HERBALIFE INTERNATIONAL INDIA PRIVATE LIMITED vs. THE ASST. COMMISSIONER OF INCOME-TAX

THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE 1(1)(4) BENGALURU, 2ND FLOOR BMTC BUILDING 80 FT ROAD, 6TH BLOCK KORAMANGALA BANGALORE-560 095

THE COMMISSIONER OF INCOME TAX-3 BMTC BUILDING, 80 FT ROAD

Whether in the facts and circumstance of the case and in law, the Tribunal erred in drawing a presumption based on provisions of the Indian Evidence Act, without taking cognizance of the fact that evidence to prove the receipt of the administrative services and technical know-how were filed and relied by the appellant?

Whether the Tribunal has erred in ignoring the principle of stare decisis and not following its orders in appellant’s own case especially when there is no change in facts?

Whether the Tribunal erred in not appreciating that transaction approved by the FIPB and RBI can be considered to be at arm’s length as per the requirement of the Income-Tax Act?

Whether on the facts and in the circumstances of the case, the Tribunal’s order in so far it is passed without adjudicating all the grounds raised by the appellant, is not in compliance with principles of natural justice and liable to be set-aside?

Heard Shri. Percy Pardiwala, learned Senior Advocate for the assessee and Shri. M. Dilip, learned Standing Counsel for the Revenue.

Briefly stated, the facts of the case are, assessee engaged in the business of dealing with weight management, food and dietary supplements and personal care products, entered into certain agreements to avail certain common services from Herbalife International Inc., and other associated group companies. Assessee also availed technical know-how services under Royalty Agreement dated November 10, 1999 between assessee and Herbalife International Inc.,

The TPO2 held that the assessee had not got the benefit of the aforementioned agreements and determined the ALP3 as ‘Nil’ by holding that there was no need to incur such expenditure. On appeal, the ITAT dismissed the same on two grounds. Firstly, that the assessee had not conclusively proved that it had actually received the administrative services and the technical services as claimed by the assessee. Secondly, that the assessee had not filed any additional evidence to prove that the technical know-how was actually received by the assessee.

Shri. Pardiwala, adverting to Annexure-H (the index of paper book filed before the ITAT) submitted that the copy of the Administrative Service Agreement between assessee and Herbalife International Inc. was appended at serial No.8 and the Royalty Agreement with Herbalife International Inc. was appended at Serial No.11. Further, adverting to letter dated January 5, 2016 (Annexure-J), he pointed out that the assessee had filed additional supporting documents/evidences. According to Shri. Pardiwala, though the assessee had filed the agreements and the additional evidences, the ITAT has incorrectly recorded in para 11 of its order that assessee had not proved that it had received administrative service and had not filed any additional evidences to prove the administrative service/ technical know-how.

Shri. Dilip, for the Revenue, though argued in support of the impugned order, in his usual fairness did not dispute the factual matrix with regard to Annexures – H & J.

We have carefully considered rival contentions and perused the records.

Annexure-H is a letter dated August 24, 2015. It contains an index of papers filed in the paper book. A copy of the Administrative Service Agreement is marked at Sl. No.8 and copy of the Royalty Agreement is marked at Sl. No.11. Annexure-J is a letter dated January 5, 2016 under which the assessee has sought to produce additional supporting documents/evidences. The said aspects not being in dispute, the findings recorded by the Tribunal in paragraphs No.10 & 11 run counter to the material on record. In that view of the matter, we are of the considered opinion that the impugned order passed on the basis of the findings recorded at paragraphs No.10 and 11 is not sustainable. Hence, the following: ORDER (a) Appeal is allowed. (b) Order dated April 17, 2017 in IT(TP)A No. 1406/Bang/2010 passed by the ITAT is set-aside.