AMP related transfer pricing adjustments in Whirlpool case

The Delhi ITAT once again reinforces the post-Sony Ericssonjurisprudence rejecting automatic AMP-based transfer pricing adjustments. 

Following binding Delhi High Court rulings in Whirlpool’s own earlier years, the Tribunal holds that mere incurrence of advertisement and marketing expenditure by an Indian entity does not establish an international transaction involving brand promotion for a foreign AE. 

The decision also reiterates that the Bright Line Test stands judicially disapproved and cannot be revived even on a “protective” basis. In addition to granting relief on AMP adjustments, the Tribunal addresses employee welfare expenditure, foreign tax credit verification, and an important additional claim concerning deductibility of warranty-related “unwinding of discount” expenses under Ind AS accounting principles.