CIT (LTU) Vs Whirlpool of India Ltd. (Supreme Court)
Summary: The Supreme Court, in CIT (LTU) v. Whirlpool of India Ltd., dismissed the Special Leave Petitions filed by the Revenue through its order dated 20 November 2024. The Court stated that it was not inclined to entertain the petitions under Article 136 of the Constitution of India. Accordingly, the petitions were dismissed, and any pending applications were disposed of. The Supreme Court did not provide substantive reasons or independently examine the transfer pricing issues in its brief order.
Background: Delhi High Court Judgment
The underlying dispute arose from the Delhi High Court’s judgment dated 22 December 2015 in CIT (LTU) v. Whirlpool of India Ltd., ITA Nos. 610/2014 and 228/2015, concerning Assessment Year 2008–09. The Revenue had sought transfer pricing adjustments in respect of advertisement, marketing and promotion (AMP) expenditure incurred by Whirlpool of India Ltd., alleging that the expenditure benefited its foreign associated enterprise, Whirlpool Corporation, USA.
The Delhi High Court held that the Revenue had failed to establish through tangible material the existence of an international transaction involving AMP expenditure between the Indian company and its foreign associated enterprise. It also noted that the Bright Line Test was not a permissible method for establishing such a transaction or determining its arm’s length price. The High Court allowed the assessee’s appeal and dismissed the Revenue’s appeal, setting aside the relevant orders of the ITAT, Dispute Resolution Panel and Transfer Pricing Officer.
The Supreme Court’s subsequent dismissal of the Special Leave Petitions left the High Court’s decision undisturbed. However, the Supreme Court’s brief order should not be characterised as an independently reasoned affirmation of every finding of the High Court.
Related Delhi High Court Judgment: The Supreme Court proceedings arose from the Delhi High Court’s decision dated 22 December 2015 in CIT (LTU) Vs Whirlpool of India Ltd., ITA Nos. 610/2014 and 228/2015. The High Court held that unilateral AMP expenditure incurred by an Indian company, without an established agreement, arrangement or action in concert with its foreign associated enterprise, could not by itself constitute an international transaction for transfer pricing purposes. The High Court also rejected the use of the Bright Line Test for establishing such a transaction. Read the detailed judgment: CIT (LTU) Vs Whirlpool of India Ltd. (Delhi High Court) – Unilateral AMP Expenditure Not an International Transaction Without Mutual Arrangement.
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
1. We are not inclined to entertain the Special Leave Petitions under Article 136 of the Constitution of India.
2. The Special Leave Petitions are accordingly dismissed.
3. Pending application(s), if any, stand disposed of.
