Comparison Of AMP Functions Is Sine Qua Non For ALP

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Published on Mon, Jun 01,2015 | 16:12, Updated at Mon, Jun 01 at 16:13Source : Moneycontrol.com 

The Delhi Bench of the Income Tax Appellate Tribunal ("Tribunal") in the case of Toshiba India (P) Ltd.[1]  has passed an order interpreting the Delhi High Court ("HC") ruling of Sony Ericsson Mobile Communications India Pvt. Ltd[2]  on the issue of determination of arm's length price ("ALP") of advertising, marketing and sales promotion ("AMP") expenses. The Tribunal has clarified that the HC has allowed the aggregation of distribution functions with AMP function only for determining the ALP of these transactions in a bundled manner, wherein suitable comparables having undertaken similar functions for both distribution and AMP expenses are to be selected. Thus, making it clear that the examination of 'AMP functions' with comparables is sine qua non for determination of ALP of an international transaction.