PCIT Vs Suzuki Motorcycle India Pvt Ltd (Delhi High Court)
Summary: The Delhi High Court dismissed appeals filed by the Department under Section 260A of the Income Tax Act, 1961, challenging the Income Tax Appellate Tribunal’s order dated 22.11.2022 concerning the Advertising, Marketing, and Promotion (AMP) adjustment. The Department questioned the Tribunal’s rejection of the AMP adjustment by applying the Bright Line Test, relying upon the Delhi High Court decisions in Sony Ericsson Mobile Communications India Pvt. Ltd. v. Commissioner of Income Tax [2015] 374 ITR 118 (Delhi) and Maruti Suzuki Ltd. v. Commissioner of Income Tax [2016] 381 ITR 117 (Delhi).
The assessee submitted that the Delhi High Court had repeatedly held that the Bright Line Test was not a method sanctioned by law. It also relied upon the rejection by the Supreme Court of SLP(C)29270/2016 in Commissioner of Income Tax (LTU) v. M/s Whirlpool Of India Ltd., arising from the judgment dated 22.12.2015 in ITA 610/2014.
The Department submitted that the Special Leave Petitions against Sony Ericsson and Maruti Suzuki remained pending before the Supreme Court and that the issue concerning use of the Bright Line Test was therefore pending. The High Court nevertheless dismissed the Department’s appeals, following its judgments in Sony Ericsson and Maruti Suzuki. It clarified that if the Revenue’s SLPs or appeals against those judgments were allowed, the law declared by the Supreme Court would apply mutatis mutandis to the assessee’s case. All pending applications were also disposed of.
Background of the Appeals
The appeals were preferred by the Department under Section 260A of the Income Tax Act, 1961, challenging the order dated 22.11.2022 passed by the Income Tax Appellate Tribunal, Delhi Bench ‘I’, New Delhi.
