Court stays Transfer Pricing Officer's order pending Supreme Court decision. Liberty granted to proceed as per law.

The court stayed the operation of the Transfer Pricing Officer's order, granting liberty to proceed in accordance with the law after the Supreme Court's decision on pending civil appeals. The writ petition and related application were disposed of, with the petitioner's counsel committing not to raise objections on the limitation period if the revenue succeeded in the Supreme Court.

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Issues:
Challenge to order by Transfer Pricing Officer under Income Tax Act, 1961 regarding advertising, marketing, and promotion expenditure adjustment.

Analysis:
The writ petition challenged the order passed by the Transfer Pricing Officer (TPO) under Section 92CA (3) in compliance with the Income Tax Act, 1961. The TPO's order aimed to implement the directive of the Income Tax Appellate Tribunal (ITAT) dated 26.11.2018 concerning the assessment year 2011-2012. The ITAT's decision involved the deletion of a transfer pricing adjustment (TPA) amounting to Rs. 21,98,34,275 related to advertising, marketing, and promotion expenditure (AMP expenditure) incurred by the petitioner-assessee. This direction was based on previous decisions by the court on the same issue, as highlighted in paragraph 16 of the ITAT's order. The tribunal emphasized that the adjustment made by the TPO/DRP/AO regarding AMP expenses was not sustainable in light of the legal position and facts of the case.

The tribunal's order referenced judgments that have been challenged by the respondent/revenue through special leave petitions pending adjudication. The TPO issued the impugned order in the context of the pending civil appeals before the Supreme Court to safeguard the interests of the revenue. The respondent/revenue argued that the TPO's order was necessary to protect their position if successful in the Supreme Court appeals. On the other hand, the petitioner's counsel contended that the TPO should have merely implemented the tribunal's order and not issued the impugned order. However, it was acknowledged that if the revenue succeeded in the Supreme Court, adjustments might need to be made by the TPO regarding transfer pricing concerning AMP.

Considering the arguments presented, the court decided to stay the operation of the impugned order and granted liberty to the TPO to proceed according to the law after the Supreme Court's decision on the pending civil appeals. The writ petition and related application were disposed of accordingly. Additionally, the petitioner's counsel assured that no objection would be raised concerning the limitation period if the revenue succeeded in the Supreme Court, with this statement being duly noted and the petitioner being bound by it.

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