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2017 (4) TMI 1597 - AT - Income TaxTP Adjustment - Arm’s Length Price (ALP) in respect of advertisement expenditure incurred by the assessee to the Associate Enterprises (AEs) - HELD THAT:- This issue is squarely covered by the decision of co-ordinate bench of this Tribunal in assessee's own case [2016 (5) TMI 1589 - ITAT CHENNAI] All the risks associated with the sales of AEs, is to be borne by AE only. In such circumstances, assessee is not required to incur any expenditure towards sales. More so, when there is no stipulation by way of any agreement between the assessee and the AE, it is to be borne in mind that if the assessee had sold similar goods to other non-AE, assessee would not have incurred such expenditure. The benefit derived from the impugned expenditure is not at all for the assessee and it goes directly to the AE only. In our opinion, services in connection with such advertisement cost which was incurred in abroad, benefit accrued to AE and the assessee cannot claim any of such expenditure as the AE is in different tax jurisdiction constituted distinct and independent entity subject to the law of the respective countries and the parent company cannot claim the benefits of their AE’s business or may claim a beneficial ownership treating the AE as virtually non entities - investment of expenditure to AE is very much a transaction as per section 92F(v) and consequently it is a international transaction as per sec.92B of the Act requiring consideration u/s.92 - we are inclined to dismiss the ground taken by the assessee. Transfer Pricing addition on account of interest in respect of interest free advertisement advances made by the assessee to it’s A.Es. - HELD THAT:- Relying on assessee's own case[2016 (5) TMI 1589 - ITAT CHENNAI], we are inclined to dismiss the ground taken by the assessee. Disallowance u/s.14A - HELD THAT:- For assessment year 2006-07, Rule-8D is not applicable as it was inserted with effect from 24.03.2008. Accordingly, in our opinion for these assessment years we direct the A.O to disallow 2% of the exempted income on -This ground raised by the assessee is partly allowed. Apportionment of the common expenses on the basis of turnover for the purpose of deduction u/s.80-IC - HELD THAT:- As decided in own case [2016 (5) TMI 1589 - ITAT CHENNAI] profit from Euro Watch Division to be worked out on standalone basis by apportioning of necessary expenditure in proportionate to the turnover to this division and ascertained the true profit of the Euro Watch Division. The market value of product of the Euro Watch Division is to be determined on the average price to be paid, or paid by the assessee to the other parties in the open market, had it been purchased from the outsiders which would be in terms of Sec.80-IA(8) r.w.sec.80-IB(13) of the Income Tax Act. Accordingly, the issue in dispute is remitted to the file of the AO for re-computation of the profit of Euro Watch Division and considered the claim of assessee for deduction u/s.80-IB in the case of West Coast Paper Mills Ltd. [2006 (4) TMI 184 - ITAT BOMBAY-I]. Provision for doubtful advances - A.R pleaded that the assessee has already disallowed while computing the income of assessee in the assessment year under consideration while determining the tax liability and the same cannot be offered to tax twice in the hands of the assessee - HELD THAT:- After hearing both the sides, we are of the opinion that the assessee has not produced any evidence before us to substantiate this argument. Accordingly, we remit the issue in dispute to the file of AO with a direction to assessee to place necessary evidence to support of its claim before the AO. Therefore, this issue is remitted to the file of AO for fresh consideration.
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