The Delhi Income Tax Appellate Tribunal (‘ITAT’) in the case of Toshiba India Pvt. Ltd. v. DCIT,[1] ruled on the applicability of transfer pricing on advertisement, marketing and promotion expenses (‘AMP’) for promoting the brand owned by its associated enterprise (‘AE’), and held that the transaction on account of AMP expenses incurred by Toshiba India Pvt. Ltd (‘Toshiba’) qualified as an international transaction subject to transfer pricing regulations.

The ITAT relied on the following key facts:

i.  The distribution agreement between Toshiba and its AE provided that Toshiba would use its best efforts to promote the ‘Toshiba’ brand name in India.

ii.  The AE had also reimbursed a portion of the AMP expenses incurred by Toshiba.

The ITAT observed that the very fact that Toshiba expressly undertook to promote the ‘Toshiba’ brand in India and the AE reimbursed a portion of the AMP expenses clearly demonstrated that Toshiba undertook promotion of the ‘Toshiba’ brand in India on an understanding with the AE, which evidently amounts to an international transaction.

[1]     ITA No.1357/Del/ 2017