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2014 (8) TMI 961 - AT - Income TaxInclusion of certain expenses in the overall base of advertising, marketing and promotion (AMP) expenses for the purposes of making Transfer Pricing adjustment - Held that:- The scope of AMP expenses came up consideration before the Special Bench in the case of LG Electronics India Pvt. Ltd. (2013 (6) TMI 217 - ITAT DELHI). The Bench, after considering the arguments from both the sides, held in para 18.3 to 18.6 of the order that AMP expenses are only such expenses which are incurred for the promotion of sales which, in turn, lead to brand building. The Bench noticed that the expenses which are directly in connection with sales are only sales specific and hence cannot be brought within the domain of AMP expenses. It was further observed that the expenses which are not in the nature of advertisement, marketing or promotion, cannot help in creating any marketing intangibles or brand promotion for the foreign A.E. The Bench further examined the erstwhile provisions of sec. 37(3A) and (3B) and held them to be relevant in the correct interpretation of the scope of AMP expenses. It was eventually held that the expenses in connection with the sales which do not lead to brand promotion should not be brought within the purview of AMP expenses for determining the cost/value of the international transaction. - The action of the AO was prompted because he did not have the benefit of special bench decision at that time. As this exercise can be carried out only after examining the correct nature of each and every item of expense, we are of the considered opinion, that the ends of justice would meet adequately, if the impugned order on this issue is set aside and the matter is restored to the file of AO/TPO. - Decided in favour of assessee.
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