Amway India Enterprises Private Limited Vs DCIT (ITAT Delhi)
This appeal before the Income Tax Appellate Tribunal, Delhi Bench arose from a final assessment order dated 28.10.2024 passed under sections 143(3) read with sections 144C(13) and 144B of the Income-tax Act, 1961 for Assessment Year 2021–22. The assessee, a wholly owned subsidiary of its foreign parent, is engaged in manufacturing and selling consumer products through a direct selling, multi-level marketing (MLM) model.
The assessee had filed its return declaring income of ₹77.89 crore. The case was selected for scrutiny due to transfer pricing risk parameters and was referred to the Transfer Pricing Officer (TPO). The TPO proposed an adjustment of ₹170.31 crore by treating advertisement, marketing and promotion (AMP) expenses—computed using an “AMP intensity” approach—as an international transaction. The TPO also proposed a nil adjustment under the Bright Line Test on a protective basis. Additionally, a disallowance of ₹3.75 lakh was proposed in respect of deduction claimed under section 80G.
A draft assessment order incorporating these variations was issued, against which the assessee filed objections before the Dispute Resolution Panel (DRP). The DRP upheld the TPO’s view that AMP expenditure, including distributor commissions, constituted an international transaction and confirmed both the AMP adjustment and the section 80G disallowance. Consequently, the Assessing Officer (AO) passed the final assessment order determining total income at ₹275.65 crore.
