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2023 (1) TMI 569 - AT - Income TaxTP Adjustment - international transactions u/s. 92B - Absence of prior agreement (formal or informal) - adjustment in respect of excess AMP expenditure - HELD THAT:- As per the definition of international transactions u/s. 92B of the Act means a transaction between two or more associated enterprises, either on both of whom are non-residents, in the nature of purchase, sale, etc. or other transactions having bearing on profit, income or loss of such enterprises. The international transaction also include a mutual agreement or arrangement for allocation or apportionment or any contribution to, any cost or expenses incurred or to be incurred in connection with a benefit, service or facility provided or to be provided by any one or more of such enterprises. As per section 92B(2) of the Act the transaction entered into between two associated enterprises shall be deemed to be an international transaction if there exists a prior agreement in relation to the relevant transaction between such other person and the associated enterprises. In the case under consideration, the AO/TPO did not bring on record exists of any formal or informal agreement between the assessee and AE to share/reimburse AMP expenses incurred by the assessee in India. In absence on any such agreement, the first and primary condition of holding the transaction in question as an international transaction remains to be fulfilled. As the assessee cannot be held liable for expenses incurred on advertising marketing and promotion as an international transaction of AMP, the consequent benchmarking by the Ld. TPO is also not justified. As relying on assessee own case [2020 (10) TMI 924 - ITAT MUMBAI] we uphold the finding of the Ld. CIT(A) that AMP expenditure is not an international transaction. The grounds of the cross-objection of the assessee are accordingly allowed. Since, we have already held that AMP expenditure is not an international transaction therefore, adjustment to said transaction for arm's length price is rendered infructuous and no adjustment could have been made. The ground of appeal of the Revenue is accordingly dismissed.
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