The problem with the Revenue’s approach is that it wants every instance of an AMP spend by an Indian entity which happens to use the brand of a foreign AE to be presumed to involve an international transaction. And this, notwithstanding that this is not one of the deemed international transactions listed under the Explanation to Section 92B of the Act
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The transfer pricing adjustment is not expected to be made by deducing from the difference between the ‘excessive’ AMP expenditure incurred by the Assessee and the AMP expenditure of a comparable entity that an international transaction exists and then proceeding to make the adjustment of the difference in order to determine the value of such AMP expenditure incurred for the AE
The transfer pricing adjustment made by the ld TPO of Rs. 73,23,49,876/- on account of arm’s length price of alleged international transaction of AMP expenditure is unsustainable
The TPO, while framing the order u/s 92CA(3) of the Act, was well aware with the decision of the Hon’ble jurisdictional High Court of Delhi in the case of Sony Ericcson Mobile Communication India Pvt Ltd reported at 276 CTR 97, and therefore, it cannot be said that the TPO was not aware that the Bright Line test has been discarded by the Hon’ble High Court of Delhi
Guide to transfer pricing law in India with methods of determining ALP, APA scheme, documentation procedures, Landmark cases and latest judgements on transfer pricing controversies
In this article we will consider whether the amounts received on account of supply of off the shelf software can be taxed as ‘royalty’ under Section 9(l)(vi) of the Act and Article 12 of the Double Taxation Avoidance Agreement between India and Ireland (‘India- Ireland Tax Treaty)