AMP expenditure for own business is not an international transaction absent cost-sharing with an associated enterprise.

Advertisement, marketing and promotion expenditure incurred wholly for the assessee's own business, without any agreement to share such costs with an associated enterprise, was not treated as an international transaction under Chapter X. On that basis, the attempted bright-line transfer pricing adjustment was rejected and no adjustment could be made for AMP spend.

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Issues: Whether advertisement, marketing and promotion expenses incurred by the assessee constituted an international transaction so as to permit transfer pricing adjustment under Chapter X of the Income-tax Act, 1961.

Analysis: The assessee's case was found to be identical to its earlier years, where it had been held that, in the absence of any agreement for sharing AMP expenditure with the associated enterprise and where the expenditure was incurred for the assessee's own business, such outlay could not be characterised as an international transaction. The earlier view was followed, and the attempt to apply a bright-line based transfer pricing adjustment was not accepted for want of a qualifying international transaction.

Conclusion: The AMP expenditure did not constitute an international transaction and no transfer pricing adjustment could be made on that basis; the issue was decided in favour of the assessee.

Ratio Decidendi: Expenditure incurred by an assessee for its own business, without an agreement to share such expenditure with an associated enterprise, cannot be treated as an international transaction for transfer pricing purposes.

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