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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: Whether advertising, marketing and promotion expenses could be treated as an international transaction under section 92B of the Income-tax Act, 1961, so as to justify a transfer pricing adjustment.
Analysis: The addition was deleted by following the jurisdictional High Court and earlier Tribunal orders in the assessee's own case. The governing principle applied was that AMP expenditure, by itself, cannot be characterised as an international transaction within section 92B unless the statutory conditions are satisfied. Once the expenditure is not treated as an international transaction, no transfer pricing adjustment can be sustained on that basis. The principle of consistency was also applied to follow the earlier view in the assessee's own case.
Conclusion: AMP expenses were held not to constitute an international transaction and the transfer pricing adjustment was not sustainable, in favour of the assessee.
Final Conclusion: The Revenue's challenge to the deletion of the transfer pricing addition failed and the assessment addition relating to AMP expenses did not survive.
Ratio Decidendi: AMP expenditure cannot, by itself, be treated as an international transaction under section 92B of the Income-tax Act, 1961 unless the statutory foundation for such characterisation is established; in the absence of such characterisation, no transfer pricing adjustment can be made.
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