TaxTMI 
TaxTMI 
2022 (8) TMI 1017
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....9-03- 2018. The Ld. AR submitted that the grounds to be adjudicated are as under: - Additional ground filed on 26.12.2018 - Without prejudice to the grounds reused above, considering the facts and circumstances of the case, the learned AO/TPO erred in denying the appellant's claim of deduction of expenditure incurred towards advertisement as business expenditure. - Without prejudice to the ground.; raised above, the appellant submits that even if the expenditure is said not be incurred by the appellant for its business activity but was incurred in the course of business, the same being an irretrievable loss, would be allowable as deduction from business income. Original Grounds of Appeal 1B. Interest should not be imputed on ....
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....red to Ld. TPO for determination of Arm's Length Price (ALP). The Ld. TPO determined ALP of the same as 'Nil' since it was observed that the assessee just performed the manufacturing functions for the products as per exclusive designs for the foreign markets. The products were sold to AEs with a mark-up. The economic burden of advertisement, in such a case, would belong to the AEs only. If the assessee had sold similar product to non-AEs, it would not have paid them for such advertisement expenses since it is not its economic function. Therefore, the ALP of the international transaction was determined as 'Nil' and Ld. TPO proposed adjustment of Rs.84.32 Lacs and also computed interest on such payments at Rs.23.76 Lacs. The same resulted int....
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....nd nothing more. The said disallowance has not been made u/s 37(1). Therefore, this ground stand dismissed. 3. Interest on advances granted by the assessee to its AE We find that this issue has been decided by the bench for AY 2003-04 in ITA No.1592/Mds/2007 dated 12-05-2016. It was held that noncharging of interest attracts Transfer pricing provisions and it is appropriate to charge interest @LIBOR+2% as held by Mumbai Tribunal in M/s Aurinpro Solutions Ltd. V.s ACIT (27 ITR (Trib.) 276). Respectfully following the same, Ld. AO is directed to compute the interest at LIBOR+2%. This ground stand partly allowed. 4. Apportionment of Common Expenses for Sec.80-IC 4.1 The assessee claimed deduction u/s. 80IC with respect to their units at ....
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....s have been allocated by the assessee on the basis of turnover. Only design and development cost and assembly share of common facilities have been allocated on the basis of number of watches produced. The Ld. AO has apportioned the same on the basis of turnover. In our considered opinion, design and development cost and assembly share of common facilities are not proportional to the number of watches produced. The expenditure is largely salary expenditure of the two departments. It could not be said that the expenditure would be directly proportional to the number of watches produced. Rather, such expenditures would largely depend upon the decision of the management to decide as to how much expenditure was to be incurred to design / develop....