Clarify in respect of AMP expenditure by companies advertising foreign brands in India

Issue/Justification

From last many years, companies advertising foreign brands in India are been scrutinized in TP audits, for the AMP expenditure made by them. On this issue large TP adjustments are been made. This has led to litigation between the companies and TPOs resulting in the disallowance all marketing expense and the same is been challenged in higher authorities.

Still after several cases been disposed by the High Court and the Appellate Tribunals, there is no clear resolution to this issue and it is still one of the most litigated TP issues before the courts.

Suggestion

It is suggested that clarifications be issued in respect of AMP expenditure made by companies advertising foreign brands in India so that litigation can be avoided

Source-  ICAI Pre-Budget Memorandum–2018 (Direct Taxes and International Tax)