‘Quantitative adjustment’ in AMP expenses prohibited under TP provisions

Maruti Suzuki India Ltd. v. CIT [2015] 64 taxmann.com 150 (Delhi)

For the purpose of Chapter X of the Income Tax Act, the Transfer Pricing Adjustment envisaged is “price adjustment” i.e. substitution of transaction price of international taxation with arm  length price (ALP) and not a ‘quantitative adjustment’.

Thus, Chapter X does not permit quantitative adjustment in AMP expense by first determining whether the AMP spend of the assessee on application of the Bright Line Test (BLT)is excessive, thereby evidencing the existence of an international transaction involving the Associated Enterprises.

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