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TMI Blog2022 (12) TMI 491X X X X Extracts X X X X X X X X Extracts X X X X ..... nto consideration the submissions of ld. AR and ld. DR and in the interest of justice, we deem it proper to remand the matter to the file of TPO for its fresh consideration.TPO shall look into the additional paper book before the Tribunal and pass order, in accordance with law. Thus, the ground Nos. 3 to 7 raised by the assessee are allowed for statistical purpose. Selection and application of the most appropriate method - The assessee adopted TNMM as the most appropriate method but however the TPO rejected the same in view of his in adopting 7% mark up to the sales. Thus, in view of our decision remanding the matter to the file of TPO, we leave it open to the TPO regarding the most appropriate method. Disallowance on account of ESOP expenditure - AR submits that the AO disallowed the said expenditure on ad-hoc basis and the DRP without going into the details confirmed the order of AO - HELD THAT:- We note that as rightly pointed by the ld. AR that the AO disallowed expenditure on account of ESOP by holding such expenditure is in notional in nature and no reasons were recorded in this regard. AR submits that the assessee is having all details and may be remanded the issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gins as per the worked out by the assessee on 27-09- 2017. 10. In compliance with the same the TPO made upward adjustment towards international transactions pertaining to marketing and sales support services vide order dated 27-10-2016. 11. Following the same the AO passed final assessment order which is impugned before us by the assessee in respect of grounds mentioned herein- above. 12. The ld. AR, Shri Nikhil Pathak submits that the TPO erred in making the addition in respect of MSS services paid to its AEs Druva Inc., USA and Druva Europe, UK. He referred to agreement entered into between Druva Inc., USA at Pages 418 to 427 and with Druva Europe to Pages 429 to 438 of the paper book. He argued both the AEs are to provide marketing the sale support services to the assessee in their respective regions and drew our attention to balance sheet of Druva Inc., USA at Pages 457 to 461 and Druva Europe at Pages 463 to 474 of the paper book. He vehemently argued that the TPO has considered only the marketing and sales expenses incurred by the Druva Inc. USA and Druva Europe, UK and allowed only the appropriated markup. He submits the action of TPO is not correct selecting only t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the paper book to show that the services were provided by the AEs. The ld. AR argued the finding of DRP in respect of holding that the assessee not able to prove the services rendered by the AEs is incorrect. 15. The ld. DR submits that the assessee did not provide any details either before the TPO or before the DRP and argued that both the foreign AEs are independently doing business. The ld. DR submits that the additional paper book No. 7 filed by the assessee were not before the TPO or DRP and it requires examination for the reason that documents came to the light for the first time before this Tribunal. He argued that the said documents in paper book No. 7 requires verification by the TPO in order to arrive ALP as well as the most appropriate method. He referred to Paras 6.1 and 8.3 of TPO and supported the order of CIT(A). 16. Heard both the parties and perused the material available on record. We note that during the year under consideration, the assessee entered into five international transactions. The TPO accepted three international transactions in respect of license fee for distribution of software products and related services on a back to back basis in respec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... containing pages 2948 to 2987 in respect of Income Tax return, updated financials statements and reconciliation income statement of Druva USA as on 31-03-2013 and Income Tax return of Druva Europe as on 31-03-2013. There is no dispute with regard to non-availability of paper book No. 5 and paper book No. 7 before the TPO/DRP as rightly pointed by the ld. DR but during the course of arguments the ld. AR fairly conceded since all these evidences were filed before the ITAT for the first time prayed to remit the same to the file TPO for its fresh consideration. Rule 10D explains that every person who has entered into an international transaction or specified domestic transaction shall keep and maintain such information and document as mentioned in sub-rule 1 (a) to (m). Sub-rule 4 of Rule 10D explains that the information and document specified under sub-rule 1, 2 and 2(a) are as far as possible be contemporaneous and should exist latest by the specified date referred to in Clause (iv) of section 92F. Clause (iv) of section 92F explains the specified date means the date one month prior to the due date for furnishing the return of income under sub-section (1) of section 139 for the rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such expenditure is in notional in nature and no reasons were recorded in this regard. The ld. AR submits that the assessee is having all details and may be remanded the issue to the file of AO for its fresh consideration. Therefore, taking into consideration the submissions of ld. AR and ld. DR, in the interest of justice, we deem it proper to remand the issue to the file of AO. The assessee is liberty to file evidences, if any, in support of its claim. Thus, ground Nos. 11 to 13 raised by the assessee are allowed for statistical purpose. 20. Ground Nos. 14 to 16 raised by the assessee on account of disallowance of PF expenditure to an extent of Rs.5,74,585/-. We note that the AO made disallowance only on the ground that the payment was made after the due date prescribed under the PF Act vide Para 7 to 7.3 of the final assessment order. The facts remains admitted that the PF contribution was paid before due date of filing of return of income and it is not disputed by the ld. DR. Since, the assessment year under consideration is prior to amendment, no disallowance is maintainable if the PF contribution paid before due date of filing of return of income. Thus, disallowance made o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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