Delhi High Court - Orders
Valvoline Cummins Pvt Ltd vs Assistant Commissioner Of Income Tax & ... on 22 March, 2021
Author: Rajiv Shakdher
Bench: Rajiv Shakdher, Talwant Singh
$~40
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ W.P.(C) 3592/2021 & CM Nos.10902-03/2021
VALVOLINE CUMMINS PVT LTD .....Petitioner
Through: Mr. Ajay Vohra, Sr. Adv. with Mr.
Neeraj Jain and Mr. Aditya Vohra,
Advs.
versus
ASSISTANT COMMISSIONER OF INCOME TAX & ANR.
..... Respondents
Through: Mr. Puneet Rai, Advocate.
CORAM:
HON'BLE MR. JUSTICE RAJIV SHAKDHER
HON'BLE MR. JUSTICE TALWANT SINGH
ORDER
% 22.03.2021 CM No.10903/2021
1. Allowed, subject to just exceptions.
W.P.(C) 3592/2021 & CM No.10902/2021
2. This is a writ petition whereby a challenge is laid to the order dated 27.01.2021 passed by Transfer Pricing Officer (TPO) under Section 92CA (3) read with Section 254 of the Income Tax Act, 1961 (in short "the Act").
3. 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) 2011-2012.
W.P.(C) 3592/2021 page 1 of 4 Signature Not Verified Digitally Signed By:VIPIN KUMAR RAI Signing Date:24.03.2021 12:01:47
4. The tribunal via its order dated 26.11.2018 directed deletion of transfer pricing adjustment (TPA) amounting to Rs.21,98,34,275/- made on account of advertising, marketing and promotion expenditure (in short "AMP expenditure") incurred by the petitioner-assessee.
5. 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 court on the very same issue. The reference to this aspect of the matter is made by the tribunal in paragraph 16 of its order, which, for the sake of convenience is extracted hereafter:
"16. After considering the legal position as discussed in the preceding paragraphs, 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. At the same time, we cannot ignore the submission of the learned DR that the matter is pending before Hon'ble Apex Court and the decision of Hon'ble Apex Court would be binding upon all the authorities. In view of the above, we set aside the orders of authorities below and restore the matter to the file of the Assessing Officer. We hold that as per the facts of the case and the legal position as of now and discussed above in this order, the adjustment made by the TPO/DRP/AO in respect of AMP expenses is not sustainable. However, if the above decisions of Hon'ble Jurisdictional High Court which is under consideration before the Hon'ble Apex Court is modified or reversed by the Hon'ble Apex Court, then the Assessing Officer would pass the order afresh considering the decision of Hon'ble Apex Court. In those circumstances, he will also allow opportunity of being heard to the assessee."
W.P.(C) 3592/2021 page 2 of 4 Signature Not Verified Digitally Signed By:VIPIN KUMAR RAI Signing Date:24.03.2021 12:01:47
6. 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.
7. We are informed by counsel for the parties that the special leave petitions preferred by the revenue have been admitted and are pending adjudication.
7.1 It is in this backdrop that the TPO has passed the impugned order.
8. Mr. Puneet Rai, 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.
9. 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.
10. 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.
11. 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.
12. It is ordered accordingly.
W.P.(C) 3592/2021 page 3 of 4 Signature Not Verified Digitally Signed By:VIPIN KUMAR RAI Signing Date:24.03.2021 12:01:47
13. The writ petition and pending application is disposed of in terms of the direction issued hereinabove.
14. In addition to what is stated by us hereinabove, 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 the expiry of the limitation, as provided under the Act.
15. 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 22, 2021 aj Click here to check corrigendum, if any W.P.(C) 3592/2021 page 4 of 4 Signature Not Verified Digitally Signed By:VIPIN KUMAR RAI Signing Date:24.03.2021 12:01:47