No ALP On AMP Expense Is Warranted In Absence Of Agreement Between Assessee And Its AE For Service W.r.t Brand Promotion Activity: Chennai ITAT
Pankaj Bajpai
15 March 2024 9:30 PM IST
The Chennai ITAT deleted the ALP adjustment made towards advertisement expenses (AMP expenses) for alleged brand enhancement for its AE by assessee manufacturing and selling cars in India as well as exporting them to its AEs and non-AEs abroad.The Bench comprising Mahavir Singh (Vice President) and Manoj Kumar Aggarwal (Accountant Member) on identical issue, noted that the Coordinate bench...
The Chennai ITAT deleted the ALP adjustment made towards advertisement expenses (AMP expenses) for alleged brand enhancement for its AE by assessee manufacturing and selling cars in India as well as exporting them to its AEs and non-AEs abroad.
The Bench comprising Mahavir Singh (Vice President) and Manoj Kumar Aggarwal (Accountant Member) on identical issue, noted that the Coordinate bench in assessee's own cases for AYs 2012-13 and 2016-17 deleted the adjustment holding that there was no formal agreement or arrangement between assessee and its AEs for rendering of service w.r.t alleged brand promotion activity.
The Bench noted tthe factual matrix that assessee did not consider its AMP expenses as an international transaction, however, TPO considered a portion of such expenses attributable to brand building of the Hyundai brand and made TP adjustment for this.
The Bench found that the TPO opined that assessee was manufacturing cars under license from Hyundai Korea, owner of brand name 'Hyundai' and was permitted to use the said brand in terms of 'Technology and Royalty agreement, and thus proposed adjustment highlighting that assessee spent considerable amount for AMP expenses which resulted into increase in brand value of its AE.
However, relying on the Coordinate Bench ruling in assessee's own case, the ITAT deleted the adjustment made towards brand development services.
Counsel for Appellant/ Assessee: K.R. Sekar & S.P. Chidambaram
Counsel for Respondent/ Revenue: A. Sasikumar
Case Title: Hyundai Motor India Ltd vs ACIT
Case Number: IT(TP)A No 53/Chny/2022
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