PCIT Vs Avery Dennison (India) Pvt. Ltd. (Delhi High Court)
The Delhi High Court dismissed an appeal filed by the Revenue under Section 260A of the Income Tax Act, 1961, challenging an order of the Income Tax Appellate Tribunal dated 05.06.2023. The Tribunal’s order had decided appeals relating to Assessment Years 2012–13 and 2015–16 and had deleted transfer pricing additions concerning payments made for intra-group services. At the outset, the Court condoned delays of 593 days in filing and 146 days in refiling the appeal and disposed of the related applications.
The Court noted that a coordinate Bench had already examined the same Tribunal order in an earlier appeal concerning Assessment Year 2015–16 and had dismissed the Revenue’s challenge. In that earlier decision, the Court had considered multiple questions proposed by the Revenue, including whether the Tribunal was justified in deleting additions made by the Transfer Pricing Officer, whether the Tribunal erred in holding that the transactions were for commercial expediency, whether the Transfer Pricing Officer had re-characterised the intra-group services, and whether the Tribunal improperly relied on earlier years’ decisions involving the same assessee.
The Court observed that identical issues had been raised by the Revenue consistently from Assessment Year 2007–08 onwards. It referred to earlier judgments where similar disputes relating to determination of the arm’s length price of international transactions involving intra-group services had been decided against the Revenue and in favour of the assessee. The Court recalled that for some years, the Tribunal had remanded matters to the Transfer Pricing Officer, but in later years the Tribunal had given detailed reasons for not doing so. In particular, the Tribunal had noted that in certain years, the Dispute Resolution Panel had accepted the assessee’s determination of arm’s length price for specific intra-group services, while for others the arm’s length price was determined as nil by applying the comparable uncontrolled price method.
