2017 (7) TMI 1346 - HC - Income Tax

TP Adjustment - addition on account of Advertisement Marketing and Promotion (AMP) Expenditure - HELD THAT - ITAT in the impugned order has referred to the decision of this Court in Sony Ericson Mobile Communications (India) Pvt. Ltd. v. CIT 2015 (3) TMI 580 - DELHI HIGH COURT and also some of the subsequent judgments where the Court has held that in matters of transfer pricing the first exercise that is to be undertaken is to determine if in fact there existed an international transaction between the Assessee at its Associated Enterprise. Only if the said question is answered in the affirmative the further question of determining its arm s length price would arise. Counsel on both sides state that all the necessary documents and information for determining the above question already form part of the record of the case in the ITAT. Restore the aforementioned appeal to the file of the ITAT for a fresh de novo adjudication on merits without reference to the order of the ITAT that has been set aside by this judgment.

Summary

Issues:
1. Condoning delay in filing the appeal.
2. Granting exemption subject to exceptions.
3. Appeal by Revenue and Assessee against ITAT order on transfer pricing adjustment.

Analysis:
1. The Court condoned the delay in filing the appeal, as per the application submitted, and disposed of the matter accordingly.

2. Exemption was granted subject to all just exceptions in the appeal, ensuring fairness in the proceedings.

3. The appeals by both the Revenue and the Assessee were directed against the same order passed by the Income Tax Appellate Tribunal (ITAT) regarding the addition of transfer pricing adjustment on Advertisement, Marketing, and Promotion (AMP) Expenditure. The ITAT had referred to previous judgments highlighting the importance of determining the existence of an international transaction before assessing the arm's length price. Both parties confirmed the availability of necessary documents for this determination. Consequently, the Court set aside the ITAT order and remanded the case for a fresh adjudication on merits without reference to the previous order. Both sides were given the opportunity to present their contentions before the ITAT afresh. The Assessee agreed to withdraw a miscellaneous application filed earlier. The appeal was scheduled for further directions, and the appeals were disposed of accordingly.