PCIT-1 Vs Beam Global Spirits & Wine (India) Pvt. Ltd. (Delhi High Court)
Delhi High Court held that before undertaking a benchmarking of Advertisement, Marketing and Promotion [AMP expenses], it was incumbent upon the TPO to have found that an international transaction had, in fact, occurred. Thus, appeal of evenue dismissed.
Facts- These two appeals pertain to Assessment Years 2009-10 and 2012-13 and raise the question of whether the Advertisement, Marketing and Promotion expenditure incurred by the respondent-assessee would constitute an “international transaction” as contemplated under Section 92B read along with Section 92F of the Income Tax Act, 1961.
Conclusion- Held that it would be wholly erroneous to assume that the expenditure was incurred for the benefit of the AE merely because it was conceived or estimated to be excessive. The Tribunal has also, and in our considered opinion, correctly held that the mere relationship between parties would not be sufficient to presume that an international transaction had come into being or that there was an arrangement in place to undertake AMP for the benefit of the brand owner. It was thus observed that before undertaking a benchmarking of AMP expenses, it was incumbent upon the TPO to have found that an international transaction had, in fact, occurred.
