TMI Blog2023 (9) TMI 1221X X X X Extracts X X X X X X X X Extracts X X X X ..... ere also remitted outside India on the basis of invoices raised upon the Appellant by its AE. Therefore, deduction for the ESOP expenses was claimed by the Appellant during the relevant previous year. Benefit accruing on account of ESOP plans - We find merit in the contention advanced on behalf of the Appellant that for the purpose of granting the RSUs to the employee of the Appellant was to retain and motivate him for continuing his employment with the Appellant. The cost incurred by AE on exercise of the RSUs by the employee of the Appellant is the cost reimbursed by the Appellant which was initially picked up by the AE. We hold that given the facts and circumstances of the present case discussed hereinabove, the ALP of the ESOP E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und 2. On the facts and in law, the Final Assessment order dated 23 June 2022 is non-est having been passed by Ld. AO as opposed to the National Faceless Assessment Centre ( NFAC ) which had validly assumed jurisdiction over the Appellant, it was only NFAC which was competent to pass the impugned assessment order, failing which, the said order is non-est, liable to be quashed. Grounds relating to Transfer Pricing - Reimbursement of Employee Stock Option Plan ( ESOP ) (Total Adjustment: INR 2,497,737) 3. The Hon'ble DRP/Ld. AO/ Ld. TPO erred on facts and in law in proposing an adjustment of INR 2,497,737 to the income of the Appellant on account of alleged difference in the arm's length price ( ALP ) of the inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DRP/ Ld. AO/ Ld. TPO erred on the fact by disregarding that the effect of adjustment has corresponding effect, thereby leading to reduction in the overall income of the Appellant and creating lower tax incidence in the hands of the Appellant. In doing so, the Hon'ble DRP/ Ld. AO/ Ld. TPO erred in upholding that arm's length price is notional and does not alter the cost base of Appellant. 8. On facts and in law, the Hon'ble DRP/ Ld. AO/Ld. TPO erred on fact and in law in initiating penalty under section 270A of the Act. The above Grounds of Appeal' are independent and without prejudice to each other. The Appellant craves leave to supplement, withdraw, amend, add and/or otherwise alter or modify, any or all, gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng adjustment. However, the DRP declined to interfere and rejected the objections. Accordingly the Assessing Officer passed the Final Assessment Order, dated 23/06/2022, under Section 143(3) read with section 144C(13) of the Act making transfer pricing addition of INR 24,97,737/-. 6. Being aggrieved, the Appellant has preferred the present appeal before the Tribunal on the grounds reproduced in paragraph 2 above. 7. The Ld. Authorised Representative for the Appellant advance argument challenging the merits of the transfer pricing addition of INR 24,97,737/- while the Ld. Departmental Representative relied upon the order passed by the TPO and DRP. 8. We have considered the rival submissions and perused the learned record. On perusal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rkup of 5%, the ESOP expenses of INR 26,53,078/- were recouped by the Appellant as compensation for services along with margin of 5% thereon. Therefore, by the Appellant to its AE service charge from the AE. In addition, the Appellant also margin of 5% on ESOP expenses of INR 26,53,078/-. 12. The TPO determined the ALP of ESOP Expenses at Nil without appreciating that the Appellant had been invoiced for the cost of ESOP expenses. It is admitted position that the ESOP expenses pertained to already vested RSUs. On exercise of the option by the employees, the ultimate holding company of the Appellant was under obligation to make payment of RSUs to the employees of the Appellant as per the compensation scheme. The Appellant had created the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year, the ESOP expenses of INR 26,53,078/- were also remitted outside India on the basis of invoices raised upon the Appellant by its AE. Therefore, deduction for the ESOP expenses of INR 26,53,078/- was claimed by the Appellant during the relevant previous year. 14. As regards the benefit accruing on account of ESOP plans is concerned we find merit in the contention advanced on behalf of the Appellant that for the purpose of granting the RSUs to the employee of the Appellant was to retain and motivate him for continuing his employment with the Appellant. The cost incurred by AE on exercise of the RSUs by the employee of the Appellant is the cost reimbursed by the Appellant which was initially picked up by the AE. 15. In view of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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