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2022 (11) TMI 1139 - AT - Income TaxTP Adjustment - comparable selection - HELD THAT:- We direct the TPO to exclude (i) Infosys BPO Limited, (ii) SPI Technologies India Private Limited, and (iii) Eclerx Services Limited from the list of comparables and recompute the ALP of the international transaction. Informed Technologies India Limited and Crystal Voxx Limited - As we find that the Tribunal in assessee's group case in the case of EIT Services Private Limited v. DCIT [2022 (8) TMI 1309 - ITAT BANGALORE] had restored the matter to the TPO to examine whether the above two companies can be considered as comparable company. Thus we direct the AO/TPO to examine afresh whether the above two companies, namely, Informed Technologies India Limited and Crystal Voxx Limited can be included as comparable companies. Ace BPO Services Private Limited - Restore the comparability of Ace BPO Services Private Limited to the files of the TPO. Disallowance of ESOP expenses u/s. 37 - employees of the assessee was eligible to participate in share based compensation scheme of the ultimate holding company, whereby the shares of the ultimate holding company are granted to the employees of the assessee on satisfying certain conditions - HELD THAT:- In assessee's group case, namely, EIT Services India Pvt. Ltd. v. DCIT [2022 (8) TMI 1309 - ITAT BANGALORE] had held that the ESOP expenditure is to be allowed as a deduction u/s. 37 of the I.T. Act. The Tribunal had followed the judgment of the Hon'ble jurisdictional High Court in the case of CIT v. Biocon Limited [2020 (11) TMI 779 - KARNATAKA HIGH COURT] TDS u/s 195 - The assessee has raised grounds with regard to the issue that the assessee is not liable for TDS u/s. 195 of the I.T. Act - We are of the view that these grounds need not be adjudicated, since, on perusal of the final assessment, it is clear that the disallowance of ESOP expenses has made under the provisions of section 37 of the I.T. Act (though there was some discussion in the draft assessment order with reference to disallowance u/s. 40(a)(i). Payment towards leave encashment - HELD THAT:- In the light of the decision of the Hon'ble Supreme Court in the case of Exide Industries [2020 (4) TMI 792 - SUPREME COURT] assessee will not be entitled to claim deduction on leave encashment on the basis of the provision. Taking into consideration the circumstances under which the assessee did not claim a sum being leave encashment actually being paid during the previous year relevant to Assessment Year 2016-2017 we are of the view that the assessee should be allowed leave encashment actually paid as per provisions of section 43B(f) of the Act. We remit the issue to the AO to verify the claim of the assessee and allow deduction to the assessee as per law after affording assessee opportunity of being heard.
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