TMI Blog2022 (8) TMI 1017X X X X Extracts X X X X X X X X Extracts X X X X ..... if the expenditure is not incurred by the assessee for its business activity, however, it was incurred in the course of business and the same being an irreparable loss would be allowable as business income. However, we decline to accept this argument in view of the fact that the dispute under consideration is determination of ALP of advertisement expenditure as paid by the assessee. The payment of the same is not under dispute by revenue. This transaction has been held by the bench to be an international transaction and therefore, the same has be benchmarked as per Transfer Pricing mechanism. TPO has determined the ALP of the same as Nil despite the fact that the assessee has incurred actual expenditure. The point in dispute is ALP of adv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In such a case, the quantum of expenditure would have no relation with the number of watches and allocating the same on such basis would give absurd results as held by lower authorities. Therefore, the more appropriate method of allocation would be based on turnover as done by the assessee for other overhead expenses. Therefore, we concur with the stand of lower authorities, in this regard and find no reason to interfere in the same. This ground stand dismissed. All the ground stand disposed-off in terms of our above order. - ITA No.2192/Chny/2010 - - - Dated:- 17-8-2022 - HON BLE SHRI MAHAVIR SINGH, VICE PRESIDENT AND HON BLE SHRI MANOJ KUMAR AGGARWAL, AM Appellant by : Shri P.R. Renganath (Advocate) -Ld. AR Respondent by : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned DRP ought to have appreciated the fact that the assessee has allocated the common expenses on the basis of the number of watches produced as the expenses relate to the salaries of the employees of these departments. c. The learned DRP ought to have observed that the overheads are not directly relatable to the value of watch produced as the expenditure primarily pertains to movements only and hence the number of watches has been considered as the basis for allocation d. The learned DRP erred in ignoring the fact that the components transferred with regard to which the common costs are incurred, are compatible to the various watches and it is not possible to identify the final watch variant into which these components are u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the assessee and it goes directly to the AE only. It was also held that such transactions would be international transaction. Following the same, the ground raised by the assessee was dismissed. 2.3 The assessee has taken an alternative plea that such expenditure should be allowed as business expenditure or irretrievable cash loss. It has been submitted by Ld. AR that even if the expenditure is not incurred by the assessee for its business activity, however, it was incurred in the course of business and the same being an irreparable loss would be allowable as business income. However, we decline to accept this argument in view of the fact that the dispute under consideration is determination of ALP of advertisement expenditure as paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alue of watches produced and hence, the number of watches was to be considered as the basis of allocation. Further, the components were compatible to various watches and if would not be possible, at the time of transfer, to identify final watch variant into which these components were assembled and thus it would not be practical to allocate these expenses based on the value of the watch. 4.2 However, rejecting the same on the ground that such an allocation would result into distorted allocation of expenditure due to factors such as labour unrest, natural calamities, change in policy of the management to augment production in particular line etc. If the allocation is based on the turnover, then it would iron out these distortions. By re-a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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