Whirlpool of India Ltd. Vs ACIT (ITAT Delhi)
The Delhi ITAT heard an appeal filed against the final assessment order dated 30.04.2022 passed under Sections 143(3) read with 144C(13) of the Income Tax Act for AY 2017-18. The assessee, a subsidiary of Whirlpool USA engaged in manufacturing, sales and distribution of appliances, had entered into international transactions and adopted the TNMM method to justify arm’s length pricing. However, the TPO and Assessing Officer made transfer pricing adjustments mainly relating to advertisement, marketing and sales promotion (AMP) expenses.
The assessee challenged the addition of ₹57.11 crore on account of AMP expenses, contending that AMP expenditure incurred in India could not be treated as an international transaction in the absence of any agreement or arrangement with the associated enterprise. The assessee also argued that the Bright Line Test (BLT) could not be used to infer an international transaction and that such a method had already been rejected by the Delhi High Court in Sony Ericsson Mobile Communications India Pvt. Ltd.
The Tribunal noted that in the assessee’s own case for AY 2008-09, the Delhi High Court had held that there was no international transaction in relation to AMP expenses. The Tribunal further recorded that the Supreme Court had dismissed the Revenue’s appeal against that decision. Coordinate Benches had also deleted AMP-related adjustments for AYs 2009-10 to 2016-17. The Tribunal observed that the Departmental Representative could not point out any change in facts or circumstances warranting a different view for the year under consideration. It was also noted that no AMP adjustment had been made in AY 2022-23. Accordingly, the Tribunal decided Grounds 2 and 3 relating to AMP adjustment and protective addition under BLT in favour of the assessee.
