Sony India Private Limited Vs ACIT (ITAT Delhi)
Assesssee Wins Major TP Relief – ITAT Deletes Royalty, AMP & Stock Valuation Adjustments; Issues Remanded for Non-Speaking DRP Order
Assessee challenged multiple transfer pricing & corporate tax adjustments made in the assessment order passed u/s 143(3) r.w.s. 144C(13)/144B, pursuant to DRP directions. Assessee also sought admission of an additional ground (Ground 29) regarding DRP’s failure to pass a speaking order on comparables & classification of service income. Tribunal admitted the additional ground.
On computation issues , Tribunal noted that AO had not fully given DRP-directed relief while determining demand & interest u/s 234A–234C. Issue was remitted to AO for verification.
On royalty TP adjustment, Tribunal held that the matter stood fully covered in favour of Assessee by earlier ITAT orders for AYs 2015-16 to 2018-19 & by Delhi High Court’s judgment dated 30.09.2024 affirming that TPO cannot benchmark royalty at NIL by questioning commercial expediency. Accordingly, royalty adjustment was deleted.
On AMP intensity adjustment , Tribunal followed earlier Coordinate Bench decisions & Delhi HC rulings (Maruti Suzuki, Casio, Beam Global) holding that intensity approach & BLT have no statutory mandate. Therefore, substantive AMP adjustments were deleted.
On protective TP adjustment for import of finished goods, Tribunal found that DRP had not passed a speaking order. Matter was restored to DRP for fresh adjudication.
On protective AMP BLT adjustment, Tribunal reiterated that BLT stands invalidated by Delhi HC in Sony Ericsson, MSD Pharma, Toshiba, Nikon, Casio etc. Protective AMP BLT adjustments were therefore deleted.
On stock valuation loss, Tribunal held that Assessee consistently valued inventory at cost or NRV, whichever is lower, which is an accepted method. Following earlier ITAT orders & Delhi HC (30.09.2024), the disallowance was deleted.
On royalty disallowance under normal provisions, Tribunal again followed its own earlier orders & Delhi HC judgment & allowed the grounds.
Grounds relating to penalty u/s 270A & interest u/s 155(18) were treated as consequential.
On DDT credit short-grant, Tribunal held that the Special Bench ruling in Total Oil governed the issue against Assessee. Ground dismissed.
On additional Ground , Tribunal observed that DRP had indeed passed a non-speaking order on comparables & service-income operating classification. Matter restored to DRP for fresh speaking order.
Appeal was partly allowed.
FULL TEXT OF THE ORDER OF ITAT DELHI
