Appeal partly allowed due to lockdown delay. Tribunal sets aside transfer pricing addition, allows Education Cess deduction.

The appeal was partly allowed for statistical purposes. The delay in filing the appeal due to the lockdown was condoned. Certain grounds not pressed by the appellant were dismissed. The transfer pricing addition confirmed by the AO was challenged, with the Tribunal setting aside the impugned order and remitting the matter for fresh assessment. An additional ground for deduction of Education Cess and Higher Education Cess was raised and deemed admissible by the Tribunal based on legal precedents. The Tribunal directed the AO to allow the deduction after verifying the correct amount of education cess.

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Issues:
- Condonation of delay in filing the appeal due to lockdown
- Dismissal of certain grounds not pressed by the appellant
- Transfer pricing addition confirmed by the AO
- Application of TNMM vs. CUP method in determining ALP
- Setting aside the impugned order and remitting the matter for fresh assessment
- Additional ground raised for deduction of Education Cess and Higher Education Cess
- Admissibility of additional ground by the Tribunal
- Merits of the additional ground based on legal precedents

Condonation of Delay:
The appellant's appeal was filed belatedly by 3 days, citing the lockdown due to COVID-19 as the reason. The delay was condoned as the ld. DR did not object, and the appeal was admitted for hearing and disposal on merits.

Dismissal of Grounds:
The ld. AR did not press ground Nos. 5 and 6 due to the smallness of the amount, resulting in their dismissal as "not pressed."

Transfer Pricing Addition:
The key issue in this appeal was against the confirmation of a transfer pricing addition of Rs. 14,56,09,180. The TPO rejected the TNMM applied by the assessee and instead used the CUP method, resulting in a proposed adjustment. The AO incorporated this adjustment in the final assessment order, leading to the appeal before the Tribunal.

Application of TNMM vs. CUP Method:
The Tribunal found that the facts and circumstances of the current appeal were similar to earlier years where the TNMM was accepted as the most appropriate method over the CUP method. Following precedent, the impugned order was set aside, and the matter was remitted for fresh assessment in line with the Tribunal's directions in the assessee's earlier case.

Additional Ground for Deduction:
The appellant raised an additional ground seeking a deduction for Education Cess and Secondary and Higher Education Cess paid on income tax. The Tribunal admitted this ground, citing the jurisdiction to examine pure questions of law, especially if they impact the tax liability of the assessee.

Merits of Additional Ground:
Based on legal precedents, including judgments from the jurisdictional High Court, it was established that Education Cess is not disallowable expenditure. The AO was directed to ascertain the correct amount of education cess and allow a deduction after providing an opportunity of hearing to the assessee.

In conclusion, the appeal was partly allowed for statistical purposes, and the matter was pronounced in the Open Court on 15th July 2021.

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