Case Details: Appellate Authority for Advance Ruling, Maharashtra MEK Peripherals India (P.) Ltd., In re - [2023] 151 taxmann.com 351 (AAAR-MAHARASHTRA)
Judiciary and Counsel Details
- Dr D.K. Srinivas & Rajeev Kumar Mital, Member
- Rahul Thakar, Adv. for the Appellant.
Facts of the Case
The appellant entered into agreement with foreign manufacturer to resell goods purchased through distributors. It filed an application for advance ruling to determine whether incentive received under agreement for completion of targets would be considered as trade discount or not. The Authority for Advance Ruling held that incentives received for promotion of sale of products purchased through distributors would not be treated as trade discount.
It filed appeal against advance ruling holding that incentive received from manufacturer under agreement would not be treatable as trade discount and the same would liable to be included in taxable value.
AAR Held
The Appellate Authority for Advance Ruling noted that the agreement was entered between appellant and manufacturer and not with distributors. The incentive was directly received from manufacturer which was not specifically linked to invoices of goods purchased from distributors.
Therefore, the prescribed conditions for exclusion of incentive as trade discount from taxable value were not satisfied as incentives received were separate from transaction with distributors. Thus, it was held that the incentives would not be treated as trade discount and can’t be excluded from taxable value.
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