PCIT Vs Page Industries Ltd. (Supreme Court of India)
Summary: The Supreme Court declined to interfere with the Karnataka High Court judgment in the Revenue’s dispute with Page Industries Ltd. concerning Assessment Year 2010-11. Page Industries manufactured and sold Jockey-branded garments under a licence from Jockey International Inc., USA, and paid royalty at 5% of sales. The Transfer Pricing Officer reported an adjustment of Rs.20,20,07,861/- after treating advertisement, marketing and product promotion expenditure as an international transaction and applying the bright line method. The draft assessment also proposed disallowances under Section 14A read with Rule 8D(2)(iii) and Section 80JJAA. The Dispute Resolution Panel rejected the assessee’s objections, while the Tribunal partly allowed its appeal because the requirements of Section 92A(1) were not satisfied.
Before the Karnataka High Court, the Revenue argued that Section 92A(2)(g), concerning dependence on intellectual property and licensing rights, could independently establish associated enterprise status. The assessee contended that Sections 92A(1) and 92A(2) must be read together and referred to the Gujarat High Court decision in Prl. Commissioner of Income Tax-Central Vs. Veer Gems, (2017) 249 Taxman 264, and the reported dismissal of the related special leave petition, (2018) 256 Taxman 298. Considering the Finance Bill, 2002 clarification, the Karnataka High Court held that both subsections were interlinked and that reading them independently would render one redundant. It also noted that the Revenue had not challenged the Tribunal’s finding concerning Section 92A(1), and dismissed the appeal. The admitted question reproduced in the supplied High Court text refers to Section 80JJA, although the court’s reasoning addresses Section 92A.
In the separate Supreme Court order supplied, the Court stated only that it was not inclined to interfere with the impugned order and dismissed the special leave petition. The Supreme Court did not set out an independent analysis of the associated enterprise provisions.
Related Reading: Section 92A(1) and 92A(2) Read Together: Karnataka High Court Dismisses Revenue Appeal.
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
We are not inclined to interfere with the impugned order.
The special leave petition is, accordingly, dismissed.
