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2013 (10) TMI 543 - AT - Income TaxAdjustment of arm's length price - Expenses on advertisement/business promotion - Conceptual framework of "international transaction" - Whether, on the facts and in circumstances of the case, the Assessing Officer was justified in making transfer pricing adjustment in relation to advertisement, marketing and sales promotion expenses incurred by the assessee - Held that:- expenses which are directly related to the sales do not come within the meaning of "brand building" - AMP expenses refer only to advertisement, marketing and publicity expenses. A divider needs to be placed between the expenses for the promotion of sales on one hand and expenses in connection with the sales on the other. Both these expenses are required to be kept in different compartments. While expenses for the promotion of sales directly lead to brand building, the expenses directly in connection with sales are only sales specific - assessee itself has categorized the expenditure into two sub-heads hereinabove, i.e. the advertisement head comprises of expenses which have been incurred for "brand building". The other head is of business promotion expenses - advertisement expenses have been incurred for brand building; whereas, the business promotion expenses deserve to be treated as directly connected with the sales undertaken by the assessee. Though the assessee has pleaded that even some of the advertisement expenses are business promotion expenses, i.e. dealer meet expenses, training/seminar/classes, product demonstrators, product finance scheme, consumer gift (supra) etc, however, in view of the fact that since it itself has included the same under the head "advertisement" - There is no reason to change the head of expenses from advertisement expenditure to business promotion expenditure - only advertisement expenses out of the total amount are liable to be considered for the purpose of advertisement, marketing and promotion leading to brand building of the "Panasonic" logo - Decided in favour of assessee.
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