IN HIGH COURT OF DELHI AT NEW DELHI ITA 187/2020 PR. COMMISSIONER OF INCOME TAX -9 Appellant Through Mr. Ruchir Bhatia, Sr. Standing Counsel with Ms. Madhura M.N., Advocates versus VALVOLINE CUMMINS PVT. LTD. Respondent Through Mr. Neeraj Jain with Mr. Aniket D. Agarwal, Advocates Date of Decision: 13th March, 2020 CORAM: HON'BLE MR. JUSTICE MANMOHAN HON'BLE MR. JUSTICE SANJEEV NARULA JUDGMENT MANMOHAN, J: (Oral) CM APPL. 9279/2020 Keeping in view averments in application, delay in re-filing appeal stands condoned. Accordingly, present application is allowed. ITA 187/2020 1. Present appeal has been filed by revenue under Section 260A of Income Tax Act, 1961 challenging order dated 26 th November, 2018 passed by Income Tax Appellate Tribunal in ITA No.527/Del/2016 for ITA 187/2020 Page 1 of 5 Assessment Year 2011-12. 2. Admittedly, present case is covered by Assessee own case decided by coordinate Bench of this Court for Assessment Year 2010- 2011 in ITA No. 158/2016. relevant portion of order in ITA No. 158/2016 is reproduced hereinbelow:- 1. This is appeal filed by Assessee under Section 260A of Income Tax Act, 1961 ( Act ) challenging order dated 31stMarch, 2015 passed by Income Tax Appellate Tribunal ( ITAT ) in ITA No.608/Del/2015 for Assessment Year ( AY ) 2010-11. 2. While admitting appeal on 19 th February 2016, following question was framed for determination by this Court: Whether in light of decision in Maruti Suzuki Ltd. v. CIT (2016) 381 ITR 117 (Del) ITAT was justified in holding that there was international transaction between Assessee and its Associated Enterprise with regard to advertising, marketing and publicity (AMP) expenses and in remanding matter to Assessing Officer/Transfer Pricing Officer for determining arms length price of such transaction for purposes of transfer pricing adjustment? xxxx xxxx xxxx xxxx 9. Assessee drew attention of ITAT to decision of this Court in Sony Ericsson India Pvt. Ltd. v. CIT (2015) 374 ITR 118 (Del) whereby Court had declared that BLT had no statutory mandate and considering excess expenditure beyond bright line as international transaction was unwarranted . 10. In para 5 of impugned order, ITAT noted as under: 5. On enquiry from Bench, Ld. Counsel of assessee submitted that facts and figures required for ITA 187/2020 Page 2 of 5 coming to conclusion pleaded by him were not available on record and opportunity may be given to him to present same before TPO. He further submitted that Revenue is also required to verify fresh data to be submitted by assessee. 11. Ultimately, ITAT stated that it had, in view of submissions of counsel of both sides, no other option, but to set aside issuein dispute to file of AO/TPO on above issue. Further, AO/TPO was directed to follow binding judgment of this Court. 12. It is submission of Mr. Vohra that, as explained by this Court in Sony Ericsson India Pvt. Ltd. (supra) and later in Maruti Suzuki India Limited v. CIT (2016) 328 ITR 210 (Del), basic requirement had to be fulfilled prior to commencing exercise of determining ALP of international transaction. Revenue had to discharge its onus of showing that there was international transaction involving Assessee and its AE with regard to AMP expenses. If Revenue failed to discharge this onus then question of further step of determining ALP of such AMP expenses does not arise. 13. Mr Vohra submitted that there was in fact no concession made by Assessee on this score. He submitted that ITAT ought not to have remanded matter to TPO as material on record before ITAT was sufficient to arrive at conclusion on this issue. 14. Mr. Sanjay Kumar, on other hand, submitted that it was Assessee s own case before ITAT that in absence of facts and figures matter should be sent back to TPO for fresh determination. He further submitted that when TPO decided issue in present case, he did not have benefit of decision of this Court in Sony Ericsson India Pvt. Ltd. (supra). He also submitted that if matter went back to TPO he would have to examine issue afresh, de hors BLT, and this was reason why entire matter, and not just ITA 187/2020 Page 3 of 5 issue regarding determination of ALP, ought to be sent back to TPO. Mr. Sanjay Kumar also placed reliance on this decision of this Court in Le Passage to India Tour & Travels (P) Ltd. v. Deputy Commissioner of Income Tax (2017) 391 ITR 207. 15. decision in Le Passage to India Tour & Travels (P) Ltd. (supra) turned on fact that there was no determination by TPO in first place whether there was international transaction. In present case, however, TPO did apply his mind to existence of international transaction involving AMP expense. only ground on which conclusion was reached by TPO was that AMP expenditure incurred by Assessee was in excess of that incurred by comparables. His conclusion was not based on any other factor. In other words, it was not as if conclusion arrived by TPO was based on two or three grounds, one of which was BLT. 16. This Court in Sony Ericsson India Pvt. Ltd. (supra) categorically found that BLT was not appropriate yardstick for determining existence of international transaction or for that matter for calculating ALP of such transaction. decision of Full Bench of ITAT in L.G. Electronics India Pvt. Ltd. v. ACIT (2013) 22 ITR (Trib.) 1 which sought to make BLT basis was set aside by this Court. 17. Once BLT has been declared by this Court in Sony Ericsson India Pvt. Ltd. (supra) to no longer be valid basis for determining existence of or ALP of international transaction involving AMP expenses, order of TPO was unsustainable in law. mere fact that Assessee was permitted to use brand name Valvoline will not automatically lead to inference that any expense that Assessee incurred towards AMP was only to enhance brand Valvoline . onus was on Revenue to show existence of any arrangement or agreement on basis of which it could be inferred that AMP expense incurred by Assessee was not for its own benefit but for benefit of its AE. That factual foundation has been unable to be laid by Revenue in ITA 187/2020 Page 4 of 5 present case. On basis of existing record, TPO has found no basis other than by applying BLT, to discern existence of international transaction. Therefore, no purpose will be served if matter is remanded to TPO, or even ITAT, for this purpose. 18. This Court has in similar circumstances in series of decisions including Maruti Suzuki Ltd. (supra); Bausch & Lomb Eye care (India) Pvt. Ltd. v. Additional CIT (2016) 381 ITR 227 (Del) and Honda Siel Power Products Ltd. v. Dy. CIT (2016) 237 Taxman 304 emphasized importance of Revenue having to first discharge initial burden upon it with regard to showing existence of international transaction between Assessee and AE. 19. For aforementioned reasons, this Court is of view that ITAT was not justified in remanding matter to AO/TPO for determining ALP of alleged international transaction involving AMP expenses, when in fact, Revenue was unable to show that there existed international transaction between Assessee and its AE in first place. 20. question framed by this Court is, accordingly, answered in negative, i.e., in favour of Assessee and against Revenue. appeal is, accordingly, allowed. 3. Keeping in view aforesaid judgment of Division Bench of this Court, no substantial question of law arises for consideration in present appeal. Accordingly, present appeal stands dismissed. MANMOHAN, J SANJEEV NARULA, J MARCH 13, 2020/rn ITA 187/2020 Pr. Commissioner of Income-tax -9 v. Valvoline Cummins Pvt. Ltd