The Delhi High Court affirmed the tax department’s treatment of advertising, marketing, and sales promotion expenses as an international transaction that are thus subject to the transfer pricing rules.
Among its several findings in the case, the High Court held that distribution and marketing are intertwined functions and can be analysed together as a bundled transaction and that segregation of non-routine advertising, marketing, and sales promotion expenses using the “bright line approach” is not appropriate.
Read a March 2015 report [PDF 469 KB] prepared by the KPMG member firm in India: Delhi High Court upheld the Revenue’s stand of characterising AMP expense as an international transaction subject to transfer pricing. Overrules principles laid down in the AMP Special bench ruling by holding aggregation approach appropriate for remunerating AMP functions
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