martes, 24 de marzo de 2015

Indian High Court rules on marketing intangibles in the case of distributors

The much awaited High Court (HC) ruling in respect of marketing intangibles in the case of taxpayers who were engaged in the import, marketing and distribution of branded products of their associated enterprises (AE), has been finally pronounced.

The HC, in its ruling, has provided guidance on how the issue of marketing intangibles should be looked at in case of taxpayers characterised as distributors.  The HC held that it was not obligatory to subject the advertisement, marketing and promotion expenses (AMP) to a ‘bright line’ test and consider non-routine AMP as a separate transaction. The HC concluded that marketing and distribution functions were closely connected, and hence could be bundled for determining arm’s length price (ALP). Further, where, on testing the bundled transaction under either Transaction Net Margin Method (TNMM) or Resale Price Method (RPM) with appropriate comparables, it was concluded that the transactions were at arm’s length, there was no need to bifurcate and look at AMP as a separate transaction.

Source & more info: PwC

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