AMP expenditure incurred by assessee not falls within purview of international transaction

JCIT Vs General Mills India Pvt. Ltd. (ITAT Mumbai)

Case Summary: –

Facts of the case:

• The assessee, a company incorporated in India, is engaged in the business of atta, semiya (vermicelli), pizza kits, dry cake mix and Indian frozen breads viz. rotis, parathas & nans and trading in canned corn niblets, cream style sweet corn and asparagus spears which are sold under the brand name “green giant”.
• The assessee also provides software development service, business process service and procurement support service to its Associated Enterprises (AEs).
• It is also evident that the assessee is a 100% subsidiary of General Mills Mauritius Inc.
• In the course of proceedings, the Transfer Pricing Officer noticed that the assessee had incurred certain expenses for promotion and marketing of the products.
• The assessee objected to the proposed adjustment by submitting that such expenses were incurred on promotion and marketing of certain new products marketed by the assessee, such as, natural valley granule bar, haagen daz ice cream, corn niblets, sweet corn soup, asparagus, spears, etc.
• However, the Transfer Pricing Officer was not convinced with such submissions of the assessee. Ultimately, he concluded that by incurring such expenses, the assessee has helped in building the brand of the AE.
• The Transfer Pricing Officer proceeded to determine the arm’s length price by applying Bright Line Test (BLT) and made an adjustment of Rs. 2,53,48,648.
• In tune with the adjustment made by the Transfer Pricing Officer, the Assessing Officer made the addition while framing the assessment order. The assessee challenged the aforesaid addition before learned Commissioner (Appeals).
• After considering the submissions of the assessee in the context of the facts and material on record, learned Commissioner (Appeals) found that identical issue had been decided by the first appellate authority in favour of the assessee in assessment year 2011-12 and 2012-13.
• Facts being identical, following the earlier order passed by him, he deleted the addition made on account of transfer pricing adjustment. Against the aforesaid decision of the first appellate authority, the Revenue was in appeal before the Tribunal.

Issue: