The issue of Advertising, Marketing and Promotion
('AMP") expenses is no longer res integra and has been
dealt with by many high courts in India. The decisions of the high
courts in various matters are now pending with the Supreme Court of
India by way of Special Leave Petitions filed by Tax department as
well as taxpayers.
At the core of these litigations, there are two principal issues
under consideration:
- Whether there exists an international transaction of AMP when
marketing expenses are being incurred by an Indian company?
- If the answer to the aforesaid question is in the affirmative,
what is the method for benchmarking such international transaction
and how?
In so far as the first issue is concerned, the Delhi High Court
in the case of Sony Ericsson Mobile Communications vs. CIT dated
16.03.2015, reported in 374 ITR 118 (hereinafter referred to as the
"Sony Ericsson") proceeded on the assumption that where
the distributor incurs marketing expenses,
