$~1 & 2
*     IN THE HIGH COURT OF DELHI AT NEW DELHI
%                                             Decided on 12.01.2017

+     ITA 368/2016
      LE PASSAGE TO INDIA TOUR & TRAVELS (P) LTD.... Appellant
                         Through: Mr. Ajay Vohra, Senior Adv. with Mr.
                         Neeraj Jain and Mr. Aniket D. Agrawal, Advs.

                         versus

      THE DEPUTY COMMISSIONER OF INCOME TAX.... Respondent
                   Through: Mr. Ashok Manchanda and Mr.
                   Raghvendra Singhj, Advs.
+     ITA 369/2016
      LE PASSAGE TO INDIA TOUR & TRAVELS (P) LTD.... Appellant
                         Through: Mr. Ajay Vohra, Senior Adv. with Mr.
                         Neeraj Jain and Mr. Aniket D. Agrawal, Advs.

                         versus

      THE DEPUTY COMMISSIONER OF INCOME TAX.... Respondent
                   Through: Mr. Ashok Manchanda and Mr.
                   Raghvendra Singhj, Advs.

      CORAM:
      HON'BLE MR. JUSTICE S. RAVINDRA BHAT
      HON'BLE MR. JUSTICE NAJMI WAZIRI

      S. RAVINDRA BHAT (Oral)

      1.    The questions of law that arose for consideration in these
      appeals were framed on 27.07.2016. The facts of the case pertain to
      Assessment Year (A.Y.) 2009-10 and A.Y. 2010-11. The Transfer








ITAs 368 & 369 of 2016                                       Page 1 of 4
      Pricing Officer
      ("T.P.O.") and the Assessing Officer ("A.O.") were of the opinion
      that the Assessee's returns for AYs 2009-10 and 2010-11 which
      reported international transactions (with respect to inbound business)
      also showed the existence of outbound travel business. This decision
      inter alia was based upon the substantial AMP expenditure to the
      tune of `1.22 crores reported by the Assessee in respect of the
      outbound business for the A.Y.s 2009-10 and 2010-11. The Dispute
      Resolution Panel ("D.R.P.") also concurred with the views of the
      A.O., both with respect to the existence of the outbound business as
      well as applicability of the AMP determination method, i.e.,
      Advertisement, Marketing and Promotion expenditure ("AMP
      expenditure"). The Income Tax Appellate Tribunal ("I.T.A.T."), after
      considering the submissions of the parties, remitted the issue with
      respect to the determination of AMP in the outbound segment, to the
      A.O. The Assessee, therefore, is aggrieved and contends that the
      I.T.A.T.'s decision, based upon an assumption of existence of
      outbound business being an international transaction, is erroneous.
      2.    The Court notices that all the tax authorities      consistently
      applied the "bright line method" which was applicable at that time
      enunciated by I.T.A.T.'s Special Bench in L.G. Electronics (India)
      Pvt. Ltd. vs. ACIT [2013] 22 ITR 1 (SB) (Del) (Trib.). That decision
      was, however, overturned by a Division Bench of this Court in Sony
      Ericsson Mobile Communications India Pvt. Ltd. v. CIT [2015] 374
      ITR 118 (Del).
      3.    The Revenue had contended that the question of law was



ITAs 368 & 369 of 2016                                          Page 2 of 4
      answered by referring to the discussion of the I.T.A.T. in the
      impugned judgment. The learned counsel for the Assessee, however,
      had resisted this submission and contended that the question was
      squarely raised in the grounds of the appeal both, before the D.R.P.
      and the I.T.A.T. but the I.T.A.T. acceded to assume the existence of
      an international transaction.
      4.    This Court is of the view that whilst L.G. Electronics India Pvt.
      Ltd. (supra) indicated that AMPs were or did constitute the basis for
      an inquiry into the international transaction and indicated a "bright
      line" test for it, Sony Ericsson Mobile Communications India Pvt.
      Ltd.(supra) overruled that decision. This per se does not mean that
      every endeavour will be to conclude that all transactions reporting
      AMPs are to be treated as international transactions, the facts of each
      case would have to be examined for some deliberations. Whilst the
      TPO and the DRP undoubtedly held that the international transactions
      existed - that understanding apparently was passed upon the pre-
      existing regime, propounded in L.G. Electronics India Pvt. Ltd.
      (supra) with greater clarity on account of this Court's decision in Sony
      Ericsson Mobile Communications India Pvt. Ltd.(supra).              The
      I.T.A.T. in our opinion, should have first decided whether in the
      circumstances of this case, the nature of the AMP reported, could lead
      to the conclusion that there was an international transaction. When
      doing so, it should have remitted the matter back for examination to
      the A.O. in this case. Accordingly, following the decision of Sony
      Ericsson Mobile Communications India Pvt. Ltd.(supra) and a
      subsequent decision in Daikin Airconditioning India Pvt. Limited v.








ITAs 368 & 369 of 2016                                           Page 3 of 4
      Assistant Commissioner of Income Tax in ITA 269/2016, decided on
      27.07.2016, this Court hereby remits the matter for a comprehensive
      decision by the I.T.A.T. In other words, the I.T.A.T. will decide
      whether the reporting of the AMP in regard to the outbound business
      constitutes an international transaction for which ALP determination
      was necessary and if so, the effect thereof. The parties are directed to
      appear before the I.T.A.T. on 01.02.2017.        The appeal is partly
      allowed in the above terms.



                                             S. RAVINDRA BHAT, J


                                             NAJMI WAZIRI, J
      JANUARY 12, 2017/acm




ITAs 368 & 369 of 2016                                           Page 4 of 4