Delhi High Court Rules in Favor of Sony India Pvt. Ltd. in AMP Expenses Case

Case Name:

ITA 7/2023 & CM APPL. 920/2023

Key Takeaways:

1. The case concerns the Assessment Year (AY) 2007-08 and revolves around the issue of whether the reimbursement of advertising, marketing, and promotion expenses (AMP) incurred by the respondent/assessee on behalf of its Associated Enterprise (AE) was at arm’s length.
2. The Transfer Pricing Officer (TPO) used the bright line test (BLT) to determine the arm’s length price (ALP) for the AMP activities carried out by the respondent/assessee

Case Synopsis:

This is a judgment from the High Court of Delhi in a case between the Principal Commissioner of Income Tax - 8 (appellant) and M/S Sony India Pvt. Ltd. (respondent). The judgment concerns the Assessment Year 2007-08 and revolves around the issue of whether the reimbursement of advertising, marketing, and promotion expenses (AMP) incurred by the respondent on behalf of its Associated Enterprise (AE) was at arm’s length.

The judgment provides a detailed background of the case, including the incorporation of the respondent as a wholly-owned subsidiary of Sony Corporation, Japan, and its activities in manufacturing, importing, and distributing various products. It also mentions that the respondent shut down its manufacturing activities in 2004 and entered into an advertisement agreement