Case Law Details
Booking.Com India Support & Marketing Services Private Limited Vs DCIT (ITAT Mumbai)
ITAT Mumbai held that Arm’s Length Price (ALP) of Employee Stock Option Plan (ESOP) cannot be taken as NIL. Accordingly, matter set aside with direction to re-compute ALP and transfer pricing adjustment.
Facts- The Assessee filed return of income for the assessment year 2018-19. The case of the Appellant was selected for scrutiny and notice u/s. 143(2) of the Act. During the assessment proceedings AO noted that the Appellant had entered into international transactions with its Associated Enterprises (AEs) during the relevant previous year and therefore, a reference u/s. 92CA(1) of the Act was made to the Transfer Pricing Officer (TPO) for determination of Arm’s-Length Price (ALP) of the International Transactions.
TPO passed order u/s. 92CA(2) of the Act proposing transfer pricing addition of INR 24,97,737/- in respect of international transaction of reimbursement of Employee Stock Option Plan (ESOP) Expenses. The TPO determined ALP of the aforesaid ESOP expenses as ‘Nil’ using Comparable Uncontrolled Price (CUP) Method as according to the TPO the ESOP expenses were notional in nature.
DRP declined to interfere and rejected the objections. Accordingly, AO passed the Final Assessment Order, u/s. 143(3) read with section 144C(13) of the Act making transfer pricing addition of INR 24,97,737/-. Being aggrieved, the present appeal is filed.
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