M/s. Luxottica India Eyewear Pvt. Ltd., Gurgaon V. DCIT, New Delhi

ITA 1115/DEL/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 7562 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 3 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I1
• Next Hearing Date: 04-11-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 26-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMRENDRA KUMAR
• Assessee Lawyers: PIYUSH SINGH; NENA SINGH
• Keywords: Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH I - 1 NEW DELHI) BEFORE SHRI I.C. SUDHIR AND SHRI L.P. SAHU ITA NO. 111 5 /DEL/201 4 ASSESSMENT YEAR: 200 9 - 1 0 LUXOTTICA INDIA EYEWEAR PVT. LTD., VS. DCIT, 7 TH FLOOR, TOWER 9B, DLF CYBER GREENS, CIRCLE 4(1), GURGAON. NEW DELHI. (PAN: AA B C L3871C ) (APPELLANT) (RESPONDENT) ITA NO. 617/DEL/2014 ASSESSMENT YEAR: 2009 - 10 DCIT, VS. LUXOTTICA INDIA EYEWEAR PVT. LTD., C IRCLE - 4(1), 7 TH FLOOR, TOWER 9B, DLF CYBER NEW DELHI. GREENS, GURGAON. (PAN: AABCL3871C) (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI PIYUSH SINGH & MS. NENA SINGH, ADV. DEPARTM ENT BY: SHRI AMRENDRA KUMAR , SR. DR DATE OF HEARING : 0 8 . 0 3 .201 6 DATE OF PRONOUNCEMENT: 06 : 0 6 .201 6 ORDER PER I.C. SUDHIR : JUDICIAL MEMBER IN THE ABOVE CROSS APPEAL S, THE ASSESSEE HAS RAISED THE ISSUE PERTAINING TO ADJUSTMENT MADE ON ACCOUNT OF ADVERTISEMENT, MARKETING AND SALES PROMOTION EXPENSE (AMP EXPENSES). THE REVENUE ON THE OTHER HAND HAS RAISED THE ISSUE OF ADOPTION OF TNMM AS THE MOST APPROPRIATE METHOD TO B ENCHMARK TRANSACTION PERTAINING TO IMPORT OF GOODS, PRIOR PERIOD EXPENSES, 2 PROVISIONS FOR WARRANTY EXPENSES AND NON - DEDUCTION OF TDS UNDER SEC. 40(A)(IA) OF THE INCOME - TAX ACT, 1961. 2. HEARD AND CONSIDERED THE ARGUMENTS ADVANCED BY THE PARTIES IN VIEW OF ORDERS OF THE AUTHORITIES BELOW, MATERIAL AVAILABLE ON RECORD AND THE DECISIONS RELIED UPON. 3. THE ASSESSEE WAS INCORPORATED IN INDIA ON 15.11.2007 AND COMMENCED IT ACTUAL OPERATIONS FROM FEBRUARY 2008. IT IS PRIMARILY ENGAGED IN THE BUSINESS OF TRADIN G OF SUNGLASSES AND SPECTACLES FRAMES. 4. THE ISSUE INVOLVED IN THE GROUNDS OF THE APPEAL PREFERRED BY THE ASSESSEE IS REGARDING ADJUSTMENT MADE ON ACCOUNT OF ADVERTISEMENT, MARKETING AND SALES PROMOTION EXPENSE (AMP EXPENSES). THE LEARNED AR POINTED OUT THAT FIRST TIME THE APPEAL CAME UP FOR HEARING BEFORE THE ITAT IN THE YEAR 2014, WHEREIN THE ITAT VIDE ITS ORDER DATED 5.11.2014 DISPOSED OFF THE ISSUE BY SETTING ASIDE THE MATTER TO THE FILE OF THE TPO TO DECIDE THE ISSUE IN ACCORDANCE WITH THE GUIDELINES LAID DOWN BY THE DELHI SPECIAL BENCH IN THE CASE OF LG ELECTRONICS INDIA PVT. LTD. (2013) 152 TTJ 273 (SB) (DELHI). AGGRIEVED BY THE DECISION OF THE ITAT, THE ASSESSEE HAD PREFERRED AN APPEAL BEFORE THE HON'BLE DELHI HIGH COURT VIDE ITA NO. 336/2015 AND THE HON'BLE HIGH COURT VIDE ITS ORDER DATED 20.5.2015 REMANDED THE MATTER 3 BACK TO THE ITAT AND DIRECTED THE ITAT TO DECIDE THE APPEAL ON MERITS IN ACCORDANCE WITH THE PRINCIPLES LAID DOWN IN THE CASE OF SONY ERECTION COMMUNICATION INDIA PVT. LTD. VS. CIT 374 ITR 118 (DEL.). 5. REGARDING THE APPEAL PREFERRED BY THE REVENUE, THE LEARNED AR POINTED OUT THAT AGAINST THE ORDER DATED 5.11.2014 OF THE ITAT, THE REVENUE HAD ALSO PREFERRED APPEAL BEFORE THE HON'BLE DELHI HIGH COURT CHALLENGING THE ABOVE ISSUES AND THE HON'BLE HIGH COURT VIDE ITS ORDER DATED 6.11.2015 IN ITA NO. 852/2015 HAS BEEN PLEASED TO DISMISS THE APPEAL OF THE REVENUE AND UPHOLD THE FINDINGS OF THE ITAT. 6. THE LEARNED CIT(DR) DID NOT DISPUTE THE ABOVE SUBMISSIONS MADE BY THE LEARNED AR . 7. IN VIEW OF THE ABOVE DEVELOPMENTS, WE FIND THAT THE ONLY ISSUE PENDING ADJUDICATION BEFORE US IN THE ABOVE CROSS APPEALS IS IN RESPECT OF AMP EXPENSES. WE THUS RESPECTFULLY FOLLOWING THE ABOVE ORDER DATED 20.5.2015 OF THE HON'BLE JURISDICTIONAL HIGH COURT OF DELHI IN THE APPEAL PREFERRED BY THE ASSESSEE (ITA NO. 336/2015) , WHILE SETTING ASIDE THE MATTER TO THE FILE OF THE LEARNED TPO DIRECT HIM TO DECIDE THE ISSUE OF ADJUSTMENT 4 MADE ON ACCOUNT OF AMP EXPENSES APPLYING THE RATIOS OF DECISION IN THE CAS E OF SONY ERRICSON MOBILE COMMUNICATION INDIA PVT. LTD. VS. CIT (SUPRA) AFTER CONSIDERING MERITS OF THE MATTER INCLUDING COMPREHENSION OF THE ASSESSEE THAT AMP DETERMINATION ITSELF , BY TAKING INTO CONSIDERATION THAT THE AMP EXPENSES IS NOT WARRANTED IN T HE CIRCUMSTANCES. IT IS NEEDLESS TO MENTION OVER HERE THAT WHILE DECIDING THE ISSUE AFRESH AS DIRECTED ABOVE, THE LEARNED TPO WILL AFFORD OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE APPEAL OF THE ASSESSEE IS ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES . 8. SO FAR AS APPEAL PREFERRED BY THE REVENUE IS CONCERNED , WE FIND THAT THE ISSUES RAISED IN THE GROUNDS REGARDING ADOPTION OF TNMM AS THE MOST APPROPRIATE METHOD TO BENCHMARK TRANSACTION PERTAINING TO IMPORT OF GOODS, PRIOR PERIOD EXPENSES, PROVISIONS FOR WARRANTY EXPENSES AND NON - DEDUCTION OF TDS UNDER SEC. 40(A)(IA) OF THE ACT HAVE REACHED FINALITY BY THE ORDER DATED 6.11.20015 OF HON'BLE DELHI HIGH COURT IN ITA NO.852/2015 AS THE HON'BLE HIGH COURT HAS BEEN PLEASED TO UPHOLD THE FINDINGS OF THE ITAT ON THE ISSUES ON EARLIER OCCASION VIDE ORDER DATED 5.11.2014 , AGAINST WHICH THE REVENUE WAS IN APPEAL BEFORE THE HON'BLE HIGH COURT . THE APPEAL PREFERRED BY THE DEPARTMENT IS THUS DISMISSED. 5 9. IN RESULT, APPEAL PREFERRED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES AND THE APPEAL PREFERRED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 06 . 0 6 . 201 6 S D/ - SD/ - ( L .P . S A HU ) ( I.C. S UDHIR ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 06 / 0 6 /201 6 MOHAN LAL COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT(APPEALS) 5) DR:ITAT ASSISTANT REGISTRAR DATE DRAFT DICTATED DIRECTLY ON COMPUTER 06 . 0 6 .201 6 DRAFT PLACED BEF ORE AUTHOR 06 . 0 6 .2016 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 06 .06 .2016 APPROVED DRAFT COMES TO THE SR.PS/PS 07 . 0 6 .2016 KEPT FOR PRONOUNCEMENT ON 06 .0 6 .2016 FIL E SENT TO THE BENCH CLERK 07 . 0 6 .2016 DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF ORDER.