TP Adjustment for AMP Expenditure deleted due to Lack of Brand Promotion Agreement with AE

Kellogg India Pvt. Ltd Vs ACIT (ITAT Mumbai)

ITAT Mumbai held that there was no express arrangement / agreement between the assessee and the AE for incurring advertisement, marketing and promotional expenses (AMP) to promote the brand of the AE and hence the said transactions would not constitute international transaction relating to AMP expenditure. Thus, TP adjustment deleted.

Facts- The Assessee Company claimed to be a wholly owned subsidiary of Kellogg USA and having principal activity of manufacturing and selling of breakfast cereal products in India and neighboring countries. The Assessee company is also engaged in the business of distributing Pringles products in the Indian market. The key product of Kellogg India Pvt. Ltd. includes Chocos, Corn Flakes, Honey Loops Muesli, Oats and Special K. etc.

The case of the Assessee was selected for scrutiny under CASS. Accordingly, statutory notices u/s. 143(2) & 142(1) of the Act were issued to the Assessee, in response to which, the Assessee submitted details through e-mail on ITBA portal.

The AO by perusing financials of the Assessee noticed that during the year under consideration, the Assessee-Company has entered into International transactions as detailed in Form No. 3CEB filed along with return of income and therefore the AO referred the case to the Transfer Pricing Officer as per provisions of Section 92CA(1) of the Income Tax Act for computation of Arm’s Length Price qua International Transactions.

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