Delhi High Court - Orders
Whirlpool Of India Ltd vs Assistant Commissioner Of Income Tax on 1 March, 2021
Author: Rajiv Shakdher
Bench: Rajiv Shakdher, Talwant Singh
$~4
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ W.P.(C) 2486/2021 & CM Appl. 7287/2021, 7288/2021
WHIRLPOOL OF INDIA LTD ..... Petitioner
Through: Mr. Ajay Vohra, Senior Advocate
with Mr. Neeraj Jain & Mr. Aniket D.
Agarwal, Advs.
versus
ASSISTANT COMMISSIONER OF INCOME TAX ..... Respondent
Through: Mr. Abhishek Maratha, Senior
Standing Counsel.
CORAM:
HON'BLE MR. JUSTICE RAJIV SHAKDHER
HON'BLE MR. JUSTICE TALWANT SINGH
ORDER
% 01.03.2021
[Physical Court hearing]
1. This is a writ petition whereby the challenge is laid to the order dated 28.01.2021 passed by Transfer Pricing Officer (TPO) under Section 92CA (3) read with Section 254 of the Income Tax Act, 1961 (in short "the Act").
2. This order was passed by the TPO to give effect to the order passed by Income Tax Appellate Tribunal (in short "the tribunal") dated 26.11.2018 with respect to the assessment year (AY) 2009-2010.
3. The tribunal via its order dated 26.11.2018 directed deletion of transfer pricing adjustment (TPA) amounting to Rs.129,44,62,939/- made on account of advertising, marketing and promotion expenditure (in short "AMP expenditure") incurred by the petitioner-assessee.
4. A perusal of the order of passed by the tribunal would show that this direction was issued having regard to the series of decisions rendered by this W.P.(C) 2486/2021 page 1 court on the very same issue. The reference to this aspect of the matter is made by the tribunal in paragraphs 16 and 17 of its order, which, for the sake of convenience are extracted hereafter:
"16.The ld. DR for the Revenue though admitted factual and legal position discussed in the preceding paras that by applying the BLT, international transactions cannot be invalid involving AMP expenses incurred by the taxpayer though benefited for brand building of its AE, but contended that all decisions rendered by Hon'ble Delhi High Court viz. Sony Ericsson India Pvt. Ltd. v. CIT (supra), Bausch & Lomb Eye Care (India) Pvt. Ltd. v. Additional CIT (2016) 381 ITR 227 (Del.) and Honda Siel Power Products Ltd. v. Dy. CIT (2016) 237 Taxman 304 are lying challenged before the Hon'ble Apex Court, hence this appeal be kept pending till the decision of Hon'ble Apex Court.
17. After considering the legal position as discussed m[ in] the preceding paragraphs and following the decision rendered by Hon'ble Delhi High Court in taxpayer's own case for A Y 2008- 09, we are of the considered view that TP adjustment ofRs.1,29,44,62,939/- involving AMP expenses is not sustainable in the eyes of law, we are of the considered opinion that the ALP of an international transaction involving AMP expenses, the adjustment made by the TPO/DRP/ AO is not sustainable in the eyes of law, hence Grounds No.2 to 2.14 & 3 to 3. 7 are determined in favour of the taxpayer".
5. It is also pertinent to note that the judgments referred to by the tribunal in paragraph 16 have been assailed by the respondent/Revenue herein by taking recourse to the special leave petition route.
6. We are informed by counsel for the parties that the special leave petitions preferred by the Revenue have been admitted and are pending adjudication. 6.1 It is in this backdrop that the TPO has passed the impugned order.
W.P.(C) 2486/2021 page 2
7. Mr. Abhishek Maratha, Senior Standing Counsel, who appears on behalf of the respondent/ Revenue, says that the impugned order has been passed to protect the interest of the respondent/ Revenue in the event it were to succeed in the civil appeals pending adjudication before the Supreme Court.
8. Mr. Ajay Vohra, Senior Advocate, on the other hand says that TPO was only required to give effect to the order passed by the tribunal and therefore ought not to have passed the impugned order.
9. Mr. Vohra, however, does not deny that if the respondent/ Revenue were to succeed before the Supreme Court, then, consequences would follow and, perhaps, the adjustment made by the TPO in the transfer pricing qua AMP would have to be factored in.
10. Having regard to the aforesaid facts and contentions of the learned counsel for the parties, in our view, the best way forward would be to stay the operation of the impugned order and give liberty to TPO to take next steps in the matter, albeit, in accordance with the law once a decision is rendered by the Supreme Court in the pending civil appeals. 10.1 It is ordered accordingly.
11. The writ petition and pending applications are disposed of in terms of the direction issued hereinabove.
12. In addition to what is stated hereinabove by us, Mr. Vohra, also makes a statement for the comfort of the respondent/Revenue that in case the respondent/Revenue were to succeed before the Supreme Court, the petitioner will not raise any objection concerning limitation as provided under the Act is running out.
W.P.(C) 2486/2021 page 3
13. Mr. Vohra's statement is taken on record. The petitioner will remain bound by the statement made by Mr. Vohra.
RAJIV SHAKDHER, J
TALWANT SINGH, J
MARCH 1, 2021/nk
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W.P.(C) 2486/2021 page 4