertisement agreement relevant to A.Y 2007-08 which is the year under appeal. The ld. AR stated that there is no agreement for the year under consideration to which the DR stated that in the absence of any agreement, it would not be possible to determine the marketing function of the assessee and, therefore, fresh comparables have to be considered.

7. The business profile of the assessee shows that it has distribution net work comprising of over 7,000 channel partners, 215 Sony World and Sony Exclusive outlets and 21 direct branch locations. The assessee has strong service presence across the country with 21 company owned and

172 authorised service centers. We further find that the assessee has shut down the business operations relating to ITA.No.6389/Del./2012 & SA.No.871/Del./2018 M/s. Sony India Private Limited, New Delhi. manufacturing operations as on 01.07.2004. Therefore, as on date, the assessee from being a manufacturer and distributor of goods, has changed its model and has become full-fledged distributor of goods.

8. Thus, it can be safely concluded that the core business of the assessee is distribution of goods and in furtherance of this core business activity, the assessee is also doing marketing.

9. The assessee does not own any intangibles in the nature of brand name or marketing intangibles. The assessee has incurred the following expenses relating to AMP: Advertisement expenses - Rs. 38,62,51,002/- Sales Promotion expenses - Rs. 77,54,79,113/- Selling expenses - Rs. 2,64,50,161/- Reimbursement of expenses - Rs. 72,63,324/-

10. Since the assessee has not bench marked the international transaction of reimbursement received from its AE, the TPO was of the opinion that the same has not been shown by the assessee in the T.P. report as to ITA.No.6389/Del./2012 & SA.No.871/Del./2018 M/s. Sony India Private Limited, New Delhi. whether the assessee has been suitably compensated by the AE in this respect or not.

11. The TPO observed that the assessee has developed marketing intangibles by incurring expenditure of Rs. 1,19,54,43,600/- on advertisement, marketing and promotion. The TPO was of the firm belief that the assessee has not been compensated by its AE fully for the cost incurred by the assessee for brand promotion and development of market for the products of the AE in India. The TPO further observed that ownership of brand was with AE and the assessee was incurring expenditure to promote the brand of AE and as a consequence, was creating marketing intangible in India which implies that marketing intangible is with the assessee and its legal ownership is with AE.

12. It is the say of the ld. AR that as a sole distributor of Sonys products in India, any benefit arising from advertisement activities including resultant increment to the value of brand in India is available to the assessee only. The ld. AR further pointed out that the assessees ITA.No.6389/Del./2012 & SA.No.871/Del./2018 M/s. Sony India Private Limited, New Delhi. management is independently responsible for undertaking all strategic decisions, such as, introduction of new products, deciding the marketing initiatives, business development, sales strategies etc. Such decisions are undertaken by the assessee based on the assessment of the market condition, nature of competition prevailing in the market and competitors strategies. The ld. AR concluded by saying that the assessee is sole beneficiary of AMP expenditure carried out by the company.

13. In our considered opinion, by virtue of incurring expenditure of AMP, the assessee cannot acquire ownership of intangibles which belongs to the AE. In our considered opinion, the AMP expenditure was not incurred for the AE. The assessee exploits the intangibles created by its AE in India though no brand royalty payment is made by the assessee and it cannot be denied that brand name Sony is global brand across the globe. Therefore, it cannot be said that Sony brand has become popular only as a result of efforts of the assessee company. ITA.No.6389/Del./2012 & SA.No.871/Del./2018 M/s. Sony India Private Limited, New Delhi.

14. Assuming that the AMP expenditure incurred by the assessee has resulted in creation of Sony brand in India and that the assessee is the economic owner of such brand in the light of the decision of the Hon'ble High Court [supra], all that has to be seen is whether the assessee has earned returns similar to the returns earned by other companies owning the brands, no further amount would be attributable towards such brand activities.

15. We find that the TPO has bench marked the international transaction relating to AMP expenditure by applying Bright Line Test [BLT].

16. The Hon'ble High Court in the case of Sony Ericson Mobile Communication India Private Limited [supra] has discarded BLT. The relevant finding of the Hon'ble High Court reads as under:

27. We agree and accept the position in the portion reproduced above in bold and italics. The object and purpose of Transfer Pricing adjustment is to ensure that the controlled taxpayers are given tax parity with ITA.No.6389/Del./2012 & SA.No.871/Del./2018 M/s. Sony India Private Limited, New Delhi. uncontrolled taxpayers by determining their true taxable income. There should be adequate and proper compensation for the functions performed including AMP expenses. Thus, we disagree with the Revenue and do not accept the overbearing and orotund submission that the exercise to separate routine and non-routine AMP or brand building exercise by applying bright line test of non-comparables and in all case, costs or compensation paid for AMP expenses would be NIL, or at best would mean the amount or compensation expressly paid for AMP expenses. Unhesitatingly, we add that in a specific case this criteria and even zero attribution could be possible^ but facts should so reveal and require. To this extent, we would disagree with the majority decision in L.G. Electronics India Pvt. Ltd. (supra).

17. The comparables used by the assessee are as under: ITA.No.6389/Del./2012 & SA.No.871/Del./2018 M/s. Sony India Private Limited, New Delhi. Name of the company FY 2006-07 Bajaj Electronics Limited 5.21% Blue Star Limited 1.69% Usha International Limited 4.54% Voltas Limited -3.07% Arithmetic mean 2.09%

18. The TPO has also used the same comparables for applying BLT: Name of the company Advertising, Marketing Promotional Expense Sales Advt, Marketing Promotion Expense/ Sales (A/B) (in %)

1. Allied Photo graphics India Ltd 8,74,164 37,48,48,199 0.23%

2. Bajaj Electronics Ltd 47,61,14,000 10,83,16,54,000 4.39%

3. Blue Star Limited 345.812,000 16,07,40,69,000 2.15%

4. Usha International Ltd 677,37,000 124,49,72,000 5.44%

5. Voltas Limited 30,53,84,000 24,00,55,16,000 1.27% Arithmetic mean 2.69%

19. The assessees operating margin is at 3.29% of operating revenue from its consumer Electronic Division and arithmetic mean of operating margin of companies owner of same brand is 2.09% as mentioned at the above chart. As per the observation of the Hon'ble High Court in the case of Sony Ericson Mobile Communication India Private Limited ITA.No.6389/Del./2012 & SA.No.871/Del./2018 M/s. Sony India Private Limited, New Delhi. [supra], if the return earned by the assessee is similar or more than that the return earned by the owner of the brand, no further amount should be contributed towards such brand activities. Any amount that would be attributable to the assessee from the creation of such marketing intangible has already been received by the assessee in terms of higher profitability for the product sold.

20. Before us, the ld. DR vehemently stated that since the TPO has proceeded by applying BLT which was prevalent at the time of Transfer Pricing assessment proceedings and since the Hon'ble High Court has discarded the BLT, then the TPO should be given an opportunity to debundle the transaction vis a vis the comparables and determine the issue afresh.

21. We do not find merit in this contention of the ld. DR. Firstly, the TPO has used the same comparables as that of the assessee and the TPO chose to examine the international transaction, if any, by applying BLT, knowing fully well that the operating margin of the assessee is ITA.No.6389/Del./2012 & SA.No.871/Del./2018 M/s. Sony India Private Limited, New Delhi. better than those of the comparables. It would not be proper to ask the TPO to rework the AMP expenses into that which was incurred for building the brand value of the foreign AE and that the same was incurred wholly or exclusively of the benefit of the brand building of the AE. Moreover, in our considered opinion, multiple opportunities are not permissible to any authority to experiment in setting up case as held by the Hon'ble Gujarat High Court in the case of Rajesh Babubhai Damania 251 ITR 541.

22. It would not be out of place to refer to the clarification given by the Hon'ble High Court of Delhi in the case of Casio India Pvt Ltd in ITA No. 814/2017 and CM 34273/2017 and the same reads as under: Learned counsel for the appellant states that clarification is required that the directions given in paragraph 8 of the impugned order should not be construed as if the Assessing Officer/Transfer Pricing Officer (TPO) would examine Advertisement Marketing and Sales Promotion (AMP) expenses as a separate international transaction. AMP expenses were ITA.No.6389/Del./2012 & SA.No.871/Del./2018 M/s. Sony India Private Limited, New Delhi. part and parcel of the expenses incurred of the distribution. While determining Arms Length Price, the said aspect would be taken into consideration by the Assessing /Officer/TPO.

23. The benefit, if any, gone to the AE can only be termed as incidental benefit. Merely because there is an incidental benefit to AE, Sony Company, it cannot be stated that the AMP expenses incurred by the assessee was for promoting the brand Sony Japan.

24. As mentioned elsewhere, since the operating profit margin of the appellant company is better than those of the comparables, it can be safely concluded that the assessee has been suitably remunerated and no further adjustment is required to bench mark the AMP expenses. Following the guidelines listed by the Hon'ble High Court in the case of Sony Ericson Mobile Communication India Private Limited [supra], the grounds raised by the assessee are allowed.

25. In the result, the appeal of the assessee in ITA No. 4978/DEL/2011 is allowed. ITA.No.6389/Del./2012 & SA.No.871/Del./2018 M/s. Sony India Private Limited, New Delhi. 3.2. Learned Counsel for the Assessee, therefore, submitted that that the entire issues are covered by the Order of ITAT, Delhi Bench in the case of assessee for A.Y. 2007-2008 in which it was held that merely because there is an incidental benefit to A.E. Sony Company, it cannot be stated that AMP expenses incurred by the assessee was for promoting the brand Sony Japan. The issues have been decided in favour of assessee on identical facts.

4. On the other hand, Ld. D.R. submitted that the department has already filed M.A. in the case of M/s. Sony Ericson Mobile Communication India Private Limited and that some of the observations of the Tribunal in the Order dated 21.12.2018 for the A.Y. 2007-2008 are not as per the Judgment of Honble High Court, though the Ld. D.R. did not dispute that the issue is covered by the Order of the Tribunal dated 21.12.2018 (supra).

5. After considering the submissions of the parties, we are of the view that the issue involved in Ground Nos. 3 to 16 are covered by the above Order of the Tribunal dated ITA.No.6389/Del./2012 & SA.No.871/Del./2018 M/s. Sony India Private Limited, New Delhi. 21.12.2018. Merely because department has filed M.A. in the case of M/s. Sony Ericson Mobile Communication India Private Limited, is no ground to take a contrary view at this stage. Further, the subsequent Bench of the Tribunal is not sitting in appeal against the Order of the Coordinate Bench Dated 21.12.2018. Therefore, following the Order of the Tribunal dated 21.12.2018 in the case of assessee on identical facts, we set aside the Orders of the authorities below and allow the grounds of appeal raised by the assessee.

6. In the result, appeal of Assessee is allowed.

7. Since the appeal of assessee have been allowed, therefore, the stay application of the assessee stands infructuous and the same is accordingly dismissed.

8. To sum-up, appeal of Assessee is allowed and stay application of the assessee is dismissed. Order pronounced in the open Court. Sd/- Sd/- (L.P. SAHU) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER Delhi, Dated 16th January, 2019 VBP/- ITA.No.6389/Del./2012 & SA.No.871/Del./2018 M/s. Sony India Private Limited, New Delhi. Copy to

1. The appellant

2. The respondent

3. CIT(A) concerned

4. CIT concerned

5. D.R. ITAT I-2 Bench, Delhi

6. Guard File. // BY Order // Assistant Registrar : ITAT Delhi Benches : Delhi