A transfer pricing adjustments had been made on advertising, marketing and promotional expenses incurred by Hyundai in India. According to the tax authorities these expences constituted an international transaction with its associated enterprise in Korea that required remuneration.
Judgment
The Tribunal deleted the transfer pricing adjustments made by the tax authorities on AMP expenditure for all three assessment years under appeal.
The Tribunal held that there was no agreement obligating Hyundai Motor India to incur AMP expenses on behalf of its foreign parent company. These expenses were incurred solely for the benefit of Hyundai Motor India’s own business. The Tribunal concluded that such AMP expenses could not be treated as an international transaction in the absence of evidence of an arrangement to promote the foreign associated enterprise’s brand.