Louis Vuitton India Retail Private Limited Vs ACIT (ITAT Delhi)
The ruling of the Income Tax Appellate Tribunal Delhi pertains to Assessment Year 2018–19 and arises from an appeal filed by the assessee against the final assessment order dated 27.06.2022 passed under Sections 143(3) read with 144C(13) of the Income Tax Act, 1961, pursuant to directions of the Dispute Resolution Panel (DRP).
At the outset, several grounds raised by the assessee, including those relating to general assessment issues and multiple transfer pricing contentions, were not pressed and were dismissed accordingly. The primary issue adjudicated by the Tribunal related to transfer pricing adjustment on account of Advertisement, Marketing, and Promotion (AMP) expenses, specifically the application of the Bright Line Test (BLT) by the Transfer Pricing Officer (TPO).
The assessee contended that the BLT approach had been consistently rejected in its own earlier cases for Assessment Years 2012–13 and 2020–21, as well as by jurisdictional High Court decisions. It was argued that the BLT lacks statutory backing and cannot be used to determine the arm’s length price of AMP expenditure. The assessee further submitted that even under the TNMM intensity approach, its operating margins were within the arm’s length range, and therefore, no adjustment was warranted.
