AMP tax issue: Pepsico gets relief from Delhi High Court
Pepsico may not be required to pay tax on advertisement, marketing and promotion (AMP) expenses under transfer pricing mechanism. Delhi High Court has dismissed an appeal by the Income Tax Department related to additions of Rs.2,800 crore towards AMP expenses by Pepsico.
Transfer pricing is an accounting practice that represents the price that one division in a company charges another division for goods and services provided. AMP under transfer pricing has always been a contentious issue. In the present matter, the Income Tax Department made transfer pricing additions of more than Rs.2,800 crore. However, the Income Tax Appellate Tribunal (ITAT) deleted the addition and gave relief to Pepsico. Aggrieved by this, the Income Tax Department moved the Delhi High Court.
