Colgate-Palmolive’s Indian subsidiary plans to appeal a $30 million transfer pricing bill, as stated in a recent filing. The company received a final assessment order for 2.54 billion rupees for the 2021-22 tax year and intends to challenge this decision at the Income Tax Appellate Tribunal. In October 2023, they were already issued a transfer pricing bill of 1.7 billion rupees for the same year, after India’s income tax authority rejected some international transactions. Colgate noted that this order does not affect its financial operations or activities. Additionally, the company faces another $30 million transfer pricing bill related to the 2020-21 tax year, which concerns how companies value transactions between related entities in different countries.
A July 2024 ruling of the Delhi Income Tax Appellate Tribunal in favor of Samsung India strengthens the position of companies in India regarding transfer pricing disputes. The matter dispute in the court was whether advertising, marketing, and promotion (AMP) expenses should be considered international transactions subject to transfer pricing rules.
The tribunal ruled that only AMP expenses with a clear arrangement between the Indian subsidiary and its foreign parent are subject to these rules, putting the burden of proof on tax authorities. This ruling, consistent with previous cases, showcases the ongoing disputes in India, with hundreds of companies facing similar issues. The precedent established by this case is expected to provide legal clarity for current and future transfer pricing adjustments concerning AMP expenses.
To read more on the ruling of the Appellate Tribunal click here.