2025 (5) TMI 715 - HC - Income Tax

TP Adjustment - Advertising Marketing and Promotional AMP expenses - whether constitute a separate international transaction? - whether it is erroneous to benchmark such expenses by using the Bright Line Test BLT ? - HELD THAT - Undisputedly AMP expenses cannot be considered as separate international transactions where the same are incurred in the normal course of business and there is no material to establish the same were incurred as a transaction between the Assessee and its associate enterprises. Concededly the said issue is covered in the favour of Assessee by the decisions of this Court in Sony Ericsson Mobile Communication India Pvt. Ltd. 2015 (3) TMI 580 - DELHI HIGH COURT and Maruti Suzuki India Ltd. 2015 (12) TMI 634 - DELHI HIGH COURT Assessee s own case being 2023 (10) TMI 1325 - DELHI HIGH COURT this Court had following the decision in the case of Maruti Suzuki India Ltd. v. CIT (supra) rejected the Revenue s appeal in respect of AY 2010-11. The present appeal will necessarily have to bear the same fate. No substantial questions of law arise for consideration of this Court.

Summary

The Delhi High Court, through Justice Vibhu Bakhrru (oral judgment), dismissed the Revenue's appeal (ITA 112/2025) challenging the Income Tax Appellate Tribunal's (ITAT) order dated 24.07.2024 for AY 2012-13. The impugned order upheld the CIT (A)'s finding that Advertising, Marketing and Promotional (AMP) expenses do not constitute a separate international transaction and thus cannot be benchmarked using the Bright Line Test (BLT). The Transfer Pricing Officer's reliance on external materials to treat AMP expenses as international transactions was rejected. The Court emphasized that AMP expenses incurred in the normal course of business, without material establishing a transaction between the Assessee and its associate enterprises, do not qualify as international transactions. This position aligns with precedents including Sony Ericsson Mobile Communication India Pvt. Ltd. v. CIT-3, Maruti Suzuki India Ltd. v. CIT, and the Court's own earlier decision in Principal Commissioner of Income Tax-9 v. Wrigley India Pvt. Ltd. The Court found "no substantial questions of law arise" and accordingly dismissed the appeal.