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    Honda Motors

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    Honda Motors

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    © All Rights Reserved
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    of 3

    [2020] 119 taxmann.

    com 400 (Delhi)/[2020] 274 Taxman


    342 (Delhi)[08-11-2019]

    TRANSFER PRICING : Once arm's length principle


    has been satisfied, there can be no further profit
    attributable to assessee, even if assessee has
    Permanent Establishment (PE) in India

    ■■■

    [2020] 119 taxmann.com 400 (Delhi)


    HIGH COURT OF DELHI
    Commissioner of Income Tax International Taxation-3
    v.
    Honda Motors Co. Ltd.*
    VIPIN SANGHI AND SANJEEV NARULA, JJ.
    IT APPEAL NO. 945 OF 2019†
    NOVEMBER 8, 2019

    Section 92C of the Income-tax Act, 1961 - Transfer pricing


    - Computation of arm’s length price (Adjustments -
    General) - Assessment year 2007-08 - Whether once arm's
    length principle has been satisfied, there can be no further
    profit attributable to assessee, even if assessee has a
    Permanent Establishment (PE) in India - Held, yes [Paras 2
    and 5] [In favour of assessee]
    CASE REVIEW

    Honda Motor Co. Ltd. v. DCIT [IT Appeal No. 1744 (Delhi) of
    2017] affirmed.
    CASES REFERRED TO
    Honda Motor Co. Ltd. v. DCIT (IT) [IT Appeal No. 1744 (Delhi) of
    2017, Dated 10-5-2019] (para 1), Asstt. DIT v. E-funds IT Solution
    Inc [2017] 86 taxmann.com 240/251 Taxman 280/399 ITR 34 (SC)
    (para 1), Honda Motor Co. Ltd. v. Asstt. DIT [2018] 92
    taxmann.com 353/255 Taxman 72 (SC) (para 1) and DIT
    (International Taxation) v. Morgan Stanley & Co. [2007] 162
    Taxman 165/292 ITR 416 (SC) (para 3).
    Ruchir Bhatia, Adv. for the Appellant. Shashi Mathews,
    Abhishek Boob and Vipin Upadhyay, Advs. for the Respondent.
    ORDER

    1. The present appeal is directed against the order dated 10-5-


    2019 passed by Income-tax Appellate Tribunal '(ITAT)' Delhi
    Bench "I-1": New Delhi in Honda Motor Co. Ltd. v. DCIT
    (International Taxation) [IT Appeal No. 1744 (Delhi) of 2017
    dated 10-5-2019 for the assessment year 2007-08. The Tribunal
    allowed the said appeal preferred by the assessee along with
    other appeals. The Tribunal, while allowing the said appeal, has
    relied upon the decision of the Supreme Court in Asstt. DIT v. E-
    funds IT Solution Inc [2017] 86 taxmann.com 240/251 Taxman
    280/399 ITR 34 (SC) and other connection matters, as well as the
    decision of the Supreme Court in the case of the respondent
    assessee itself in Honda Motor Co. Ltd. v. Asstt DIT [2018] 92
    taxmann.com 353/255 Taxman 72 (SC).
    2. The Tribunal has noted that the Supreme Court has held that
    once arm's length principle has been satisfied, there can be no
    further profit attributable to the assessee, even if it has a
    permanent establishment in India. Therefore, the finding that the
    respondent assessee has a permanent establishment in India was
    of no consequence since the transaction was found to be at arm's
    length in the facts of the present case.
    3. The submission of Mr. Bhatia is that the earlier decision of the
    Supreme Court in E-Funds IT Solution Inc. (supra) is not
    attracted in the case of the respondent assessee, and that the
    case should be examined in the light of the decision of the
    Supreme Court in DIT (International Taxation) v. Morgan Stanley
    & Co. [2007] 162 Taxman 165/292 ITR 416 (SC).
    4. However, considering the fact that the Supreme Court has
    already rejected the appeal preferred by the Revenue, as also the
    review in the case of the respondent assessee itself, it is not open
    for the department to press for the same here.
    5. The revenue claims that it is moving an accurate writ petition.
    Be that as it may, since the issue stands concluded so far as the
    respondent assessee is concerned by this Court in [ITA 562/2019]
    which, in turn, follows the aforesaid decisions of the Supreme
    Court, including in the case of the assessee, in our view, no
    question of law arises for our consideration in the present appeal.
    The same is, accordingly, rejected.
    ¦¦

    *In favour of assessee.


    †Arising out of ITA No. 1744 (Delhi) of 2017.

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