Case Law Details
Herbalife International India Pvt Ltd Vs DCIT (ITAT Bangalore)
ITAT Bangalore held that if the net profit margin meets the Arm’s length price, then no separate addition needs to be made. Accordingly, TPO directed to delete the adjustment made towards Advertising Marketing Price (AMP) expenses.
Facts- Herbalife India was incorporated in 1998. The case was selected for scrutiny and statutory notices were issued to the assessee.
The Ld. AO noted that as the transaction exceeded Rs. 15 crores, a reference was made to the TPO under 92CA of the act.
The Ld. TPO observed that assessee carried out certain advertising, marketing functions which could benefit the AE who is a legal owner of the intangibles. The Ld. TPO noted that the assessee had not benchmarked the AMP functions separately. He thus proposed to consider expenditures as international transactions by concluding them to be AMP expenses incurred by the assessee, that resulted in benefit to the AEs.
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