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TP Officer Not Authorised to Examine Marketing Intangibles Transaction
The Delhi Bench of the Income-tax Appellate Tribunal ("Tribunal") delivered a significant ruling in the case of Amadeus India Pvt Ltd ("Amadeus"), where an interesting question on the benchmarking of Advertisement, Marketing and Promotion ("AMP") expenditure related to marketing intangibles owned by an AE was raised. Taxand India review the facts of the case and contentions from both the revenue and the taxpayer's perspective.
This is a significant ruling on the scope and powers of the TPO in reviewing the transactions of the taxpayer.
This case is also a pointer to the approach of the Revenue, which continues to apply the 'bright line test' to effect Transfer Pricing adjustments to AMP expenditure, despite the ruling of the Supreme Court, which nullified the effect of the Delhi High Court ruling in the case of Maruti Suzuki. The Tribunal has not dealt with question raised before it and taxpayers would have to wait for a definitive ruling on this important aspect of marketing intangibles.
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