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“bright line test”

Transfer PricingSection 92CSection 92C120 judgments

The decision most relied on for bright line test is Sony Ericsson Mobile Communications India Pvt. Ltd. v. CIT (374 ITR 118), cited in 499 judgments on BharatTax.

Leading authorities on bright line test

Sony Ericsson Mobile Communications India Pvt. Ltd. v. CIT
374 ITR 118 · 2015 · High Court
499
citing judgments

The existence of an international transaction for Advertising and Marketing Promotion (AMP) expenditure requires the revenue to discharge the burden of proof. An explanation inserted under Section 92B does not automatically make AMP expenditure an international transaction.

Maruti Suzuki India Ltd. v. CIT
381 ITR 117 · 2016 · High Court
220
citing judgments

The Bright Line Test (BLT) is not a recognized method under the Income-tax Act and Rules for benchmarking advertising, marketing, and promotion (AMP) expenses or for determining the existence of an international transaction or its Arm's Length Price. The Revenue must first establish the existence and price of an international transaction before seeking an ALP adjustment.

Bausch & Lomb Eye Care (India) Pvt. Ltd. v. Additional CIT
381 ITR 227 · 2016 · High Court
127
citing judgments

The existence of an international transaction must be established before its arm's length price can be determined. An alleged 'excessive' AMP expenditure cannot unilaterally expand the scope of an international transaction if its existence is contested.

Whirlpool of India Ltd. v. DCIT
381 ITR 154 · 2016 · High Court
119
citing judgments

Advertisement, Marketing, and Promotion (AMP) expenditure incurred by an Indian entity directly benefits its own business and cannot be automatically treated as an international transaction for global brand building by associated enterprises without specific statutory provisions or proper analysis.

Maruti Suzuki India Ltd. (MSIL) v. Addl. CIT, TPO
328 ITR 210 · 2010 · High Court
39
citing judgments

AMP expenditure is not an international transaction. The Bright Line Test is not a valid basis for determining the existence of an international transaction or computing the arm's length price.

LG Electronics India Pvt. Ltd. v. ACIT
29 Taxmann.com 300 · 2013 · High Court
37
citing judgments

The 'bright line test' is not an appropriate method for determining the existence of an international transaction for calculating arm's length price. This ruling overrules prior special bench decisions on AMP expenses.

308 ITR 199 (Del) and CIT v. Spice Distribution Ltd.
374 ITR 30 · 2015 · High Court
28
citing judgments

Expenditure on advertisement and sales promotion is generally treated as business expenditure allowable under section 37 of the Income-tax Act. The Assessing Officer cannot treat revenue expenditure as deferred revenue expenditure as the Act does not have such a concept.

LG Electronics v. ACIT
22 ITR 1 · 2013 · Supreme Court
23
citing judgments

The Special Bench decision in LG Electronics v. ACIT affirmed the applicability of the 'Bright Line Test' for determining international transactions related to advertising, marketing, and promotion (AMP) expenses.

Judgments citing bright line test

Sony India Private Limited, New Delhi vs. ACIT, Circle-22(2), Delhi

ITA 1688/DEL/2022[2017-18]Status: DisposedITAT Delhi08 Aug 2025AY 2017-18

Bench: Shri Anubhav Sharma & Shri Manish Agarwal

For Appellant: Shri Nageshwar Rao, Advocate &For Respondent: Shri S.K. Jhadav, CIT-DR
Section 143(3)

making‘intensity adjustment' to adjust net profit margin of comparable companies purportedly to equalise functions. ‘Intensity adjustment' is mirror image of Bright Line Test (‘BLT') already invalidated by Hon'ble Courts. 6. Without prejudice to all other grounds, impugned order errs in quantifying AMP expense of appellant by including expenses

Sony India Pvt. Ltd., New Delhi vs. ACIT Circle-24(1), New Delhi

ITA 9080/DEL/2019[2015-16]Status: DisposedITAT Delhi08 Aug 2025AY 2015-16

Bench: Shri Anubhav Sharma & Shri Manish Agarwal

For Respondent: Shri S.K. Jhadav, CIT-DR
Section 143(3)

making‘intensity adjustment' to adjust net profit margin of comparable companies purportedly to equalise functions. ‘Intensity adjustment' is mirror image of Bright Line Test (‘BLT') already invalidated by Hon'ble Courts. 6. Without prejudice to all other grounds, impugned order errs in quantifying AMP expense of appellant by including expenses

DCIT, Circle- 5(2), New Delhi vs. Carlsberg India Pvt. Ltd., New Delhi

In the result, the appeal filed by the assessee is allowed and appeal filed by the Revenue stands dismissed

ITA 3190/DEL/2019[2010-11]Status: DisposedITAT Delhi31 Jul 2025AY 2010-11

Bench: Shri Prakash Chand Yadav & Shri Manish Agarwalcarlsberg India Private Limited, Dy. Cit, 4Th Floor, Rectangle No.1, Circle-5(2), Commercial Complex,D-4, Saket, Vs. New Delhi. New Delhi-110017. Pan-Aajcs8454J (Appellant) (Respondent) (Assessment Year 2010-11 Dy. Cit, Carlsberg India Private Circle-5(2), Limited, New Delhi. Vs. 4Th Floor, Rectangle No.1, Commercial Complex, D-4, Saket, New Delhi-110017. Pan-Aajcs8454J (Appellant) (Respondent) Assessee By Shri S.K. Aggarwal, Ca & Shri Paras Sharma, Ar & Ms. Ruchika Mittal, Ca Department By Shri S.K. Jadhav, Cit-Dr Date Of Hearing 28/07/2025 Date Of Pronouncement 31/07/2025 Order

Section 143(1)Section 14ASection 36(1)(iii)

before the lower authorities. 17. Ld. Counsel for the assessee further pointed out that the CIT(A) has not approved the method of Bright Line Test as adopted by TPO for computing the adjustments qua AMP expenses. It has further been submitted that the Ld. CIT(A) has relied upon

Carlsberg India Pvt. Ltd., New Delhi vs. DCIT, Circle- 5(2), New Delhi

In the result, the appeal filed by the assessee is allowed and appeal filed by the Revenue stands dismissed

ITA 3150/DEL/2019[2010-11]Status: DisposedITAT Delhi31 Jul 2025AY 2010-11

Bench: Shri Prakash Chand Yadav & Shri Manish Agarwalcarlsberg India Private Limited, Dy. Cit, 4Th Floor, Rectangle No.1, Circle-5(2), Commercial Complex,D-4, Saket, Vs. New Delhi. New Delhi-110017. Pan-Aajcs8454J (Appellant) (Respondent) (Assessment Year 2010-11 Dy. Cit, Carlsberg India Private Circle-5(2), Limited, New Delhi. Vs. 4Th Floor, Rectangle No.1, Commercial Complex, D-4, Saket, New Delhi-110017. Pan-Aajcs8454J (Appellant) (Respondent) Assessee By Shri S.K. Aggarwal, Ca & Shri Paras Sharma, Ar & Ms. Ruchika Mittal, Ca Department By Shri S.K. Jadhav, Cit-Dr Date Of Hearing 28/07/2025 Date Of Pronouncement 31/07/2025 Order

Section 143(1)Section 14ASection 36(1)(iii)

before the lower authorities. 17. Ld. Counsel for the assessee further pointed out that the CIT(A) has not approved the method of Bright Line Test as adopted by TPO for computing the adjustments qua AMP expenses. It has further been submitted that the Ld. CIT(A) has relied upon

Thermo Fisher Scientific India P. Ltd, Mumbai vs. DCIT 15(3)(1), Mumbai

In the result, the appeal by the assessee is partly allowed for statistical

ITA 2458/MUM/2015[2010-11]Status: DisposedITAT Mumbai16 Jul 2025AY 2010-11

Bench: Shri Vikram Singh Yadavshri Sandeep Singh Karhail

For Appellant: Shri Dhanesh Bafna, Shri Amol MahajanFor Respondent: Shri Ajay Chandra, CIT-DR
Section 143(3)Section 144CSection 144C(5)Section 32(1)

length AMP expenditure, learned DCIT and Hon'ble DRP erred in confirming learned TPO's actions of a. applying bright line test for determining compensation towards AMP expenditure incurred by the Appellant and failing to appreciating that no such method has been prescribed under the IT Act and Income ... Enterprises. The TPO, by following the decision of the Special Bench of the Tribunal in M/s L.G. Electronics India Private Limited adopted the Bright Line Test (i.e., by considering the AMP/Sales ratio of the comparable companies), and concluded that the assessee is not being suitably compensated for the development

Edwards Lifesciences (India) Pvt Ltd, Mumbai vs. ACIT-2(1)(1), Mumbai

In the result, the appeal by the assessee is partly allowed

ITA 6188/MUM/2024[2021-22]Status: DisposedITAT Mumbai30 Jun 2025AY 2021-22

Bench: Shri Narendra Kumar Billaiyashri Sandeep Singh Karhailedwards Lifesciences (India) Pvt. Ltd., 4Th Floor Commerz – Ii, International Business Park Oberoi Garden City, Goregaon (East), Off Western Express Highway Goregaon (East), ............... Appellant Mumbai - 400063 Pan : Aaacb4203F V/S Assistant Commissioner Of Income Tax, Circle-2(1)(1), ……………… Respondent Kautilya Bhawan, Bkc, Mumbai - 400012 Assessee By : Ms. Chandni Shah Ms. Riddhi Maru Ms. Kinjal Patel Revenue By : Shri Bhagirath Ramawat, Sr.Dr

For Appellant: Ms. Chandni ShahFor Respondent: Shri Bhagirath Ramawat, Sr.DR
Section 143(3)Section 144BSection 144C(13)Section 144C(5)Section 153Section 92B

alleged creation of marketing intangibles and promoting the brand of the Associate Enterprises (ABs') by incurring excess AMP expenses over and above the Bright Line Test (‘BLT’) i.e., the AMP expenses incurred by the comparables. Further the Ld. DRP/ Ld. AO/ Ld. TPO erred in, charging of a mark ... favour of the Associated Enterprises in India, and the same is an international transaction that calls for benchmarking. The TPO, by adopting the Bright Line Test (i.e., by considering the AMP/Sales ratio) of the comparable companies, concluded that the assessee is not being suitably compensated for the development of marketing

Ethiopian Airlines Group, Ethiopia vs. ACIT, Int. Taxation Circle-1(2)(2), Delhi

ITA 2201/DEL/2024[2017-18]Status: DisposedITAT Delhi05 Jun 2025AY 2017-18

Bench: Shri Satbeer Singh Godara & Shri S. Rifaur Rahman

Section 115ASection 133ASection 147Section 195Section 9(1)Section 9(1)(vii)

utilized in India. Hence, the service income of assessee is sourced in India under section 9(1)(vii) of the Act. 5.11 The bright line test of utilization of services is where the cost of such services is borne. Accordingly, the source of income is the location of payment. This

Ethiopian Airlines Group, Ehiopia vs. ACIT Int. Taxation Circle-1(2)(2), Delhi

ITA 2200/DEL/2024[2016-17]Status: DisposedITAT Delhi05 Jun 2025AY 2016-17

Bench: Shri Satbeer Singh Godara & Shri S. Rifaur Rahman

Section 115ASection 133ASection 147Section 195Section 9(1)Section 9(1)(vii)

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: 'D' NEW DELHI BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND SHRI

Ucweb Mobile Private Limited, Gurgaon vs. Assessment Unit, Inocome Tax Department, Gurgaon

In the result, the appeal of the assessee is partly allowed

ITA 3945/DEL/2024[2020-21]Status: DisposedITAT Delhi30 May 2025AY 2020-21

Bench: SHRI MAHAVIR SINGH (Vice President), SHRI MANISH AGARWAL (Accountant Member)

Section 143(2)Section 143(3)Section 144CSection 144C(1)Section 144C(13)Section 144C(5)Section 253(1)(d)Section 43(3)

transactions: A. Advertising, marketing and promotion (AMP) expenses by applying intensity approach ₹ 7,23,37,023/- (substantive basis) B. AMP expenses by applying bright line test (BLT) ₹ 48,61,72,050/- (protective basis) C. Disallowance of interest paid on compulsory convertible debentures (CCDs) ₹ 6,00 crores D. Interest on outstanding ... have erred in proposing an upward adjustment of INR 53,34,57.313 / on a protective basis by applying invalid Bright Line Test ("BLT') contrary to decisions of Hon'ble Courts. 3.5. Ld. DRP/TPO/AO have erred in selecting functionally dissimilar companies viz Vector E-Commerce Pvt. Ltd. UBM India

Wrigley India Private Limited, Delhi vs. ACIT, Circle-27(2), Delhi

ITA 953/DEL/2022[2016-17]Status: DisposedITAT Delhi29 May 2025AY 2016-17

Bench: Shri Vikas Awasthy & Shri Manish Agarwal

Section 250(6)Section 92CSection 92C(3)Section 92D

this clearly established that AMP expenses were for the creation of world- wide brand owned by parent AE. With regard to application of Bright line test (BLT), 1d. CIT-DR fairly admitted that the Hon'ble Jurisdictional High Court in the case of Sony Ericsson Mobile Communications India

Wrigley India Private Limited, Delhi vs. ACIT, Circle-27(2), Delhi

ITA 952/DEL/2022[2015-16]Status: DisposedITAT Delhi29 May 2025AY 2015-16

Bench: Shri Vikas Awasthy & Shri Manish Agarwal

Section 250(6)Section 92CSection 92C(3)Section 92D

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘I': NEW DELHI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER AND SHRI MANISH

DCIT, Circle-25(1), New Delhi vs. Wrigley India P.Ltd, New Delhi

ITA 1295/DEL/2022[2016-17]Status: DisposedITAT Delhi29 May 2025AY 2016-17

Bench: Shri Vikas Awasthy & Shri Manish Agarwal

Section 250(6)Section 92CSection 92C(3)Section 92D

this clearly established that AMP expenses were for the creation of world- wide brand owned by parent AE. With regard to application of Bright line test (BLT), 1d. CIT-DR fairly admitted that the Hon'ble Jurisdictional High Court in the case of Sony Ericsson Mobile Communications India

DCIT, Circle- 25(1), New Delhi vs. Wrigley India Pvt. Ltd., New Delhi

ITA 1294/DEL/2022[2015-16]Status: DisposedITAT Delhi29 May 2025AY 2015-16

Bench: Shri Vikas Awasthy & Shri Manish Agarwal

Section 250(6)Section 92CSection 92C(3)Section 92D

this clearly established that AMP expenses were for the creation of world- wide brand owned by parent AE. With regard to application of Bright line test (BLT), 1d. CIT-DR fairly admitted that the Hon'ble Jurisdictional High Court in the case of Sony Ericsson Mobile Communications India

DCIT, Circle-25(1), New Delhi vs. Wrigley India P.Ltd, New Delhi

ITA 1293/DEL/2022[2014-15]Status: DisposedITAT Delhi29 May 2025AY 2014-15

Bench: Shri Vikas Awasthy & Shri Manish Agarwal

Section 250(6)Section 92CSection 92C(3)Section 92D

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘I': NEW DELHI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER AND SHRI MANISH

JCIT, Circle-27(2), New Delhi vs. Wrigley India Pvt. Ltd., New Delhi

ITA 702/DEL/2019[2013-14]Status: DisposedITAT Delhi29 May 2025AY 2013-14

Bench: Shri Vikas Awasthy & Shri Manish Agarwal

Section 250(6)Section 92CSection 92C(3)Section 92D

this clearly established that AMP expenses were for the creation of world- wide brand owned by parent AE. With regard to application of Bright line test (BLT), 1d. CIT-DR fairly admitted that the Hon'ble Jurisdictional High Court in the case of Sony Ericsson Mobile Communications India

Wrigley India Pvt. Ltd., 206, Okhla Industrial Estate, Phase-3, New Delhi-110020 vs. DCIT, Circle 27(2), New Delhi

ITA 667/DEL/2019[2013-14]Status: DisposedITAT Delhi29 May 2025AY 2013-14

Bench: Shri Vikas Awasthy & Shri Manish Agarwal

Section 250(6)Section 92CSection 92C(3)Section 92D

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘I': NEW DELHI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER AND SHRI MANISH

Louis Vuitton India Retail Private Limited, Gurgaon vs. DCIT Circle-1(1), Gurgaon

In the result, the Appeal of the Assessee is partly allowed

ITA 4348/DEL/2024[2020-21]Status: DisposedITAT Delhi28 May 2025AY 2020-21

Bench: Shri Yogesh Kumar U.S. & Shri Avdhesh Kumar Mishra(Ita No. 4348/Del/2024 (A.Y. 2020-21) Louis Vuitton India Vs. Dcit Retail Private Limited Circle-1(1) 901-A, 9Th Floor, Time Gurgaon, Tower, Mg Road, Haryana Gurgaon, Haryana Pan: Aaacl8230E Appellant Respondent

Section 143(3)Section 144BSection 253(1)Section 928Section 92D

expenses which have further been assumed to have been incurred solely towards brand promotion of the AE. 4.8. proposing protective adjustment applying bright line test ("BLT") as a 'tool to benchmark the alleged international transaction, even though BLT is not a prescribed method under the purview of section ... protective basis on the ground of excess advertisement, marketing and promotion expenditure. 22. The Ld. Counsel for the Assessee submitted that Bright Line Test does not have a statutory mandate and cannot be applied in order to determine the international transaction relate to incurring of AMP Expenses on behalf

Tupperware India Private Limited, New Delhi vs. DCIT, Circle-25(1), New Delhi

In the result, the appeal of the assessee for AY 2018-19 is partly allowed for statistical purposes

ITA 462/DEL/2022[2017-18]Status: DisposedITAT Delhi17 Apr 2025AY 2017-18

Bench: Shri Mahavir Singh & Shri M. Balaganesh

For Appellant: Shri Rohit Tiwari, AdvFor Respondent: Shri S. K. Jadav, CIT DR
Section 143(3)Section 144BSection 144CSection 144C(3)Section 92CSection 92F

DRP/Ld. AO/Ld. TPO have erred in proposing adjustment on protective basis amounting to INR 374,498,064 for excessive AMP expenses applying Bright Line Test ("BLT"). In doing so, Ld. DRP/Ld. TPO/Ld. AO have erred by: 6.1. not appreciating that BLT has been expressly rejected by several judicial pronouncements ... Learned AO. The Learned TPO held that AMP expenses incurred by the assessee are significantly higher than that of comparable companies and applied Bright Line Test (BLT) by charging a markup of 15.61% for alleged brand building services provided to the AEs. The Learned TPO applied Residual Profit Split Method

Tupperware India Private Limited, New Delhi vs. ACIT, Circle-25(1), New Delhi

In the result, the appeal of the assessee for AY 2018-19 is partly allowed for statistical purposes

ITA 2409/DEL/2022[2018-19]Status: DisposedITAT Delhi17 Apr 2025AY 2018-19

Bench: Shri Mahavir Singh & Shri M. Balaganesh

For Appellant: Shri Rohit Tiwari, AdvFor Respondent: Shri S. K. Jadav, CIT DR
Section 143(3)Section 144BSection 144CSection 144C(3)Section 92CSection 92F

DRP/Ld. AO/Ld. TPO have erred in proposing adjustment on protective basis amounting to INR 374,498,064 for excessive AMP expenses applying Bright Line Test ("BLT"). In doing so, Ld. DRP/Ld. TPO/Ld. AO have erred by: 6.1. not appreciating that BLT has been expressly rejected by several judicial pronouncements ... Learned AO. The Learned TPO held that AMP expenses incurred by the assessee are significantly higher than that of comparable companies and applied Bright Line Test (BLT) by charging a markup of 15.61% for alleged brand building services provided to the AEs. The Learned TPO applied Residual Profit Split Method

Ayatna Realty Pvt. Ltd., New Delhi vs. ACIT, Circle-3(2), New Delhi

In the result, the appeal of the Assesse in ITA No

ITA 1295/DEL/2024[2012-13]Status: DisposedITAT Delhi07 Apr 2025AY 2012-13

Bench: Shri Vikas Awasthy & Shri Manish Agarwalm/S Wrigley India Private Dcit, Limited Circle-27(2), 206, Okhla Industrial Vs. New Delhi. Estate, Phase Iii, New Delhi-110020 Pan-Aaacw1789P (Appellant) (Respondent) Joint Cit (Osd), M/S Wrigley India Private Circle-27(2), Limited, New Delhi Vs. 206, Okhla Industrial Estate, Phase Iii, New Delhi-110020 Pan-Aaacw1789P (Appellant) (Respondent)

Section 250(6)Section 92CSection 92C(3)Section 92D

this clearly established that AMP expenses were for the creation of world- wide brand owned by parent AE. With regard to application of Bright line test (BLT), ld. CIT-DR fairly admitted that the Hon’ble Jurisdictional High Court in the case of Sony Ericsson Mobile Communications India