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2022 (2) TMI 1367 - AT - Income TaxDeduction u/s 10AA - HELD THAT:- As relying on assessee own case Assessment Year 2013-14 [2020 (8) TMI 196 - ITAT BANGALORE] had examined the various aspects of the relief claimed u/s. 10AA of the Act and held it in favour of assessee, subject to the proceeds having been brought into India in convertible foreign exchange - this Tribunal remanded only one aspect to the DRP i.e. to verify whether the sale proceeds have been brought into India in convertible foreign exchange by IBM India. Respectfully following the same this ground stands remanded as indicated hereinabove. Disallowance of payments to AEs and third party u/s. 40(a) - payments to IBM Singapore for shrink wrapped software - HELD THAT:- As decided in assessee own case 2013-14 [2020 (8) TMI 196 - ITAT BANGALORE] we remand the issue back to DRP. The DRP is also directed to verify the details filed by applying the principles laid down by Hon’ble Supreme Court in case of Engineering Analysis Centre of Excellence (P.) Ltd. [2021 (3) TMI 138 - SUPREME COURT] Disallowance u/s 37(1) - amounts that was suo moto disallowed by assessee u/s. 40(a) - HELD THAT:- As this Tribunal in Assessment Year 2013-14 [2020 (8) TMI 196 - ITAT BANGALOR] set aside for these issue to DRP for fresh consideration. Accordingly this ground raised by assessee stands allowed for statistical purposes. Deductibility of ESOP expense - HELD THAT:- This Tribunal in case of Novo Nordisk India (P.) Ltd. [2013 (11) TMI 218 - ITAT BANGALORE] held that the expenditure in question was wholly and exclusively used for the purpose of the business of the assessee and motivated its workforce and allowed the deduction u/s 37(1) of the Act. Respectfully following the above view, we direct to grant deduction to assessee on ESPO expenses in accordance with law, based on the principles laid down in the decision referred hereinabove. TP Adjustment - AMP Adjustment - TPO was of the view that a sissy needs to become adequately compensated for such additional functions undertaken by it and therefore separately benchmarked the AMP function - HELD THAT:- Certain transactions listed in the Explanation under clauses (i) (a) to (e) to Section 92B are described as an ‘International transaction’. This might be only an illustrative list, but significantly’ it does not list AMP spending as one such transaction. The Courts held that the existence of an international transaction will have to be established de hors the BLT, the – burden is on the Revenue to first show the existence of an international transaction. The objective of Chapter X is to make adjustments to the price of an international transaction which the AEs involved may seek to shift from one jurisdiction to another. An ‘assumed’ price cannot form the reason for making an ALP adjustment. Since a quantitative adjustment is not permissible for the purposes of a TP adjustment under Chapter X, equally it cannot be permitted in respect of AMP expenses either. We find that the DRP categorically observed that assessee has not furnished any documents to substantiate the argument of their existing no arrangement between assessee and the AE towards the brand promotion, which is beneficial to the AE. It is also observed by the DRP that assessee has not established that the AMP spend pertained to other segments also. Accordingly, in the interest of justice, we remand this issue to the Ld.AO/TPO to verify the aspect based on the documents/evidences submitted by the assessee. In the event the it is found that the expenditure is factored in net cost for computing margin, no separate adjustment needs to be made. Grant the credit for TDS deducted and SA Tax on verification in accordance with law.
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