Taxman sees moolah in brand promotion

The tax department has been zealously taking up the aspect of marketing intangibles. As a result, many taxpayers have witnessed large adjustments over the years on the basis that advertisement, marketing and promotion (AMP) expenditure was outside permissible arm’s length. The common questions raised include: Whether the promotional efforts of an Indian entity (licensee of trademark) enhance the value of the trademark legally owned by an associated enterprise? Whether the associated enterprise should compensate the Indian entity for the excessive AMP expenditure? Given the importance of this issue, and the possibility of conflicting views from different benches, the questions were referred to a Special Bench of the Income Tax Appellate Tribunal, which recently gave its verdict.

Source : The Hindu Businessline