Principal Commissioner of Income Tax-VI & Anr. v. Stanley Black and Decker India Ltd.

1. FACTS OF THE CASE

For AY 2010-11, the power-tool trader incurred Rs.8,47,34,153 in advertising and sales-promotion expenditure; the TPO proposed an adjustment of Rs.6,36,08,748. A draft order followed on 15 April 2014. The DRP rejected objections on 31 December 2014 for want of details. The assessee applied on 12 January 2015 under section 154 and DRP Rule 13, asserting that expense details already on record were overlooked. The DRP rectified on 27 March 2015; the Tribunal upheld it on 7 March 2016.

Source: Paragraphs 1–2 and 7; PDF pp.2–4,7–9

2. DISCUSSION BY THE COURT

Revenue characterized rectification as an impermissible change of opinion. The Court found it undisputed that specific expense details had been placed before the DRP. Failure to consider material already on record could be a mistake apparent from the record; considering it on rectification permitted a just conclusion. The Tribunal had correctly upheld the DRP’s section 154 jurisdiction.

Source: Paragraphs 5–8; PDF pp.5–10

3. JUDICIAL DECISION

Revenue’s appeal failed and both substantial questions were answered for the assessee. The rectification excluding trade/sales discounts, warranty and packing expenses from AMP for transfer-pricing comparison and adjustment, if any, remained intact.

Source: Paragraphs 2,8–9; PDF pp.4,9–11

4. OUTCOME

The DRP’s correction of overlooked material was sustained. The judgment does not provide a revised ALP or say that the entire Rs.6,36,08,748 proposed adjustment necessarily disappeared.

Source: Paragraphs 7–9; PDF pp.8–11

5. Expert Comments

AKHB editorial analysis, distinct from the Court’s findings.

The false premise of missing material explains the section 154 result

The original DRP rejection proceeded on absence of specific information, whereas paragraph 8 treats its prior presence before the DRP as undisputed. Rectification addressed that mismatch. For practical use, identify the earlier submission and the precise omitted material; disagreement with an authority’s considered view is not the factual situation on which this judgment upheld relief.

Source: PDF p.8 · PDF p.9 · PDF p.10

A changed conclusion did not by itself make this an impermissible review

Revenue argued that the DRP had revisited its decision. The Court instead focused on why the conclusion changed: relevant existing material had not been considered. Its reasoning allows a just conclusion after addressing that omission, but does not authorize a new evidentiary case to be presented as rectification or reopen every disputed transfer-pricing judgment.

Source: PDF p.5 · PDF p.6 · PDF p.9 · PDF p.10

The relief narrows the AMP base rather than supplies a final tax computation

The exclusion concerns identified sales-related categories for comparison and any resulting adjustment. That is narrower than a ruling that AMP can never support transfer pricing, or that the proposed adjustment is wholly nil. The source’s inconsistent account of submissions before the TPO does not alter the decisive finding that the material was already before the DRP.

Source: PDF p.3 · PDF p.4 · PDF p.8 · PDF p.9 · PDF p.10