Advertisement, Marketing and promotion expenses: Requirement to benchmark these expenses
Case Outcome: Remand
- During the year under consideration, the Assessee had incurred expenditure on Advertisement, Marketing and Promotion (AMP) which in the view of Assessing Officer had created market intangibles including brand value in favour of Associated Enterprises and thus, being an international transaction same was needed to be benchmarked.
- The Tribunal placed reliance on the decision in Assessee’s own case, wherein further reliance was placed on the decision in the case of Valvoline Cummins (P.) Ltd. vs. Deputy Commissioner of Income Tax. It was held that mere use of brand name or logo owned by the Associated Enterprises by the assessee will not automatically lead to influence that any expenses that the assessee incurred towards AMP was only to enhance the brand.
- It was observed that the bright line test was not an appropriate yardstick for determining the existence of an international transaction or for that matter for calculating the Arm’s Length Price of such transaction.
- Therefore, following the same in the present facts of the case, adjustment made on account of AMP transaction was to be deleted.
- Issue Outcome – In favour of Assessee
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