PR. COMMISSIONER OF INCOME TAX-1 vs. AVERY DENNISION (I) PVT. LTD.
What did the High Court hold?
The Delhi High Court upheld the ITAT's decision, finding that the issue of intra-group services was covered by a previous judgment in the assessee's own case. The court also agreed with the concurrent findings of fact that interest on receivables was not warranted.
What were the facts?
The Revenue appealed against an ITAT order that deleted additions made by the TPO regarding intra-group services and interest on receivables. The ITAT had held the services were for commercial expediency and that interest on receivables was not an international transaction requiring benchmarking.
What were the issues?
Whether intra-group services were for commercial expediency and whether interest on outstanding receivables constituted an international transaction requiring benchmarking.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
ITA No.342/2022 Page 1 of 3 $~45 * IN THE HIGH COURT OF DELHI AT NEW DELHI + ITA 342/2022 PR. COMMISSIONER OF INCOME TAX-1 ..... Appellant Through: Mr.Sanjay Kumar, Sr.Standing Counsel for the Revenue with Ms. Easha Kadian, Advocate. versus AVERY DENNISION (I) PVT. LTD. ..... Respondent Through: Mr.Vishal Kalra with Mr.S.S.Tomar, Advocates. % Date of Decision: 20th September, 2022 CORAM: HON'BLE MR. JUSTICE MANMOHAN HON'BLE MS. JUSTICE MANMEET PRITAM SINGH ARORA J U D G M E N T MANMOHAN, J (Oral): 1. Present income tax appeal has been filed challenging the order dated 11th October, 2021 passed by the Income Tax Appellate Tribunal (‘ITAT’) in ITA 4720/Del./2017 for the Assessment Year 2009-10. 2. Learned counsel for the Appellant states that the ITAT has erred in deleting the addition made by the Transfer Pricing Officer (TPO) and in holding that the payment made for intra group services was for commercial expediency. He further states that the ITAT has erred in holding that the TPO has re-characterized the infra group services transaction, without appreciating that the TPO has not disallowed the infra group services This is a digitally signed Judgement. NEUTRAL CITATION NO: 2022/DHC/003774
ITA No.342/2022 Page 2 of 3 merely on the issue of non-substantiation of commercial expediency by the assessee but on several other factors. 3. He also states that the ITAT has erred in not considering interest on outstanding receivables as an international transaction as per Section 92 (B) read with Section 92F(v) of the Income Tax Act, 1961 (‘the Act’) which requires to be benchmarked as per Rule 10B of the Income Tax Rules,1962. 4. Admittedly, the issue pertaining to infra group services is covered by the judgement of this Court dated 28th July, 2016 in assessee’s own case in ITA 386/2016 and other connected matters for the Assessment Years 2007- 08 & 2008-09, wherein this Court has held as under:- “3. … The contention of the Assessee was that agreement between the Assessee and its AE was a composite one and could not be split up for the purposes of holding that some services are at arm’s length and some are not. The ITAT appears to have agreed with the above contention of the Assessee on viewing the agreement as a whole. It was not within the purview of the TPO to determine if some of the services resulted in any actual benefit to the Assessee or not. 4. Having heard learned counsel for the Revenue at length and having perused the orders of the TPO, CIT(A) and the ITAT, the Court is of the view that the view taken by the ITAT is plausible one and does not warrant any interference.” 5. The Appellate Authorities have concluded that facts of present case are similar to the facts involved in Assessment Years 2007-08 & 2008-09. Consequently, the first issue raised by the appellant is no longer res integra. 6. Further, the Appellate Authorities below have accepted the contention of the assessee that the assessee was justified in not charging interest on the delayed payments by the AEs and in not levying any interest on delayed payments made by the non-AEs, as the debtor days given to the non-AEs This is a digitally signed Judgement. NEUTRAL CITATION NO: 2022/DHC/003774
ITA No.342/2022 Page 3 of 3 were more than the debtor days given to the AEs. The ITAT also recorded that at times 120 days are given to the non-AE entity for payment from billing date. Furthermore, the Authorities below accepted the contention of the assessee that during the Financial Year 2008-09, the assessee had net monthly balance payable to the AEs as opposed to monthly balance receivable from the AEs as alleged by the Assessing Officer. 7. Consequently, given the concurrent findings of facts by the Appellate Authorities below that the debtor days given to the AEs are less than the debtor days given to non-AEs, no substantial question of law arises for consideration in the present appeal and the same is accordingly dismissed. MANMOHAN, J MANMEET PRITAM SINGH ARORA, J SEPTEMBER 20, 2022 KA This is a digitally signed Judgement. NEUTRAL CITATION NO: 2022/DHC/003774
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