Case Law Details
L’oreal India Private Limited Vs ACIT (ITAT Mumbai)
ITAT Mumbai held that provisions of Chapter X cannot be invoked for making a TP adjustment in case of Advertisement, marketing and promotion (AMP) expenses.
Facts- This is an appeal filed by the assessee, challenging the assessment order passed by the Assessing Officer/Transfer Pricing Officer (TPO for short) pursuant to the direction of the Hon’ble Dispute Resolution Panel (‘DRP’ for short) passed u/s. 143(3) r.w.s. 144C(13) r.w.s. 144B of the Act relevant to the Assessment Year (A.Y. for short) 2018- 19.
The assessee has challenged the grounds of transfer pricing adjustment on account of advertisement, marketing and promotion (AMP) expenses.
Conclusion- Held that there was no arrangement between the assessee and the AE pertaining to AMP expenses. The tribunal in the earlier years has held that the onus of proof lies on the Revenue to prove that there was an international transaction in existence. The Tribunal further held that the proposition laid down in the case of Maruti Suzuki India Ltd. is that the absence of a machinery provision qua AMP expenses, the A.O. is not at liberty to levy tax on an imagined transaction. In such case, the provisions of Chapter X cannot be invoked for making a TP adjustment. The Tribunal has also relied on the decision of the Hon’ble Delhi High Court in the case of Bausch and Lomb (India) Pvt. Ltd. and held that the impugned transaction is not an international transaction for which the TPO was not entitled to invoke the provision of Chapter X of the Act.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
Author Bio
