Transfer pricing AMP adjustment deleted where no international transaction was proved and Bright Line Test was held insufficient.

Transfer pricing adjustment for advertisement, marketing and promotion expenses was unsustainable because the Revenue failed to prove, by tangible material, the existence of an international transaction between the assessee and its associated enterprise. The Tribunal held that mere reliance on the Bright Line Test could not establish such a transaction or justify the addition. Following its earlier orders in the assessee's own cases and applying consistency, it deleted the AMP adjustment and held the addition to be without legal basis.

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Issues: Whether the transfer pricing adjustment made on account of advertisement, marketing and promotion expenses was sustainable in the absence of proof of an international transaction between the assessee and its associated enterprise, and whether the Bright Line Test could be used to make such adjustment.

Analysis: The Tribunal followed its earlier orders in the assessee's own cases for prior assessment years and held that the Revenue had not brought on record any tangible material to show that the assessee and the associated enterprise had acted in concert or had an arrangement to incur AMP expenditure as an international transaction. It further held that the Bright Line Test could not, by itself, establish the existence of an international transaction or justify the adjustment. Applying the principle of consistency, the Tribunal found no legal basis for sustaining the addition made on account of AMP expenses.

Conclusion: The transfer pricing adjustment on account of AMP expenses was deleted and the issue was decided in favour of the assessee.

Final Conclusion: The appeals succeeded because the AMP adjustment was held unsustainable in law for want of proof of an international transaction and for impermissible reliance on the Bright Line Test.

Ratio Decidendi: An AMP adjustment under Chapter X cannot be sustained unless the Revenue first proves, by tangible material, the existence of an international transaction with the associated enterprise; the Bright Line Test alone is insufficient to establish such transaction or to support the addition.

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