L’Oreal India Private Limited Vs DCIT (ITAT Mumbai)
AO/TPO had alleged that AMP expenses incurred by the Assessee constituted an international transaction in the nature of brand promotion services for its AE, warranting adjustment with a mark-up. The DRP upheld the adjustment.
Before the Tribunal, Assessee argued that AMP expenses were incurred wholly & exclusively for its own business in India, with no agreement or arrangement with AE for brand promotion. Reliance was placed on Tribunal’s consistent decisions in Assessee’s own cases from AY 2008-09 to AY 2020-21, where similar adjustments were struck down. It was contended that the Revenue was merely keeping the issue alive despite repeated rulings.
Revenue argued that license agreement with parent company implied AMP obligation, that expenses led to enduring brand benefit, & that OECD guidelines supported the adjustment. It was also submitted that Tribunal’s earlier orders were pending before Bombay High Court.
Tribunal noted that in all earlier years, it was consistently held that AMP incurred by Assessee was not an international transaction absent any arrangement with AE. Following its earlier rulings & Delhi High Court precedents (Maruti Suzuki, Whirlpool, Bausch & Lomb), it reiterated that in the absence of a binding arrangement, AMP cannot be treated as an international transaction. Consequently, the TP adjustment of Rs. 184.75 crore along with mark-up was deleted.
