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2021 (3) TMI 1053 - AT - Income TaxTP Adjustment - determining the ALP - Cost aggregation for the purpose of benchmarking - HELD THAT:- Given the range of transactions involved, the arm’s length method cannot be adequately applied on a transaction-by-transaction basis. Accordingly, for the purpose of determining the ALP, the assessee has rightly aggregated for the purpose of benchmarking (i) purchase of raw materials, sale of finished goods and engineering services that are essentials to its business, (ii) payment of ASP charges, IT and service charges to assist in business administration and (iii) payment of commission that assists the assessee in obtaining purchase orders from third parties. Burden of proof - It is well-settled that the primary onus is on the assessee to maintain documentation to demonstrate that the price charged in an international transaction complies with the ALP and the method followed to ascertain the price is the most appropriate method. The assessee discharges this onus by maintaining the documentation; thereafter, the onus shifts to the tax authorities. In the event, the tax authorities disagree with the assessee’s view and seek additional explanation, the burden of proof against shifts to the assessee to prove why the method adopted by the assessee is correct. In the instant case, as narrated hereinabove the assessee has discharged its onus by maintaining the documentation. Further, during the TP proceedings, the assessee has filed before the TPO sufficient details called for. Then the burden of proof has shifted to the TPO. However, the TPO has made the disallowances / adjustments on general propositions. We are reminded by the great aphorism of Justice Oliver Wendell Holmes in Lochner v. New York, 198 U.S. 45,76 (1905) that “general propositions do not decide concrete cases.” As mentioned earlier, the assessee vide letter dated 27.02.2015, 04.09.2015, 24.09.2015, 08.12.2015 and 15.12.2015 has filed sufficient details in response to the queries raised by the TPO during the course of TP proceedings. Further, the assessee has filed before the DRP additional evidence dated 06.06.2016. However, instead of examining / scrutinizing those submissions, the tax authorities have made disallowances/adjustments on general propositions.- Allow assessee ground. Adjustment relating to the international transaction of charges pertaining to Restricted Stock Units issued by associated enterprise, by determining its arm's length price at NIL - HELD THAT:- As per the date of joining Mr. Venkatasubramanian had been allocated 457 shares. The purpose of granting the RSUs to the employee was to retain and motivate him for continuing his employment with the assessee. The assessee expected to drive benefits from the employee’s experience and exposure and hence had awarded RSUs to him. Considering the same, any cost incurred in exercise of the RSUs by the employee typically represents the cost of the assessee-company. Since the cost was initially incurred by the AE, the assessee reimbursed the same to its AE as the same was for the benefit of the assessee-company. Considering the above facts, we delete the adjustment and allow the 10th ground of appeal. Unreconciled income appearing in Form 26AS as unaccounted in the books of accounts - HELD THAT:- In the instant case, admittedly there is difference in the receipts as per the TDS certificates and the receipts as appear in the books of accounts of the assessee. It is not a question of reconciling 97.17% of the entries and only 2.83% of the entries to be reconciled. It is the question of genuineness of the receipts and the amount involved. Therefore, we set aside the order of the AO on the above ground of appeal and restore the matter to him to pass an order afresh after giving reasonable opportunity of being heard to the assessee. We direct the assessee to file the relevant documents/ evidence before the AO. Accordingly, the 11th ground of appeal is allowed for statistical purposes. Amount paid by the assessee in the nature of Education Cess and Higher and Secondary Education Cess - whether allowed as deduction in computing its business income for the year under consideration? - HELD THAT: Since, the above issue has been raised for the first time before the Tribunal, we deem it appropriate to restore the issue back to the AO for passing an order in the light of the ratio laid down in Sesa Goa Ltd [2020 (3) TMI 347 - BOMBAY HIGH COURT]. Thus the additional ground of appeal is allowed for statistical purposes.
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