The Commissioner of Income Tax-TDS vs M/s. Idea Cellular Ltd.,

$~63 to 72 * IN THE HIGH COURT OF DELHI AT NEW DELHI + ITA 272/2018 PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL)-3

..... Appellant

Through: Mr. Shlok Chandra, SSC along

with Ms. Priya Sarkar, Ms.

Maadhavi Shukla, JSCs, Mr.

Ujjawal Jain, Adv.

versus

PERNOD RICARD INDIA PVT.LTD. ..... Respondent

Through: Mr. Deepak Chopra, Mr.

Anmol Anand, Ms. Priya

Tandon and Ms. Sheetal

Kandpal, Advs

64 + ITA 273/2018 PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL-3)

..... Appellant

Through: Mr. Shlok Chandra, SSC along

with Ms. Priya Sarkar, Ms.

Maadhavi Shukla, JSCs, Mr.

Ujjawal Jain, Adv.

versus

PERNOD RICARD INDIA PVT. LTD. ..... Respondent

Through: Mr. Deepak Chopra, Mr.

Anmol Anand, Ms. Priya

Tandon and Ms. Sheetal

Kandpal, Advs

65 + ITA 872/2019

PR. COMMISSIONER OF INCOME TAX, (CENTRAL)-3,

NEW DELHI

..... Appellant

Through: Mr. Shlok Chandra, SSC along

with Ms. Priya Sarkar, Ms. This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 28/05/2024 at 12:12:08

Maadhavi Shukla, JSCs, Mr.

Ujjawal Jain, Adv.

versus

M/S PERNOD RICARD (INDIA) PVT. LT ..... Respondent

Through: Mr. Deepak Chopra, Mr.

Anmol Anand, Ms. Priya

Tandon and Ms. Sheetal

Kandpal, Advs

66 + ITA 49/2020

PR.COMMISSIONER OF INCOME TAX CENTRAL -3 ND ..... Appellant

Through: Mr. Shlok Chandra, SSC along

with Ms. Priya Sarkar, Ms.

Maadhavi Shukla, JSCs, Mr.

Ujjawal Jain, Adv.

versus

M/S PERNOD RICARD INDIA PVT. LTD. ..... Respondent

Through: Mr. Deepak Chopra, Mr.

Anmol Anand, Ms. Priya

Tandon and Ms. Sheetal

Kandpal, Advs

67 + ITA 50/2020 PR. COMMISSIONER OF INCOME TAX (CENTRAL) -3, NEW DELHI

..... Appellant

Through: Mr. Shlok Chandra, SSC along

with Ms. Priya Sarkar, Ms.

Maadhavi Shukla, JSCs, Mr.

Ujjawal Jain, Adv.

versus

M/S. PERNOD RICARD (INDIA) PVT. LTD ..... Respondent

Through: Mr. Deepak Chopra, Mr. This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 28/05/2024 at 12:12:08

Anmol Anand, Ms. Priya

Tandon and Ms. Sheetal

Kandpal, Advs

68 + ITA 51/2020

PR. COMMISSIONER OF INCOME TAX (CENTRAL), NEW

DELHI

..... Appellant

Through: Mr. Shlok Chandra, SSC along

with Ms. Priya Sarkar, Ms.

Maadhavi Shukla, JSCs, Mr.

Ujjawal Jain, Adv.

versus

M/S. PERNOD RICARD (INDIA) PVT . LTD ..... Respondent

Through: Mr. Deepak Chopra, Mr.

Anmol Anand, Ms. Priya

Tandon and Ms. Sheetal

Kandpal, Advs

69 + ITA 54/2020

PR. COMMISSIONER OF INCOME TAX, (CENTRAL)-3,

NEW DLEHI

..... Appellant

Through: Mr. Shlok Chandra, SSC along

with Ms. Priya Sarkar, Ms.

Maadhavi Shukla, JSCs, Mr.

Ujjawal Jain, Adv.

versus

M/S. PERNOD RICARD (INDIA) PVT. LTD ..... Respondent

Through: Mr. Deepak Chopra, Mr.

Anmol Anand, Ms. Priya

Tandon and Ms. Sheetal

Kandpal, Advs

70 + ITA 165/2021 PRINCIPAL COM0MISSIONER OF INCOME TAX This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 28/05/2024 at 12:12:08

(CENTRAL) – 3

..... Appellant

Through: Mr. Shlok Chandra, SSC along

with Ms. Priya Sarkar, Ms.

Maadhavi Shukla, JSCs, Mr.

Ujjawal Jain, Adv.

versus

PERNOD RICARD INDIA PVT. LTD. ..... Respondent

Through: Mr. Deepak Chopra, Mr.

Anmol Anand, Ms. Priya

Tandon and Ms. Sheetal

Kandpal, Advs

71 + ITA 166/2021 PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL) – 3

..... Appellant

Through: Mr. Shlok Chandra, SSC along

with Ms. Priya Sarkar, Ms.

Maadhavi Shukla, JSCs, Mr.

Ujjawal Jain, Adv.

versus

PERNOD RICARD INDIA PVT. LTD. ..... Respondent

Through: Mr. Deepak Chopra, Mr.

Anmol Anand, Ms. Priya

Tandon and Ms. Sheetal

Kandpal, Advs

72 + ITA 83/2022 PRINCIPAL COM0MISSIONER OF INCOME TAX (CENTRAL) – 3

..... Appellant

Through: Mr. Shlok Chandra, SSC along

with Ms. Priya Sarkar, Ms.

Maadhavi Shukla, JSCs, Mr.

Ujjawal Jain, Adv.

This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 28/05/2024 at 12:12:08

versus

PERNOD RICARD INDIA PVT. LTD. ..... Respondent

Through: Mr. Deepak Chopra, Mr.

Anmol Anand, Ms. Priya

Tandon and Ms. Sheetal

Kandpal, Advs

CORAM:

HON'BLE MR. JUSTICE YASHWANT VARMA HON'BLE MR. JUSTICE PURUSHAINDRA KUMAR KAURAV

O R D E R %

20.05.2024

ITA 272/2018 ITA 273/2018

The Principal Commissioner impugns the order of the Income Tax Appellate Tribunal [“ITAT”] dated 02 May 2017 and has proposed the following questions of law for our consideration: “A Whether on facts and in the circumstances of the case the Hon’ble Tribunal has erred in law and facts of the case by relying on the decision of the Ld. CIT(A) without considering the basic finding of the TPO that the AMP spend incurred by the assesse is actually developing the brand owned by the foreign AE?

B. Whether on facts and in the circumstances of the case the Hon'ble Tribunal has erred in law and facts of the case by deleting the brand building expenditure when the TPO has established that the assesse has non-exclusive rights to use the trademarks within the territory of India and any marketing intangible developed could be utilised by third party manufacturers/bottlers licensed by the foreign AE?

C. Whether on facts and in the circumstances of the case the Hon'ble Tribunal has erred in law and facts of the case by upholding the partial relief given by the CIT(A) to assesse in relation to transfer pricing adjustment in the marketing support service segment, without having regard to the fact that the expenses incurred by the assesse on behalf of its AE, though reimbursable, ought to be included in the cost base for determining the PLI?

D. Whether on facts and in the circumstances of the case the Hon'ble Tribunal has erred in law and facts of the case by deleting the disallowance of Rs. 3,89,55,070/- on account of brand expenditure without appreciating that assesse enjoys an enduring benefit on account of advertisement expenses incurred and hence the same ought to have been capitalised?”

However, we note that insofar as the aspect of Advertising, Marketing and Promotional [“AMP”] expenses are concerned, the ITAT has in Paras 5.5 and 5.6 held as follows: “5.5 We have heard the rival submissions. In our considered opinion the crux of the matter is that we find force in the contentions of the Ld. Counsel of the assessee that no adjustment was warranted on the facts of the present case since the brands for which the AMP expenditure was incurred were India specific. This categorical finding has been recorded by the Ld. CIT(A) in Para 10.9 of his order for AY 2004-05 and no evidence has been brought on record by the Ld. DR to repel this factual finding. Given ·the above, we find no force in the contentions of the DR that the issue be remanded back to the Ld. TPO for a fresh consideration. As rightly pointed out by the Ld. Counsel for the assessee, the jurisdictional High Court has time and again directed the Tribunal to apply the law as laid down by the High Court and adjudicate the matter. Given the fact that the AMP spend was India specific as the said brands were also India specific we find no force in the contentions of the revenue that any benefit could have arisen to the non-resident AE. If the product manufactured and sold by the assesse is India specific then it cannot' be said that any benefit could have accrued to the AE on account the AMP spend in India in respect of such brands.

5.6 Further the Ld. Counsel of the assessee has also submitted that the assessee is a full risk bearing manufacturer in India and as such no adjustment is warranted on account of AMP expenditure since the benefit of such expenditure accrues to the assessee only. However, we are not opining on this issue at this stage since on the facts we have already held that where the products are India specific there cannot be any adjustment in respect of the AMP expenditure since no benefit arises to the AE on account of such expenditure. Accordingly, these grounds of the revenue are rejected and order of the Ld. CIT (A) is confirmed.”

In view of the aforesaid findings that the AMP expenditure was incurred in respect of India specific brands, we find no ground to interfere with the view as expressed by the ITAT. This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 28/05/2024 at 12:12:08

Consequently, the appeals shall stand dismissed. 5. Since ITA 272/2018 stands disposed of by virtue of this order, we request learned counsel appearing for the respondent to place a common chart as well as the other compilations in any of the other surviving appeals.

ITA 872/2019 ITA 49/2020 ITA 50/2020 ITA 51/2020 ITA 54/2020 ITA 165/2021 ITA 166/2021 ITA 83/2022

On the request of learned counsel appearing for the appellants, let these appeals be called again on 29.08.2024.

YASHWANT VARMA, J.

PURUSHAINDRA KUMAR KAURAV, J. MAY 20, 2024/p

The Commissioner of Income Tax-TDS vs. M/s. Idea Cellular Ltd.,