THE PR. COMMISSIONER OF INCOME TAX -9 vs. WRIGLEY INDIA PRIVATE LIMITED

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ITA/26/2018HC DelhiDLHC01477367201710 January 2018Bench: HON'BLE MR. JUSTICE S. RAVINDRA BHAT,HON'BLE MR. JUSTICE A. K. CHAWLA2 pages
AI SummaryRemanded

What did the High Court hold?

The High Court did not decide the merits of the revenue's appeals for the assessment years 2007-08, 2008-09, and 2009-10. Instead, it directed the Revenue to first exhaust its remedy by way of the rectification application filed under Section 254(2) before the ITAT. If the Revenue remained aggrieved by the order passed in the rectification proceedings, it could approach the High Court again. In such a scenario, the Revenue would be at liberty to urge the grievances raised in the present appeals. The Court noted that it would consider the pendency of the miscellaneous application if issues of delay arose at a later stage. No specific finding was made on the AMP expenditure issue itself, as the appeals were disposed of procedurally.

What were the facts?

The Revenue is aggrieved by the Income Tax Appellate Tribunal's (ITAT) findings that certain expenditures, which resulted in amounts being brought to tax for various assessment years, constituted Advertising, Marketing, and Promotion (AMP) elements. The ITAT had ruled, relying on the Delhi High Court's decision in Maruti Suzuki Ltd. v. CIT, that there was no international transaction in the AMP expenditure sought to be taxed. The Revenue had filed an application for rectification under Section 254(2) of the Income Tax Act, 1961. The High Court, in these appeals, kept the merits of the revenue appeals for assessment years 2007-08, 2008-09, and 2009-10 open.

What were the issues?

1. Whether the expenditure constituted AMP elements taxable under the Income Tax Act, 1961, specifically in relation to the concept of international transactions as interpreted by the ITAT based on the Maruti Suzuki Ltd. judgment. The Revenue contended that the ITAT's finding was erroneous and that the expenditure was indeed taxable. The Assessee (Wrigley India Private Limited) did not present any arguments as none were recorded. The ITAT's decision was based on the principle that no international transaction existed in the AMP expenditure, following the Maruti Suzuki case.

Which sections of the Income-tax Act were involved?

Section 254(2)

AI-generated summary — verify with the full judgment below

$~18, 23 & 24 * IN THE HIGH COURT OF DELHI AT NEW DELHI + ITA 21/2018, CM APPL.934/2018

ITA 26/2018, CM APPL.936-937/2018

ITA 27/2018, CM APPL.938-939/2018

THE PR. COMMISSIONER OF INCOME TAX -9 ..... Appellant

Through: Mr. Ruchir Bhatia, Sr. Standing Counsel.

versus

WRIGLEY INDIA PRIVATE LIMITED

..... Respondent

Through: None.

CORAM: HON'BLE MR. JUSTICE S. RAVINDRA BHAT HON'BLE MR. JUSTICE A. K. CHAWLA

O R D E R %

10.01.2018

In these appeals, the revenue is aggrieved by the ITAT’s findings that the expenditure which resulted in bringing to tax the various amounts of the concerned assessment years were in fact constituted AMP elements that were taxable. The ITAT had ruled - based upon the judgment of this Court in Maruti Suzuki Ltd. v. CIT (2016) 381 ITR 117 (Del) - that there was no international transaction in the AMP expenditure involved that is sought to be brought to tax. It is stated that the Revenue has preferred an application for rectification under Section 254 (2).

In the circumstances, having regard to the decision of the Court, the merits of the revenue appeals are kept open for the years 2007-08,

2008-09 and 2009-10. However, it should first exhaust its remedy by way of rectification application and if aggrieved by the order made by the ITAT in those proceedings, it can approach this Court in appropriate proceedings. In such eventuality, if the Revenue’s grievance with respect to the questions urged in these appeals subsist, it is open for it to urge those grievances as well.

The Court would obviously take into consideration the pendency of the miscellaneous application under Section 254, if the issue of delay crops up at that stage.

The appeals are disposed of in the above terms.

S. RAVINDRA BHAT, J

A. K. CHAWLA, J JANUARY 10, 2018 /vikas/

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