Hyundai Motor India Ltd. Vs DCIT (ITAT Chennai)
The appeal arose from the assessment order dated 23 July 2024 passed under Sections 143(3) and 144C(13) of the Income-tax Act, 1961 for Assessment Year (AY) 2020-21, pursuant to the Dispute Resolution Panel (DRP) directions dated 3 June 2024. The assessee challenged multiple transfer pricing and corporate tax adjustments, including deemed brand promotion adjustment, taxation of government subsidies, depreciation disallowance, disallowance under Section 14A, and levy of interest.
The principal transfer pricing dispute concerned an adjustment of ₹381.01 crore on account of alleged brand promotion or brand development services rendered by the assessee to its associated enterprise (AE). The Transfer Pricing Officer (TPO) held that the assessee, while manufacturing and selling vehicles under the Hyundai brand, incurred significant advertising, marketing and promotion (AMP) expenditure that enhanced the brand value of its AE. Treating this as an international transaction, the TPO attributed 50% of the AMP expenditure, applied a mark-up of 10.04%, and proposed a transfer pricing adjustment, which was upheld by the DRP.
Before the Tribunal, the assessee argued that identical issues had already been decided in its favour in earlier assessment years. The Tribunal noted that the issue had consistently been decided in the assessee’s favour in previous years, including AY 2018-19, following earlier Tribunal decisions for AYs 2012-13, 2013-14, 2015-16 and 2016-17. Since there was no change in facts or law, the Tribunal followed its earlier decisions and directed deletion of the transfer pricing adjustment relating to deemed brand development. Accordingly, Ground No. 2 was allowed.
