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2022 (12) TMI 491 - AT - Income TaxTP Adjustment - international transactions in respect of license fee for distribution of software products and related services on a back to back basis in respect of Druva USA and Druva Europe - most appropriate method for the international transactions entered thereto - HELD THAT:- 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 relevant assessment year. We note that admittedly during the course of TP proceedings the assessee submitted unaudited financials of Druva USA and Druva Europe and the TPO did not consider the same. Thus, in our opinion, issue requires fresh adjudication in view of the additional evidences filed in the form of paper book Nos. 5 & 7. Therefore, taking into 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 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 raised by the assessee are allowed for statistical purpose.
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