L.G.Electronics India Pvt. Ltd vs. ACIT (ITAT Delhi Special Bench)
Transfer Pricing: The ‘Bright Line test’ can be applied to disallow the excessive advertisement, marketing and sales promotion (AMP) expenses incurred by the assessee for the benefit of the brand owner
Transfer pricing adjustment in relation to advertisement, marketing and sales promotion expenses incurred by the assessee for creating or improving the marketing intangible for and on behalf of the foreign Associated Enterprises is permissible.
Earning a mark-up from the Associated Enterprises in respect of AMP expenses incurred for and on behalf of the AE is allowable. However, the matter is restored to the file of TPO for de novo adjudication in the light of certain guidelines outlined by Tribunal in its order.