Case Law Details
PCIT Vs Wrigley India Pvt. Ltd. (Delhi High Court)
Introduction: In a recent decision related to the Assessment Year 2010-11, the Delhi High Court addressed the contentious issue of whether Wrigley India Pvt. Ltd., a wholly-owned subsidiary of its Associated Enterprise (AE), should be compensated for Advertising, Marketing, and Promotion (AMP) expenses incurred on behalf of its AE. The appellant, seeking to challenge the order, claimed that the Transfer Pricing Officer (TPO) had made an adjustment on the Arm’s Length Price for what was perceived as an international transaction concerning AMP expenditure.
Detailed Analysis: The core of the issue revolved around the determination of whether AMP expenses incurred by Wrigley India Pvt. Ltd. constituted an international transaction. The TPO had made a substantial adjustment based on this premise. However, the Income Tax Appellate Tribunal (ITAT), relying on its earlier decisions for AY 2007-08 to AY 2009-10 and considering the principle of consistency, ruled in favor of Wrigley India Pvt. Ltd. The Tribunal had previously concluded that the AMP expenses did not amount to an international transaction.
The Tribunal’s decision also referenced the judgment in Maruti Suzuki India Ltd. v CIT (2016) 381 ITR 117, further supporting the stance that AMP expenses, in certain contexts, may not be considered an international transaction.
The appellant, represented by Mr. Sanjeev Menon, standing counsel, sought to challenge the ITAT’s decision before the Delhi High Court. However, during the proceedings, it was clarified that the Miscellaneous Applications (MAs) filed by the appellant/revenue for AY 2007-08 to AY 2009-10 had been dismissed, and no legal remedy had been pursued further.
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