The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT), ruled that Advertising Marketing and Promotion (AMP) Expenditure is not an International Transaction and thereby ruled in favour of M/s Mattel Toys (India) Pvt. Ltd.
For the year under consideration, the assessee, M/s Mattel Toys (India) Pvt. Ltd, filed return of income declaring total income which was selected for scrutiny and statutory notices under the Income Tax Act, 1961 were issued and complied with. In the assessment order passed under Section 143(3) r.w.s.144C (3) of the Act.
The Assessing Officer made addition for transfer pricing adjustment of advertising marketing and promotion (AMP) expenses of along with disallowance of depreciation on unused plant and machinery of Further, the Assessing Officer rectified the transfer pricing adjustment.
The CIT(A) deleted the transfer pricing adjustment. Aggrieved the Revenue is in appeal.
The assessee however, contested that AMP expenses were not incurred by the assessee on behalf or for the benefit of the Associated Enterprises and if any it was incidental.
As per the definition of international transactions under Section 92B of the Act means a transaction between two or more associated enterprises, either on both of whom are non-residents, in the nature of purchase, sale, etc. or other transactions having bearing on profit, Income or loss of such enterprises.
The international transaction also include a mutual agreement or arrangement for allocation or apportionment or any contribution to, any cost or expenses incurred or to be incurred in connection with a benefit, service or facility provided or to be provided by any one or more of such enterprises.
The Bench comprising Vikas Aswathy, Judicial Member and Om Prakash Kant, Accountant Member observed that “AMP expenditure is not an international transaction therefore, adjustment to said transaction for arm’s length price is rendered infructuous and no adjustment could have been made.”
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