Marketing Intangibles – The Legal Quest of Quantifying the Non-Measurable

AMP1 commonly referred as issue of marketing intangible in the Transfer Pricing (‘TP’) has been on the top list of revenue authorities for scrutiny not only in India but worldwide. In India, the issue has travelled through various Income tax ITATs to the various High courts. Still the same has not attained the required finality till date. The issue has been contested on various debates involving issue of consideration of incurrence of AMP expenditure as an international transaction, recovery of such expenses from associated enterprise (‘AE’), incurrence of AMP leading to brand promotion or brand building for Multinational Enterprises/groups (‘MNE’) etc.The problems develop directly out of the exact existence of a worldwide transaction to the computation of arm's duration cost ('ALP') of such global transaction. Much widely, the Tax Authorities ('TAs') are perceived as to be using the Bright Line Test ('BLT'), the place that the taxpayers AMP additionalityinvest vis-à-vis the competitors’ equivalent is viewed according to the price of program for calculating the arm's measurements program earnings intended forthe advancement of thebrand name.As per the BLT application a mere quantified way might lead to illogical conclusions, and hence, this exercise intends to explore issues legally and with a legal perspective on the debatable questions related to marketing intangibles.