a) Assessee-company had entered into an agreement with Widex, Denmark for distribution of digital hearing aids manufactured by it.
b) TPO noted that assessee had incurred huge AMP expenses which were disproportionate to that spent by comparable companies. He concluded that excess AMP expenses benefited AE only, for which assessee should be adequately compensated.
c) Accordingly, he applied Bright Line Test for determining non-routine spend on AMP by assessee. DRP confirmed said addition. Aggrieved-assessee filed instant appeal before the Tribunal.
Tribunal held in favour of assessee as under:
1) In the instant case, the AMP spend had been treated as an international transaction since it was found to be benefitting the foreign AE of assessee.
2) There was no finding of any clause in the agreement entered into between the two parties requiring the assessee to undertake brand promotion expenses on behalf of the AE.
3) The existence of some sort of arrangement between the assessee and the AE obliging the assessee to undertake AMP expenditure on behalf of the AE had not been demonstrated. Further, TPO had not been able to prove that the AMP expenses incurred was not for the benefit of the assessee.4) Merely because there was incidental benefit to foreign AE, it could not be said that AMP expenses incurred was for promoting brand of foreign AE. -  78 taxmann.com 348 (Chandigarh - Trib.)