2019 (2) TMI 820 - HC - Income Tax

Court directs Tribunal on international transaction analysis for Assessment Year 2009-10

The High Court directed the Tribunal to focus on determining whether the appellant's expenditure should be considered an international transaction for the ... AMP expenditure to be regarded as an international transaction and subjected to the rigors of Chapter X of the Act - TPA - Held that:- The grievance of the appellant is that this issue though raised was not decided by the Tribunal in the impugned order of the Tribunal. This even though it had remanded the issue of determining the ALP of the transactions to the AO/ TPO. Mr. Thakkar points out that on remand, the Assessing Officer passed an order even examining the issue of transaction being an international transaction or not. This order of the AO (on remand) is now in the appeal before the Tribunal. Thus, the issue raised herein viz. whether the transaction is international transaction or not for the purpose of determining AMP expenses is before the Tribunal and is now fixed for hearing on 10.3.2019. Tribunal is now considering issue whether the AMP expenses incurred by the respondent in an international transaction or not. This by virtue of the order of the AO / Transfer Prising Officer in the second round. Therefore, it would be appropriate that the Tribunal decides the issue in the second round without in any manner being fettered by the impugned order. We dispose of this appeal with direction to the Tribunal to decide the issue which is a subject matter of dispute in second round of appeal along with this appeal. It is made clear that other issues raised in the first round of appeal (except those remanded) are not to be re-adjudicated by the Tribunal. Issues:1. Whether the expenditure incurred by the appellant should be regarded as an international transaction under the Income Tax Act, 1961 for the Assessment Year 2009-10Rs.Analysis:The appellant challenged the order passed by the Income Tax Appellate Tribunal, Mumbai, regarding the categorization of the appellant's expenditure as an international transaction. The appellant contended that the Tribunal did not decide on this issue in the initial order, despite remanding the matter to the Assessing Officer for determining the Arm's Length Price (ALP) of the transactions. The Assessing Officer, upon remand, did not specifically address the issue of whether the transaction qualified as an international transaction. Consequently, the Tribunal was now tasked with determining whether the appellant's AMP expenses were indeed part of an international transaction. The High Court directed the Tribunal to address this specific issue in the ongoing appeal, without revisiting other matters already decided or remanded in the first round of appeal.Therefore, the High Court disposed of the appeal by instructing the Tribunal to focus on deciding whether the appellant's expenditure should be considered an international transaction in the ongoing proceedings, while clarifying that previously addressed issues should not be re-examined.