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2022 (11) TMI 1017 - ITAT BANGALORE
TP Adjustment - comparable selection - HELD THAT:- Companies functionally dissimilar with that of assessee need to be deselected. Also comparable fails SWD service revenue >75% filter need to be rejected.
Delay in receivables or deferred receivables as an international transaction - A.R. submitted that the period of credit given to the parties is only 24.5 days and as per agreement, 90 days credit has been given to the parties - HELD THAT:- In our opinion, the argument of Ld. A.R. is justified. The provision for doubtful loans and advances cannot be considered for computation of interest on intra-group trade and advances as the recovery of the principal itself is doubtful. Hence, we direct the AO/TPO to consider net advances after deducting provision for doubtful loans and thereafter apply LIBOR+2% as held by Tribunal in the case of Swiss Re Global Business Solutions India Pvt. Ltd [2022 (1) TMI 1275 - ITAT BANGALORE] - Accordingly, this issue remitted to the file of AO/TPO for re-examine if the credit period is more than 90 days adjustment towards interest receivable to be made. Issue is accordingly remitted to AO/TPO.
Disallowing the expenditure on ESOP u/s 37 - Expenditure incurred is not notional expense - HELD THAT:- Similar issue came for consideration before this Tribunal in the case of Novo Nordisk Inia Pvt. Ltd [2013 (11) TMI 218 - ITAT BANGALORE] expenditure in question is wholly and exclusively for the purpose of the business of the assessee and the fact that the parent company is also benefited by reason of a motivated work force would be no ground to deny the claim of the assessee for deduction, which otherwise satisfies all the conditions referred to in section 37(1) of the Act. The decision of the Hon’ble Supreme Court in the case of Sassoon J. David & Co. (P) Ltd. [1979 (5) TMI 3 - SUPREME COURT] and Mysore Kirloskar Ltd. [1986 (9) TMI 62 - KARNATAKA HIGH COURT] clearly support the plea of the assessee in this regard.
Thus the expenditure in question was wholly and exclusively for the purpose of the business of the assessee and had to be allowed as deduction as a revenue expenditure.
The assessee is not liable for TDS u/s 195 - 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) of the I.T.Act). - Decided in favour of assessee.
