AMP expenditure as an international transaction requires clear entrustment to the associated enterprise; incidental brand benefit is not enough.

AMP expenditure was treated as an international transaction only where an arrangement or understanding showed that the assessee was obliged to incur the spend for the associated enterprise; incidental benefit to the foreign brand owner was insufficient. The Revenue's reliance on joint venture clauses did not establish any entrustment of brand promotion liability: the clause requiring marketing of licensed products in India reflected a normal sales function for the assessee's own products, and the trademark clause merely acknowledged the associated enterprise's ownership of the mark and contemplated a separate agreement to preserve that ownership. No mistake apparent from the record was shown, so rectification was refused and the earlier deletion of the transfer pricing adjustment remained undisturbed.

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Issues: Whether the miscellaneous application disclosed any error apparent from the record in the Tribunal's earlier order by reason of the joint venture agreement clauses relied upon by the Revenue, and whether those clauses showed that the assessee had been entrusted with brand promotion or AMP expenditure on behalf of the associated enterprise.

Analysis: The earlier order had proceeded on the footing that no arrangement or understanding was shown under which the assessee was obliged to incur brand promotion expenses for the associated enterprise, and therefore AMP spend could not be treated as an international transaction merely because it incidentally benefited the foreign brand owner. The clauses newly relied upon by the Revenue were found not to alter that position. The clause requiring the joint venture company to market the licensed products in India was held to be a normal sales function for its own products and not an obligation to promote the AE's brand. The trademark clause merely recognised the AE's ownership of the mark and contemplated a separate agreement to preserve that ownership, but did not establish any entrustment of brand promotion liability to the assessee.

Conclusion: No mistake apparent from the record was shown, and the request for rectification failed. The assessee's treatment was upheld and the Revenue's miscellaneous application was rejected.

Final Conclusion: The earlier deletion of the AMP-based transfer pricing adjustment remained undisturbed, and the rectification proceedings did not result in any modification of that decision.

Ratio Decidendi: AMP expenditure can be treated as an international transaction only when an arrangement or understanding shows that the assessee was obliged to incur such spend for the associated enterprise; absent such entrustment, rectification is not warranted merely because the expenditure may have benefited the foreign brand owner.

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