TaxTMI 
TaxTMI 
2022 (12) TMI 491
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.... by the assessee challenging the action of TPO/DRP for disregarding the intercompany agreement entered between the assessee and its associated enterprises (AEs) pertaining to availing of marketing and sales support services (MSS services) in the facts and circumstances of the case. 4. We note that the assessee is a company conducts its business under the name and style as "M/s. Druva Software Pvt. Ltd." (in short "Druva India") hereafter. The assessee is engaged in the business of providing data protection to the enterprises. 5. The assessee filed return of income declaring a total loss at Rs.51,71,06,222/- on 30-11-2013. 6. Having noticing international transactions, the AO made reference u/s. 92CA(1) of the Act to the Transfer Pricing ....
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....ons and drew our attention to balance sheet of Druva Inc., USA at Pages 457 to 461 and Druva Europe at Pages 463 to 474 of the paper book. He vehemently argued that the TPO has considered only the marketing and sales expenses incurred by the Druva Inc. USA and Druva Europe, UK and allowed only the appropriated markup. He submits the action of TPO is not correct selecting only to cost items and disregarding other cost items for computing total cost. The TPO and DRP considered select cost items by adopting an ad-hoc approach and ignored the fact of AEs are required to incorrect various routine expenses while providing marketing and sale support services to the assessee. He referred to various routine expenses like office rent, salary expenses....
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....7% as mark up. The TPO held the said cost are at ALP and disallowed all other expenses by holding are not required to be reimbursed. He vehemently argued in order to determine the ALP the TPO again considered the foreign AEs as tested parties. The assessee considered the foreign AEs are least complex entity to the present international transaction and selecting them as tested parties is valid. The ld. AR referred to Para 9 of the TPO's order and submits the assessee submitted e-mail correspondence from Pages 2362 to 2651 of the paper book to show that the services were provided by the AEs. The ld. AR argued the finding of DRP in respect of holding that the assessee not able to prove the services rendered by the AEs is incorrect. 15. The ld....
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.... ground that the TPO did not appreciate the payment regarding marketing and sales support services which up to Rs.54.42 crore as against the turnover of Rs.19.59 crore which is reproduced in the TPO's order at Page No. 4. In order to find out the real character of the said payment under marketing and sales support services the TPO examined the financials as on 31-03-2013 of the assessee. He observed that the share capital of the assessee at Rs.6,28,620/- and accumulated loss at Rs.31,07,60,683/- and further he found the trade payables as on 31-03- 2016 at Rs.35,07,13,677/- in respect of Druva Inc. USA and Druva Europe and other employee related payables. On such circumstances, the TPO asked the details of services provided by both the AEs. ....
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....urse of arguments the ld. AR fairly conceded since all these evidences were filed before the ITAT for the first time prayed to remit the same to the file TPO for its fresh consideration. Rule 10D explains that every person who has entered into an international transaction or specified domestic transaction shall keep and maintain such information and document as mentioned in sub-rule 1 (a) to (m). 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 furnishi....
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....hallenging the disallowance on account of ESOP expenditure. The ld. 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 and referred to Paras 7.6 to 7.77 of the order of DRP. He submits that the assessee debited ESOP expenditure to the profit and loss account and the said expenditure has been claimed on the basis of the Employees Staff Option Plan in accordance with the guidelines issued by the SEBI. Accordingly, the assessee debited the difference of market value of shares and the value at which allotted to the employees. He placed reliance on the decision of Hon'ble High Court of Karnataka in the case of Biocon Ltd. reported in 430 ITR 151 (Kar.). The ....