Facts of the Case

The Revenue filed appeals challenging a common order passed by the Income Tax Appellate Tribunal (ITAT) concerning Assessment Year 2011–12.

The dispute arose over whether routine selling and distribution expenses should be included within AMP expenses for transfer pricing analysis.

The ITAT held that such routine expenses do not form part of AMP expenses. The Revenue contested this finding, arguing that these expenses contribute to the creation of marketing intangibles and should be considered in comparability analysis.

Issues Involved

Whether routine selling and distribution expenses should be included within AMP expenses for transfer pricing purposes.

Whether the ITAT erred in excluding such expenses while determining marketing intangibles.

Whether the issue is already covered by binding judicial precedents.

Petitioner’s (Revenue’s) Arguments

The ITAT erred in excluding selling and distribution expenses from AMP expenses.

Such expenses contribute to the creation of marketing intangibles, which are relevant in transfer pricing analysis.

Different accounting heads should not exclude the true nature of such expenditures.

Respondent’s (Assessee’s) Arguments

The issue raised by the Revenue does not arise in one of the appeals (ITA 330/2022).

The matter is already covered by earlier binding judgments of the Delhi High Court in the assessee’s own case.

Court’s Findings / Order

The Court held that the issue is squarely covered by earlier judgments, particularly:

Assessee’s own case (AY 2009–10)

Sony Ericsson Mobile Communications (India) Pvt. Ltd. vs. CIT

The Court noted that although the Revenue has challenged the earlier judgment before the Supreme Court, no stay has been granted, and hence it remains binding.

Applying settled law:

ITA No. 331/2022 → Dismissed as covered by precedent

ITA No. 330/2022 → Dismissed as not maintainable

Important Clarifications by Court

Even if a judgment is under challenge before the Supreme Court, it continues to be binding unless stayed.

The decision in one appeal (ITA 331/2022) is subject to the final outcome of the Supreme Court in Canon India Pvt. Ltd. vs. DCIT.

Link to download the order - https://delhihighcourt.nic.in/app/case_number_pdf/2022:DHC:3670-DB/MMH14092022ITA3302022_193410.pdf

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