2018 (4) TMI 1285 - HC - Income Tax

Transfer Pricing - Expenditure incurred by the Appellant on AMP - Whether was an international transaction for the purposes of adjustment under Chapter X of the Act? - Held that - As both parties are broadly agreed that there are subsequent developments in law, which the Tribunal should consider while deciding the second round of appeal before it. The Tribunal is at liberty to adjudicate the issues arising in the second round of appeaL interalia with regard to AMP as an international transaction to determine the Arm Length Prince under Chapter X of the Act

Summary

Issues:
1. Challenge to the order of the Income Tax Appellate Tribunal for Assessment Year 2008-09.
2. Whether the expenditure on AMP was an international transaction for adjustment under Chapter X of the Act.
3. Consideration of subsequent court decisions in the second round of appeal.

Analysis:

Issue 1: The appeal challenges the order of the Income Tax Appellate Tribunal dated 19.2.2014 for Assessment Year 2008-09. The Tribunal had remanded the issue of AMP expenditure back to the Transfer Pricing Officer for fresh consideration.

Issue 2: The substantial question of law admitted in the appeal was whether the AMP expenditure constituted an international transaction for adjustment under Chapter X of the Act. The Tribunal's order directed the TPO to decide the issue afresh, considering the documents filed by the assessee and giving a reasonable opportunity to be heard.

Issue 3: In the second round of appeal, the Tribunal faced constraints in deciding the matter due to the pending appeal challenging its initial order. The applicant sought a direction to consider subsequent court decisions regarding AMP expenses. The Tribunal was allowed to adjudicate on the issue of AMP as an international transaction, taking into account post-2014 court decisions.

The court clarified that it could not grant directions on matters not before it but allowed the Tribunal to consider subsequent legal developments. The Tribunal was directed to consider various court decisions, including Sony Ericsson Mobile Communications and other cases, in determining the arm's length price under Chapter X of the Act. The court disposed of the motion with no order as to costs.