TaxTMI 
TaxTMI 
2022 (12) TMI 106
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.... of income on 30/09/2010 declaring total income of Rs. 19,13,56,45,771/-and had revised its return of income on 29/03/2012 declaring total income of Rs. 18,99,47,48,506/-. The assessee's case was selected for scrutiny and draft assessment order under section 143(3) r.w.s.144C (1) of the income tax Act 1961 dated 31/03/2014 was proposed to assess the income at Rs. 25, 07, 36, 09, 270/-. The assessee filed its objection before the DRP-1, Mumbai and was subsequently transferred to DRP-IV, Mumbai. It was observed that the assessee had entered into international transactions including supply of medical and spares, rendering of services, provisions of loans and corporate guarantee on investment in equity shares with its AEs. Subsequent to this, assessee's case was transferred to the TPO who had made an adjustment of Rs. 31, 74, 04, 647/- and the AO had also proposed various other additions such as, on premium payable on FCCBs, provision for warranty, disallowance under section 14A, addition under section 40(a)(ia), weighted deduction under section 35 (2AB), dealer incentive and service coupon under section 40(a)(ia), disallowance under section 80IC and octroi incentive thereby proposing ....
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....506 F Mahindra Defence Services Professional fees paid in relation to JV agreement & due diligence 25,71,248 25,71,248 TOTAL 7,89,91,917 5. It is observed that the AO has considered the above mentioned expenses as capital investments in nature which include legal expenses incurred on entering into joint venture with Renault S.A.France and Rs. 27 lakhs towards legal and professional charges incurred in connection with the acquisition of Reva Electric car company private limited, foreign travel expenses of Rs. 104,36,519/- incurred on various project relating to product development all its products like Xylo Refresh,Genio Pickup,Compact Xylo etc. cetera and professional fees of Rs. 101, 77, 643/-in connection with Chinese tractor manufacturer company Yeuda Tractor co.ltd with whom the assessee company had entered into a joint venture. The said expenditure was incurred with regard to the setting up of joint venture for which the impugned professional fees was paid by the assessee company for the purpose of promoting the business of manufacturing and selling of tractors by the assessee company in India. The asses....
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....isfied in assessee's case and that the co-ordinate bench of this Tribunal has decided in favour of the Revenue on similar issue pertaining to AYs 2006-07 & 2007-08. However, the AO / DRP has allowed the expenses to be treated as addition to cost of investment and has disallowed the expenses which were claimed by the assessee as revenue expenses. The assessee is in appeal before us as against the order of the AO / DRP. 7. The Ld.AR for the assessee contended that the expenditure pertaining to legal charges for joint venture and provision for legal and professional fees for M&A projects has been held to be capital expenditure in nature by the Tribunal for AYs 2009-10 & 2011-12 to 2013-14 by the Tribunal vide order in ITA No.1449/Mum/2016, ITA 719/Mum/2017 and ITA No.7382/Mum/2017 wherein it has been held that the impugned expenditure is capital in nature and that it should form part of cost of investment which the assessee company can claim at the time of sale of investment. The relevant portion of the decision is as under:- "2.3. Aggrieved, the assessee is in appeal before us. We find that the Id. AR made the following submissions before us:- (a) In so far as ex....
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....the expenditure and hence the expenditure was not capital in nature. (ii) Further, in A.Y. 1999-2000, in the assessee's own case, expenses of consultancy fees, preparation of plans, drawings and design for the setting-up of foundry was allowed by the Tribunal as business expenditure even though the foundry project was abandoned subsequently (ITA No 2344/Mum/200E), Page 3-5, para 2) . The Hon'ble Jurisdictional High Court dismissed the Department's appeal (ITA 450 of 2017) in Para 7 there against. (iii) The ratio of that decision - expenditure which does not result in acquisition of a capital asset is not capital in nature - should be applied to the expenditure of Rs. 9,74,09,230 which did not result in acquisition of any entity/investment. d) The last item of expenditure is Rs. 30,000 incurred towards showroom design charges which are routine expenses incurred in the course of business of the assessee and therefore should be allowed as revenue expenditure. 2.4. Per contra, the Id. DR vehemently relied on the order of the Id. AO. 2.5. We find that on perusal of the facts narrated hereinabove and by placing reliance on the vari....
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....vident that the impugned expenditure claimed by the assessee company are mostly recurring in nature which has existed even in the earlier years wherein the co-ordinate bench has decided the said expenditure to be capital in nature and shall form part of cost of investment in which the assessee was at liberty to claim the same at the time of sale of investment. It is pertinent to point out that the impugned expenditure are found to be part of cost of investment through various subsidiaries, viz. Zippaero Pty Ltd, Aero Star, Australia Pty Ltd, Bak systems Plc. Etc. In respect of other expenditure, in view of the earlier Tribunal order in assesse's own case on the impugned issue of treatment of capital expenditure and revenue expenditure of the assessee, the Ld.AO is hereby directed to decide this issue in the light of decision given by this Tribunal for A.Ys 2011-12 to 2013-14 vide order dated 19/06/2020. Accordingly, ground 1 raised by the assessee is partly allowed for statistical purpose. Ground 2 : Provision for warranties Rs. 42,15,66,402/-. 12. This ground raised by the assessee challenges the disallowance of provision for warranties by the Ld.DRP / ACIT by treating the s....
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.... assessee for impugned year to calculate the warranty expenditure for the year under consideration. The assessee further stated that to determine the provision for warranty expenditure, the assessee has calculated current year amount of settlement of warranty claims related to the sale of the impugned year was deducted from the gross warranty expenditure as specified in the tabulation above, the balance of which is determined as provision for warranty expenditure. The Assessing Officer has rejected the said claim of the assessee and has allowed the deduction on actual basis thereby disallowing the excess of provisions. Further to this, the Assessing Officer has contended that the assessee's determination of the provision does not have any scientific basis. The Assessing Officer has also distinguished the decision of Hon'ble Apex Court in the case of Rotork Controls Ltd (supra) which was relied upon by the assessee. The Ld.DRP has also rejected the objection raised by the assessee on this ground. 14. The Ld.AR contended that this issue has been covered by the decision of the co-ordinate bench for A.Ys 2011-12 to 2013-14 vide order dated 19/06/2020 in ITA No.1449/Mum/2016, ITA 719....
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.... period or the claim is not covered within the warranty clause etc, the same is reversed. This scientific exercise of making provision for warranty clause for each and every vehicle / tractor sold is made on a regular basis year on year by the assessee which is duly proved in the extensive workings provided before the lower authorities and hence, we find that the issue is squarely covered by the decision of the Hon'ble Supreme Court in the case of Rotork Controls India Pvt. Ltd., vs CIT in 314 ITR 62. We also find that this issue has been allowed by the Tribunal in assessee's own case for the A.Y.1989-1990 to A.Y.1998-1999. Later in A.Y.2009-10, this issue was remitted back to the file of the ld. AO to decide the same in the light of the aforesaid Supreme Court decision. We find that the decision for A.Y.2009-10 was rendered by this Tribunal by placing reliance on the decision rendered in assessee's own case for the A.Y.2006-07 to 2008-09. For A.Y.2006-07 to 2008- 09, the ld. AR submitted that the ld. AO had duly accepted the fact that the provision for warranty schemes have been made based on the analysis of past data of actual warranty expenditure incurred but repeated the same d....
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....on (at Kandivli) of the company. The assessee further stated that the impugned amount of Rs.2,59,650/- is deduction for the amount spent from the said fund account. The assessee claimed the said amount as allowable as deductible expenditure on actual incurrence basis as per the provisions of section 37 of the Income-tax Act. The Assessing Officer has rejected the claim of the assessee on the ground that as per section 40A(9) "contribution to any fund" does not mean a separate entity and that if the assessee has created a fund even in its books of account, the amount is said to be transferred to a 'fund'. On this ground, the Assessing Officer disallowed the claim of the assessee, an amount of Rs.2,59,650/- which is transferred to employees' benefit fund to be not allowable expenditure as per section 40A(9) of the Act. 19. The Ld.AR submitted that the assessee's claim for deduction of similar actual expenditure was allowed by the co-ordinate bench for A.Y. 1996-97 in ITA No.3659/Mum/2012 which has been followed in A.Y. 2000-01 in ITA No.3998/Mum/2010 and A.Y. 2001-02 in ITA 7581/Mum/2012 and in subsequent years. 20. The Ld.DR relied on the decision of the Assessing Officer. ....
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....enges the disallowance of deduction of Rs.4,50,62,837/- in respect of stock option granted to employees under the ESOP scheme. It is observed that the amount is the difference between the fair market value of shares offered to employees on the date of grant of option and price at which they were offered to employee. The assessee company had granted 41,790 ESOP out of which 20,850 were lapsed during the year under consideration. It was further observed that the exercise price of option granted on 04/11/2009 amounted to Rs.724 whereas the market price was Rs.842.30 for which the assessee company claimed Rs.4,50,62,836/- as the difference between market price and option exercise price and claimed the same as deduction in computation of income. The Assessing Officer disallowed the same on the ground that the expenses incurred are for the purpose of increasing the share capital base of the company and are, therefore, capital in nature. Further to this, the employees' stock option will provide enduring benefit to the assessee company from the employees who have availed the scheme and that the mere approval of SEBI is not for the admissibility of the expenditure which are not for the purp....
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....his issue to the file of the ld. AO to consider the claim of deduction in the light of the Special Bench decision in the case of Biocon Ltd., We find that the ld. AR fairly submitted that in principle, this issue is decided in favour of the assessee by the Special Bench in the case of Biocon Ltd., but still in the interest of justice, a specific direction need to be given to the ld. AO to allow deduction in respect of all options exercised during the year equal to the difference between the exercise price and the market price at the time of exercise of the option, as held in the case of Biocon Ltd, instead of the market price at the time of grant of option. We find lot of force in the said argument of the ld. AR and direct the ld. AO accordingly. Accordingly, the concise ground No.11 raised by the assessee is allowed for statistical purposes." Respectfully following the above decision of the co-ordinate bench, we hereby allow this ground of appeal filed by the assessee as the issue would be squarely covered by the said decision. Ground 5 : Disallowance under section 14A 28. This ground of appeal raised by the assessee pertains to disallowance of Rs.36,83,10,000/- under sec....
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....t has been computed on a proportionate basis whereas the other expenses / funds computed to be total salary and other expenses incurred which are related to the value of investments in proportion to the total assets. The assessee further stated that the salary forms part of personnel cost of the corporate finance department and other expenses pertained to travelling and various expenses pertaining to the concerned department. The Ld.AR further stated that the assessee has excluded those investments which were made without borrowings by the assessee company before amalgamation which has become part of the investments of the assessee company subsequent to amalgamation. It is stated that the assessee has furnished details pertaining to the investments in trust of Rs.1,548.16 crores and the investment of Mahindra Holdings & Finance Ltd to the tune of Rs.202.58 crores which were excluded as it is acquired as a result of amalgamation where no borrowed funds were used for such investment. The assessee has also furnished details of investment made before 01/04/2007 of Rs.499 crores, which was excluded for the reason that there was no outstanding borrowings prior to 01/04/2007 on which inte....
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....s than 3% thereby determining the value of guarantee adjustment of Rs.1,27,73,700/-. The assessee has controverted the same by stating that the same does not warrant an international transaction by relying on the OECD guidelines and various other decisions and without prejudice, the guarantee fees should be within a range of 0.5% to 1% citing various judicial precedents for the same. 34. The Ld.DRP relied on the provisions of section 92D and held that the same is an international transaction and the same adjustment was confirmed in assessee's case in preceding years. The AO / DRP relied on various decisions of the Tribunal in upholding the rate of 3% as corporate guarantee commission for the international transaction. 35. The Ld.AR relied on the decision of the Tribunal in assessee's own case for A.Y. 2009-10 which followed preceding years' decisions. The Ld.AR also relied on various decisions of the Hon'ble jurisdictional Bombay High Court which upheld rates lesser than 1% in various decisions pertaining to corporate guarantees. 36. The Ld.DR, on the other hand relied on the decision of the Ld.DRP in upholding 3% commission on corporate guarantee and relied on the order o....
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....various expenses. But we find that the entire break-up had been duly submitted by the assessee before the lower authorities and the same are enclosed in page 234 of the paper book and the figures mentioned thereon are fairly ascertainable and are not mere adhoc provisions. Respectfully following the said decision of the Tribunal in assessee's own case for A.Y.2009-10, we have no hesitation in directing the ld. AO to delete the disallowance u/s. 40(a)(ia) in the sum of Rs.33,78,54,976/-. Accordingly, the concise ground No.5 raised by the assessee is allowed." 40. Having considered the rival submissions and perused the materials on record and also the order of the Tribunal for A.Y. 2012-13 ITA No.1449/Mum/2016 & Ors, we respectfully following the above cited order of the Tribunal, allow this ground of appeal filed by the assessee and delete the disallowance made by the Assessing Officer under section 40(a)(ia) of the Act. GROUND 8 : DISALLOWNCE OF WEIGHTED DEDUCTION UNDER SECTION 35(2AB) OF THE ACT. 41. This ground of appeal of the assessee pertains to the restriction of claim for weighted deduction under section 35(2AB) on scientific expenditure as allowed by DSIR in Form 3....
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....ion of the order of the Tribunal is as follows:- "24. On this issue the disallowance was made on the ground that form 3CL has not been furnished. We note that in earlier year i.e., for A.Y.2008-09. Tribunal has noted the submission from assessee that once the R & D facilities are approved and DSIR has not rejected the application submitted by the assessee, it could be presumed that the application has been accepted. Further that failure on the part of DSIR to confirm the authorities in time cannot be reason for taking back deduction to the assessee. Noting the above and following judicial precedents from earlier year, the Tribunal had directed that assessee is entitled to grant of better deduction u/s.35(2AB). Referring to these case laws from ITAT and also from Cummins India Ltd., (ITAT Pune) and Sri Biotech Laboratories India Ltd., (ITAT Hyderabad), assessee has requested that AO be directed to allow the claim for deduction u/s.35(2AB) as non-receipt of form 3CL from DSIR is not determinative of the issue. 25. Respectfully following the decision as above, we accede to the assessee's request in the light of the above and directed accordingly." 45. Respectf....
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.... The Assessing Officer had disallowed the same on the above mentioned reasons. 47. The Ld.AR relied on the proposition that no disallowance under section 40(a)(ia) could be made after expiry of time for passing order under section 201 of the Act and in case the disallowance is sustained, the same is liable to be restricted to 30% instead of 100% of the said expenditure. The Ld.AR relied on the decision of the co-ordinate bench in assessee's own case for .Y. 2007-08 in M.A. No.485/Mum/2019 arising out of ITA No.382/Mum/2017. 48. The Ld.DR, on the other hand, relied on the decision of the Assessing Officer. 49. Having heard both the learned representatives and perused the materials on record, it is observed that in a similar disallowance in assessee's case for A.Y. 2007-08, the co-ordinate bench restored the matter to the Assessing Officer directing to consider the issue that no disallowance under section 40(a)(ia) could be made after the expiry of the time for passing of the order under section 201 of the Act and that in case the disallowance is sustained, the same is liable to be restricted to the extent of 30% of the amount of service coupons. The relevant extract of the ....
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.... dated 14,05.2019 is modified to the said extent." 50. As the issue of the assesse is squarely covered by the decision of the Tribunal, we respectfully follow the said decision and hereby restore this issue to the file of the Assessing Officer by directing him that no disallowance under section 40(a)(ia) shall be made after the expiry of the time for passing of the order under section 201 of the Act and that in case the disallowance is confirmed, 100% of the said amount should be disallowed in view of the Apex Court decision in Shree Choudhary Transport Co (Civil Appeal No.7865 of 2009) In the result, this ground of appeal filed by the assessee is partly allowed. GROUND 10 : DISALLOWANCE OF DEDUCTION OF OCTROI INCENTIVE OF RS.72,48,94,000/-. 51. The assessee has stated that it had received octroi incentive of Rs.72.48 crores which was treated as capital receipt by the assessee and revenue receipt by the Assessing Officer. It is observed that the said incentive was received as package scheme of incentives declared by Government of Maharashtra which, according to the assessee, is only a yardstick to determine the quantum of incentive and not as mitigating the operational cos....
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...., reported in 228 ITR 253 and the decision of Hon'ble Punjab and Haryana High Court in the case of Abhishek Industries Ltd., reported in 286 ITR 1 and rejected the claim of the assessee of treating the industrial promotion subsidy as capital receipt. 10.4. The ld. AO also observed that this subsidy was available to the assessee from the date of commencement of commercial production suggesting that the subsidy was not given for the setting up of business but for carrying on of its business. He also observed that similar additions were made in assessee's own case for A.Yrs. 2008-09 to 2011-12. With these observations, the ld. AO treated the receipt of subsidy as the revenue receipt. This action was upheld by the ld. DRP. We find that the ld. AR before us submitted that the same Maharashtra 2001 package scheme of incentives has been examined by the Co-ordinate Bench of Delhi Tribunal in the case of LG Electronics India Pvt. Ltd., in ITA No.2163/Del/2015 dated 19/04/2017 wherein by placing reliance on the decision of the Hon'ble Supreme Court in the case of CIT vs. Ponni Sugars and Chemicals Ltd., reported in 306 ITR 392 had held that Industrial Promotion Subsidy received unde....
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....sidered as income earned by the assessee. This contention of the assessee was rejected by the Assessing Officer on the ground that the said property was let out to the sister concern at a rate lesser than the market rate and has not considered the heads of income classified by the assessee in its books of account pertaining to the impugned income. The Assessing Officer further made addition of the said income on the fact that res judicata is not applicable in Income Tax proceedings on assessee's contention that it was not objected by the department in the preceding years. 55. The Ld.AR for the assessee contended that the co-ordinate bench has deleted the disallowance for the reason that the property in question being stock in trade, provisions of section 28 will apply and not the provisions of section 24 for A.Y. 2009-10 in ITA No.1956/Mum/2014, wherein it has been held as follows:- "33. Upon careful consideration, we note that ITAT in ITA No.586/Mum/2013 for A. Y. 2008-09 has decided the issue as under:- "94. We have carefully considered the submissions of the parties and also perused the relevant findings of the Assessing Officer. It is not in dispute that th....
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.... Court in the case of Goetze India Ltd vs CIT (2006) 284 ITR 323 (SC). 58. The Ld.AR contended that as the revenue has held the loss in A.Y. 2009- 10 to be capital in nature and a consistent view should also be taken in case of gain in the impugned year. 59. The Ld.AR relied on the decision of the Tribunal in assessee's case for A.Y. 2013-14 where the Assessing Officer is directed to allow depreciation on exchange difference. The relevant portion of the said order is reproduced hereunder:- "12.13. The another related issue involved in this regard is what is the period for which such loss should be capitalised. In this regard, the ld. AR argued that under the Income Tax Act, any item that is added to the fixed asset need to be capitalised till the asset is put to use. This is supported by Explanation 8 to Section 43(1) and proviso to Section 36(1)(iii) of the Act. Any cost incurred beyond that period should be charged off as revenue expenditure. Accordingly, he argued that irrespective of the accounting treatment given by the assessee in the books, the exchange loss could be added to the cost of fixed assets only till such time, the assets were not put to use. Thereaf....
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....in cost, variation in sale price, defective allocation of expenses, etc. The DRP has rejected the unit-wise accounts prepared by the assessee company on the ground that they do not disclose true and fair results of the units of the assessee company pertaining to A.Y. 2009-10. The Assessing Officer was directed by the Ld.DRP to determine business profit of Rudrapur unit by allocating the business income assessed in proportion to the turnover of the Rudrapur unit to the total turnover. It is pertinent to point out that the Assesing Officer has followed the same methodology prescribed by the DRP in the preceding year for computation of deduction under section 80IC for the impugned year. 62. The Ld.AR relied on the decision of the Tribunal in A.Y. 2011-12 in ITA No.1449/Mum/2016 directing the Assessing Officer to recomputed the deduction following the directions of the Tribunal in A.Y. 2009-10 in ITA No.1956/Mum/2014. The relevant extract of the said decision is as follows:- "23. The concise ground No.9 raised by the assessee for A.Y.2011-12 is with regard to disallowance of deduction u/s.80IC of the Act in respect of Rudrapur unit. We find that for A.Y.2011-12, the transac....
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.... the Tribunal has dealt with the issue in A.Ys 2011-12 o 2013-14. The relevant portion of the decision of the co-ordinate bench is reproduced below:- "26.1. We have heard rival submissions and perused the materials available on record. At the outset, we find that this additional ground deserves to be admitted as it does not involve verification of the primary facts on record and more especially in view of the undisputed fact that the entire details of interest income had been duly filed before the ld. AO by the assessee during the course of assessment proceedings. Admittedly, the said interest income included interest earned on tax free bonds in the sum of Rs.3,47,19,107/- which is not liable for taxation at all both under normal provisions of the Act as well as in the computation of book profits u/s.115JB of the Act. Merely because, the assessee had erroneously offered the same in the return of income, the same cannot be brought to tax by the revenue. The law is now well settled that only just and right tax should be collected from the right person by the revenue. Hence, we deem it fit and admit the additional ground and direct the ld. AO to reduce the sum of Rs.3,47,19,1....
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.... same to be capital expenditure for the reason that it enhances the capital base of the assessee company. The Assessing Officer relied on the decision of Apex Court in the case of Punjab State Industrial Development Corporation vs Brooke Bond India Ltd 225 ITR 792 (SC). The Ld.DRP on the other hand, has allowed the said expenditure for the reason that the assessee has no control over the decision of the subscriber of the bonds and that the assessee cannot refuse the choice of the holder in exercising conversion. Further to this, the Ld.DRP held that the redemption of premium on maturity is an only possibility which is merely contingent in nature. The Ld.DRP further stated that in 2011 all the bonds were finally converted into equity and the premium claimed in earlier years was written back. Considering these facts, the Ld.DRP allowed the claim of the assessee on the facts that it was premature of the assessee to have claimed the premium as deduction on priority basis as it was merely contingent in nature. 73. Having heard both the learned representatives and perused the materials on record, it is observed that the Ld.DRP has relied on the decision of the Tribunal in assessee's c....
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....econe UK Ltd., Mahindra Overseas Investment Company (Mauritius) Ltd, Mahindra Gears International Ltd, at the rate of 6%, 6.20-6.6%, 9% and 6.25%, as the case may be. The assessee company benchmarked the loans using LIBOR rate by using external Comparable Uncontrolled Price Method (CUP). The Id. TPO applied LIBOR for the year of loan and further added the average spread of comparable unsecured loans given in the said year and made ALP adjustment accordingly. We find that the Id. DRP directed the Id. AO to adopt LIBOR rate of the year in which the loan was given in case the loan had been granted at fixed rate for the entire tenure of the loan. However, if the loan had been granted for a floating / flexible rate of interest, the Id DRP directed the Id AO that LIBOR rate to be applied would be LIBOR for the year under consideration. The Id. DRP also directed the Id. AO to adopt the LIBOR as directed above and further add 5% towards basis points. 6.2. Aggrieved by this direction, the assessee is in appeal before us. The Id. DR submitted that let the Id. TPO be directed to adopt LIBOR + 300 basis points for benchmarking international transaction in respect of loan given to AE. ....
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....curring heavy losses and there is no question of shifting of profits. The assessee has availed the technical services from its AE such as style feasibility, engineering feasibility, detailing activities and assembling activities. 13.3.2. The assessee treated the foreign AE as a tested party on the grounds that it is the less complex entity in the transaction. It selected comparables based on search using the AMADEUS Database. It adopted OP/TC as the PLI. The assessee submitted that the AE is a high end service provider for Manufacturing designing, style, prototyping and other technical services and assisted the assessee in launching successful models like Xylo Refresh, Bolero Refresh, Quanto and Genio. 13.3.4. The TPO observed that the assessee had selected its AE as the tested party just because it was incurring losses and the comparables were earning high margin. The assessee has its own research and development facility based in Nashik and had not only availed technical services from MGRD and also from other third party service providers inspite of having a full-fledged R & D Centre of its own at Nashik. Assessee argued that it is a business decision o....
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.... Directions of DRP 13.3.6. MGRD was incorporated on 12/02/2008. The assessee in FY 2007-08, through Mahindra Overseas Investment Co (Mauritius) Ltd., a wholly owned subsidiary of the assessee, had entered into an asset purchase agreement with G.R. Graphical Ricerca Design S.r.l. to purchase its assets and business. Pursuant to the agreement, G R Design became Mahindra Graphic Research Design S.r.l. Even prior to its acquisition, the assessee had approached this company for design and engineering services. This company was purchased from G.R.Grafica Ricerca Design S.r.l. The remuneration to MGRD is based on hourly rates which was Euro 42 per hour, which is less than the rate when this company was not an AE and the quotations received then was based on Euro 48 per hour. It was also stated that during the year MGRD provided services to third parties such as Pilkington and SEKURIT which were based on hourly rates of Euro 46.50 and 44.HO and invoices were sought to be filed. However, since this was not produced before the TPO, the same is not admitted. The assessee furnished to the TPO documents indicating the assignments such as Development of Sun shade concept along with an e....
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....ur. Considering that this is a technical service, the rate is not unreasonable. Further, comparing it to bid based on Euro 48 per hour to assessee before it became an AE, suggests that it is reasonable. The adjustment made is therefore deleted." 80. The Ld.DR contended that the assessee has failed to establish the benefit test and that the TPO has rightly held that it was a mere duplication of job. The Ld.DR further contended that the Ld.DRP has erroneously applied CUP data and deleted the adjustment made by the TPO. The Ld.DR relied on the AO / TPO's order. 81. The Ld.AR, on the other hand, contended that the TPO has not determined the ALP by following any of the prescribed method nor has he challenged the selection of AE as the tested party. The Ld.AR further stated that simply because the assessee has a large R & D facility does not imply that it will not require any technology or design services from external sources. This reasoning of TPO to make adjustment on the impugned transaction is not warranted on this ground. The Ld.AR relied on the order of the Ld.DRP in deleting the adjustment. 82. Having heard the rival submissions and perused the materials on record, we ar....