Haier Appliances (India) P. Ltd v. Deputy Commissioner Of Income-Tax

$~3 *IN THE HIGH COURT OF DELHI AT NEW DELHI + ITA 563/2017 HAIER APPLIANCES (INDIA) P. LTD..... AppellantThrough:Mr. Ajay Vohra, Senior Advocatewith Mr. Neeraj Jain and Mr. AniketD. Agarwal, Advocate. versus DEPUTY COMMISSIONER OF INCOME-TAX ..... RespondentThrough:Mr. Asheesh Jain, Senior StandingCounselwithMr.VikrantA.Maheshwari, Advocate. CORAM:JUSTICE S.MURALIDHARJUSTICE PRATHIBA M. SINGH % O R D E R01.09.2017 1. This is an appeal by the Assessee under Section 260A of the Income TaxAct, 1961 ( ‘the Act’) against an order dated 8[th]September, 2016 passed bythe Income Tax Appellate Tribunal (‘ITAT’) in ITA No.1515/Del/2014 forthe Assessment Year (‘AY’) 2009-10. 2. Notice. Mr. Asheesh Jain, Senior Standing counsel for the Revenueaccepts notice. 3. The issue raised in this appeal concerns the transfer pricing (TP)adjustment made by the Transfer Pricing Officer (‘TPO’) on account ofalleged Advertisement, Marketing, Promotion (‘AMP’) expenses incurredby the assessee for its associated Enterprise (AE). 4. In para 4 of the impugned order, the ITAT has recorded as under: “At the time of hearing both the parties agreed that in view of thedecision of Hon'ble Delhi High Court in the case of Sony EricssonMobile Communications Vs. CIT (2015) 374 ITR 118 (Del), thematter needs to be restored back to the file of ld. AO/TPO for denovo consideration.” 5. Immediately thereafter, in para 5, the ITAT notes as under: “We have considered the submissions of both the parties and haveperused the record of the case. The assessee is a distributor of variousproducts of its AE. The Hon'ble Delhi High Court the case of SonyEricsson Mobile Communications (supra), has, inter alia, observed asunder:..” 6. Mr. Ajay Vohra, learned Senior counsel for the Assessee, points out thatthe ITAT committed a factual error in recording that the Assessee is adistributor of various consumable durable products of its AE. He points outthat the Assessee is in fact a manufacturer which gets its productsmanufactured through other entities. Secondly, it is pointed out that at thetime the ITAT passed the order, it did not have the benefit of ordersubsequentlypassedbythisCourtinSonyEricssonMobileCommunications v. CIT (order dated 28[th]January 2016 in ITA 638 of 2015)and Daikin Airconditioning India Pvt. Ltd. (order dated 27[th]July 2016 inITA 269/2016) wherein this Court had emphasised that prior to commencing a TP exercise, the existence of an international transaction involving theAssessee and its AE has to first be established. This Court has in the abovecases remanded the matter to the ITAT for that purpose. 7. Mr. Asheesh Jain learned counsel for the revenue has been unable todispute that the ITAT has failed to examine in the first place whether theredoes exist an international transaction involving the assessee and its AE. 8. In the absence of such a finding, there would be no purpose in remanding,as the ITAT has done by the impugned order, the issue concerning TPadjustment to the TRPO for a fresh determination. 9. For the aforesaid reasons, the Court sets aside the impugned order of theITAT and restores the assessee’s appeal, ITA No.1515/Del/2014 for AY2009-10, to the file of ITAT. 10. Mr. Vohra submitted a chart indicating that the subsidy/grant receivedby the Assessee from its AE during the AY in question exceeded the netAMP expense incurred by the Assessee thereby obviating any TPadjustment on that score as proposed by the TPO. The said details will betaken into consideration by the ITAT while dealing with the appeal onmerits. This Court is not inclined to express any opinion on the merits oneway or the other. 11. The ITAT will decide the Assessee’s appeal afresh without beinginfluenced by anything said in this order on merits or in the previous order ITA 563/2017 Page 3 of 4 of the ITAT that has been set aside by this order. The Assessee’saforementioned appeal shall be listed before the ITAT on 18[th]September,2017 for directions. 12. The appeal is disposed of in the above terms. S.MURALIDHAR, J. 11. The ITAT will decide the Assessee’s appeal afresh without beinginfluenced by anything said in this order on merits or in the previous order ITA 563/2017 Page 3 of 4 of the ITAT that has been set aside by this order. The Assessee’saforementioned appeal shall be listed before the ITAT on 18[th]September,2017 for directions. 12. The appeal is disposed of in the above terms. S.MURALIDHAR, J. SEPTEMBER 01, 2017dk PRATHIBA M. SINGH, J.