On 18 September 2026, the Delhi Income Tax Appellate Tribunal (ITAT) dismissed the Revenue’s appeals over advertisement, marketing and promotion (AMP) transfer-pricing adjustments for Bacardi India for assessment years (AYs) 2014-15 and 2015-16. It held that AMP expenditure was not shown to be an international transaction in this case, so an arm’s-length-price adjustment on that basis was not required.
What the ITAT decided
ITAT Delhi Bench I heard Revenue appeals ITA Nos. 1872 and 1873/Del/2023, along with Bacardi India’s Cross Objections Nos. 86 and 87/Del/2023, on 7 July 2026. Accountant Member M. Balaganesh and Judicial Member Vimal Kumar pronounced the order on 18 September 2026.
The tribunal rejected the Revenue’s appeals and dismissed both cross-objections in its final result. It followed earlier decisions in Bacardi India’s own cases and cited Delhi High Court authority. Its conclusion was tied to the record before it: the Revenue had not established an international transaction relating to the AMP expenditure that would require an arm’s-length-price (ALP) adjustment.
Adjustments recorded in the assessment history
| Assessment year | AMP adjustment recorded in the ITAT order |
|---|---|
| 2014-15 | ₹25,88,76,779 (ITAT order, 2026) |
| 2015-16 | ₹45,86,40,058 (ITAT order, 2026) |
These figures are the adjustments described in the order’s account of the assessment history. They are not amounts Bacardi India was ultimately ordered to pay after the appellate outcome.
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The Commissioner of Income Tax (Appeals), or CIT(A), had allowed Bacardi India’s appeals on the AMP issue. The Revenue challenged that result, arguing that the Bright Line Test (BLT) could be used under Rule 10AB and that AMP spending should be benchmarked. In its view, the spending warranted a transfer-pricing analysis.
The tribunal’s answer turned on the order of analysis. Before a pricing method can be used to calculate an ALP, the Revenue must establish that an international transaction exists. The tribunal stated: “The Courts held that the existence of an international transaction will have to be established de hors the BLT, the burden is on the Revenue to first show the existence of an international transaction.”
The order also quotes the Delhi High Court’s reasoning in Bausch & Lomb Eyecare (India) Pvt. Ltd.: “Under Sections 92B to 92F, the pre-requisite for commencing the TP exercise is to show the existence of an international transaction.” The tribunal relied as well on Delhi High Court precedent in Maruti Suzuki India Ltd. v. CIT.
The transaction-existence question in this case
The tribunal distinguished evidence of an actual arrangement from an inference drawn from the spending’s possible effect on a related company. AMP outlays paid to third parties in India, or a perceived benefit to an associated enterprise (AE) from promotion of its brand, do not by themselves prove that the Indian company undertook an international transaction.
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The relevant question was whether there was an agreement, arrangement or understanding obliging Bacardi India to incur AMP expenditure for the AE’s brand. On the record and precedents before it, the tribunal concluded that the Revenue had not established the required transaction. A BLT could not independently supply that proof: it may be used in a benchmarking exercise only after the threshold transaction question is answered.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What the ruling does—and does not—mean
The decision resolves the Revenue’s appeals in Bacardi India’s case for AYs 2014-15 and 2015-16. It applies the threshold requirement to this record, in light of earlier Bacardi decisions and cited Delhi High Court authority. It does not establish that AMP spending can never be an international transaction, or that benchmarking is unavailable whenever AMP expenditure is disputed. In another case, the evidence of an agreement or arrangement and the surrounding facts may differ.
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