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TMI Blog2017 (4) TMI 1597X X X X Extracts X X X X X X X X Extracts X X X X ..... stinct 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:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e bench of this Tribunal in assessee's own case in ITA No.1592/Mds./2007 dated 12.05.2016 wherein the Tribunal disposed off this ground by observing as follows:- 2.4.6 We have heard both the parties and perused the material on record. In this case, Titan International Marketing Ltd., (TIML), London incurred ₹ 854.08 lakhs towards advertisement expenditure during the year. The assessee has taken a plea that it was incurred for marketing TITAN products at abroad. Out of this, a sum of ₹ 803.31 lakhs is claimed by the parent/assessee company M/s.Titan Industried Ltd.( TIL) as its own expenditure. This sum of ₹ 803.31 lakhs was reimbursed to TIML as expenditure by assessee. The total exports in the year was ₹ 1237.69 lakhs against which the advertisement expenses of ₹ 803.31 lakhs was 65%.Furhter, the design for watches developed by another AE Titan International Holdings BV (TIHBV), which is a design office in Paris, being a tax resident of Netherlands have patented the development designs in favour of it and the outside India, the brand TITAN is owned globally by Titan Brand Holdings NV of Netherlands (TBHNV), which is 100% subsidy of TIHBV. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w is supported by the recent judgement of Supreme Court in the Vodafone International Holdings B. V. Vs. UOI reported in [2012] 341 ITR 01. 2.4.7 Further, as held by Mumbai Bench in the case of Steam International Services Pvt. Ltd Vs. ACIT reported in 141 ITD 492 that 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 of the Act. Further, the argument of the assessee is that TIML is under losses and hence no TP adjustment is necessary on transaction which is not tenable in view of the decision of the Bangalore Tribunal in the case of 24/7 Customer.com Pvt. Ltd., in 140 ITD 344 (Bangalore). Accordingly, this ground of the assessee is rejected. 3.1 Accordingly, placing reliance on the order of the Tribunal in assessee's own case, we are inclined to dismiss the ground taken by the assessee. 4. The second ground is with regard to Transfer Pricing addition on account of interest of ₹ 23,76,936/- in respect of interest free advertisement advances made by the assessee to it s A.Es. 5. We have heard both the parties and perused th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... % of the exempted income on placing reliance on the jurisdiction High Court in the case of Simpson Co. Ltd. V. DCIT in Tax case No.2621 of 2006 dated 15.10.2002. This ground raised by the assessee is partly allowed. 8. The fourth ground is with regard to apportionment of the common expenses on the basis of turnover for the purpose of deduction u/s.80-IC of the Act. 9. After hearing both the parties, we are of the opinion that similar issue came for consideration before this Tribunal in assessee's own case in ITA No.1592/Mds./2007 dated 12.05.2016 wherein the Tribunal held as under:- 8.4 We have heard both the parties and perused the material on record. The claim of deduction u/s.80-IB of the Act in respect of profits of Euro Watch Division cannot be denied on the ground that it is only notional profit, as assessee uses the products of Euro Watch Division for captive consumption of the assessee or for the reason that assessee has not earned actual profits. In our opinion, the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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