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TMI Blog2023 (6) TMI 175X X X X Extracts X X X X X X X X Extracts X X X X ..... to the cost of software itself, that alone cannot be basis for arriving at the conclusion that no services were rendered by the AE to the assessee. Such high cost for services rendered for implementing a software does raise doubts, but mere suspicion cannot be the basis for holding that no services were rendered by the AR for the said purpose, more particularly when the assessee had filed evidences showing rendering of services. It is for the Department to make further inquiry to find out whether any constructive services as such was rendered by the AE or not to the assessee. Without pointing out any infirmity in the evidences furnished by the assessee, demonstrating rendering of IT services, the Revenue authorities, we hold could not have casually gone on to state that no services were rendered by the AE to the assessee, and that the evidences did not establish nature of services rendered. We do not agree with the AO/DRP that no services were rendered by the AE to the assessee on account of IT consultancy services, and we therefore, direct the deletion of the adjustment made to the same by treating the ALP of the said services at NIL as opposed as claimed by the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O by treating these assets as furniture and fittings entitled to depreciation at the rate of 10% is directed to be deleted. Ground of the assessee s appeal is allowed. Disallowing provision for advertisement expenses - HELD THAT:- As noted that basis of making disallowance was contrary to the facts of the case, since it has been demonstrated before us that complete details of this provision made by the assessee had been furnished to the DRP, pointing out the specific expenses in relation to which the provision had made by the assessee. The assessee clearly had demonstrated that it was not an adhoc provision made by it, but based on specific bills of advertisement expenses incurred by the assessee. DRP for the reason best known chose to ignore this evidence filed by the assessee. The order passed therefore by the DRP disallowing the expense is grossly incorrect and unjustified, we hold that the assessee having proved by way of evidence that provision or advertisement expenses were not adhoc in nature -no reason to make the impugned disallowance. Decided in favour of assessee. Disallowing devaluation of inventory - HELD THAT:- Assessee consistently following the system a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ier years, the DRP agreed to the objection of the assessee to the disallowance made by the AO for provision for products support/services, and accordingly, the DRP directed the AO to delete the disallowance so made. Before us, the ld.DR was unable to point out any infirmity in the order of CIT(A). DR was also unable to distinguish the earlier year case of the assessee with the present one - since the issue already stands decided in favour of the assessee in earlier years by the ITAT, we see no reason to interfere in the order of the DRP directing the deletion of product supports/service charge. TP adjustment proposed by the TPO on account of intra-group services - adjustment related to template charges and infrastructure consultancy charges - HELD THAT:- DR before us has been unable to controvert the fact demonstrated by the assessee as above, both to TPO and the DRP that template charges was paid for acquiring the SAP software which was developed by its AE for streamlining the business transactions of the assessee. We, therefore, agree with the DRP that the cost of acquisition of software cannot be treated at NIL. Since undisputedly, the purpose of the software was to s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... einafter referred to as the Act for short]pertaining to the Asst.Year 2010-11. 2. We shall first take up the assessee s appeal in ITA No. 930/Ahd/2015. IT(TP)No. 930/Ahd/2015 3. Ground No. 1, 2 3 raised by the assessee, it was pointed out, related to the issue of adjustment made to the international transaction of payment for information technology consultancy charges to the AE of the assessee amounting to Rs. 4,84,28,143/-, the ALP of which was determined by the TPO at NIL, holding, it was only in the nature of stewardship and supervisory services. All these grounds are being dealt with by us together. The said grounds read as under: 1. On the facts and in the circumstances of the case and in law, the Learned Income-tax Officer, Ward-1 (1)(3), Ahmedabad ('Ld. AO') and the Learned Deputy Commissioner of Income-tax, Transfer Pricing Officer- II ('Ld. TPO') under the directions of Honourable Dispute Resolution Panel ('Hon'ble DRP'), erred in making an upward adjustment of Rs. 1,47,36,729/- in relation to the international transaction of payment of Information Technology Consulting Charges to Associated Enterprise ('AE'). The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred in disallowing provision for advertisement expenses amounting to Rs. 85,500 by considering it as an ad hoc provision without appreciating the break-up of the' said expense and the fact that taxes had been withheld and deposited to the credit of government on the said provision amount. The Appellant prays that the aforesaid addition be deleted. 8. On the facts and in the circumstances of the case and in law, the Ld. AO under the directions of Hon'ble DRP erred in disallowing devaluation of inventory amounting to Rs. 1,79,46,564. While making the addition, the Ld. AO erred in law and on facts on the following: i. in disregarding the stock valuation made by the Appellant as per AS 2 and section 145A of the Act; ii. in not appreciating the fact that no adverse remark is made by the Auditors in the audit report; iii. in disregarding the contention of the Appellant that the current method of valuation of inventory has been followed consistently over the past years; The Appellant prays that the aforesaid addition be deleted. 9. On the facts and in the circumstances of the case and in law, the Ld. AO under the directions of Hon'ble DRP erred in capita ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rges for SAP consulting. For roll out of any SAP software, the regional team (US, Europe, Asia Pacific) of consultants work on site as well as provide the support for roll out from legacy system to RAINBOW. They charge for consultancy and travel costs of consultants. 5. It is important to note here that, these services received by BRIL are availed in both the segments i.e. Manufacturing and Trading segments. Hence the value of these international transactions has been allocated between manufacturing and trading activities by using sales value as a basis of allocation. Sales made by the manufacturing division are INR 207.57 crores and trading division is INR 185.89 crores i.e. the allocation ration being 50.89/6 and 49.11% respectively. 6. Sample invoices for the service are enclosed herewith as Annexure K 1.1 5. Our attention was drawn to various invoices raised on account of the said services by its AE placed at PB Page No. 120 to 124 and also agreement for rendering of services of AE, placed before at PB Page No. 115 to 117. Our attention was also drawn to the list of employees who worked on the SAP project placed before us at PB page no. 522; schedule of sessions cond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the assessee argued that in view of all the evidences and explanation filed by the assessee as above the DRP was incorrect in holding that no services were rendered to the assessee. He further pointed out that the DRP concurred with the finding of the TPO that no services were rendered on this count or they were merely supervisory services, on the basis that quantum of charges paid by the assessee for these services was disproportionately higher in relation to the cost of the software for the implementation of which these services were procured by the assessee. He pointed out that the DRP had taken note that while software purchased for Rs. 2.91 crores, the maintenance cost claimed by the assessee as IT consultancy charges, was as high as Rs. 1.47 crores, and based on this, the DRP held that the assessee actually had not received any benefit on this count. The ld.counsel for the assessee contended that this cannot be the basis for holding that the assessee had not procured any service on account of IT consultancy, more particularly, when all evidences in this regard, as noted above, were filed by the assessee. The ld.DR on the other hand relied on the order of the DRP/TPO. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... find out whether any constructive services as such was rendered by the AE or not to the assessee. Without pointing out any infirmity in the evidences furnished by the assessee, demonstrating rendering of IT services, the Revenue authorities, we hold could not have casually gone on to state that no services were rendered by the AE to the assessee, and that the evidences did not establish nature of services rendered. 9. In view of the same, we do not agree with the AO/DRP that no services were rendered by the AE to the assessee on account of IT consultancy services, and we therefore, direct the deletion of the adjustment made to the same by treating the ALP of the said services at NIL as opposed to Rs. 1,47,36,729/- claimed by the assessee. In view of the above, ground nos.1, 2 3 raised by the assessee are allowed. 10. Ground No. 4 raised by the assessee reads as under: 4. On the facts and in the circumstances of the case and in law, the Ld. AO / TPO under the directions of Hon'ble DRP, erred in making adjustment of Rs. 52,91,667/- in relation to the international transaction of payment of guarantee fees to AE. 11. The issue involved in this ground relates to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and providing of guarantee on the said loans to the lenders were all undertaken with AEs of the same group to which the assessee belonged. The borrowing, which was guaranteed, was from one of the AEs of the assessee i.e. Bosch Ltd., and the guarantor was also an AE belonging to the same group i.e. Robert Bosch GmbH. Besides, he also noted that the assessee was a debt-free entity with sufficient reserves and no lender, in such circumstances, would have asked for any guarantee fee on giving loans to the assessee. The assessee was found to be in a very sound financial position by the TPO. Thirdly, the TPO noted that the loan had been made for acquiring capital assets, and in such a situation he found that, the capital asset itself would have sufficed as collateral securities for the loan, and there was no requirement for any guarantee fee to be given by any party. He also noted that there was neither any insistence by the lender for guarantee, and as per the assessee it appeared to have been given more as a unilateral group policy for imposing guarantee fees on the assessee. His detailed findings in this regard at para 5(a) to 5(e) are as under: 16. His finding to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee and it would not be appropriate for the revenue to question commercial wisdom of the assessee; that once the requirement of guarantee services are appreciated, the same could not benchmarked at NIL. 20. Brief submissions of the assessee in this regard were filed before us as under: 21. We do not find any merit in the contentions made by the ld.counsel for the assessee made before us. The facts relating to the payment of guarantee commission that it was all an arrangement between the AE of the entities itself is not disputed, the lender being an AE of the assessee, as also the entity providing guarantee to the assessee, all belonging to the same group. It is also not disputed and denied that the assessee was a debt-free company with huge and sufficient reserves as noted by the TPO. There was no necessity demonstrated for guaranteeing of the loan. The service of guarantee in the facts of the case was not needed by the assessee at all as rightly noted by the AO/TPO. Therefore, we agree with the TPO that there was no rendering of any service of guarantee in the present case by the AE to the assessee, warranting payment of guarantee, if at all. Further, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and that the assessee accordingly was entitled to depreciation at the rate of 10% thereon and not 15%. The assessee was confronted with the same who responded by stating that it had claimed depreciation at the rate of 15% on office equipments which qualified as plant machinery and were used in the factory premises. He stated that these equipments did not fall within the meaning of furniture and fittings. The AO was not convinced with the submission of the assessee, who held that as per the rate of depreciation prescribed under the Income Tax Rules, 1962 in Part-III of new Appendix, equipments are not covered under the plant machinery, but they are covered under the category fittings on which rate of depreciation is 10%. Accordingly, he restricted the assessee s claim of depreciation on office equipments to 10% as opposed to 15% claim by the assessee, and excess depreciation so claimed by the assessee amounting to Rs. 11,71,648/- was proposed by the AO to be disallowed in his draft order passed under section 143C of the Act. 26. The assessee objected to the same before the ld.DRP contending that it had been consistently claimed depreciation at the rate of 15% on office equi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore us. 28. During the course of hearing before us, the ld.counsel for the assessee reiterated his contentions made before lower authorities which summarized briefly to the effect that i) The assessee had been consistently claiming depreciation on office equipments which were in the nature of plant machinery at the rate of 15% treating them as qualified for depreciation under the block plant machinery ; ii) That the major portion of the depreciation was claimed by the assessee on office equipments pertained to opening block of asset so qualified as office equipments on which the assessee had claimed depreciation at the rate of 15% in earlier years, and had been consistently allowed by the Revenue. In this regard, our attention was drawn to the Paper Book Page No. 58 of Volume-I of PB being particulars of depreciation allowable as per Income Tax Rules for the impugned year i.e. 2010-11 being part of tax audit report furnished by the assessee, pointing out there from the fact that of the total value of office equipments on which depreciation at the rate of 15% had been claimed by the assessee amounting to Rs. 2,32,52,570/-, an amount of Rs. 2,24,47,127/- represented ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 43/-. What transpires from the fact therefore is that the majority depreciation claimed by the assessee on office equipments at the rate of 15% related to the opening value of the block of asset coming over from past years, when these assets were acquired. It is an undisputed fact that all these opening WDV of office equipments value of Rs. 2.24 crores, the assessee had consistently been claiming depreciation at the rate of 15% and has been allowed the same also by the Revenue. The assesseehas consistently pleaded before the Revenue authorities and even before us and this contention of the assessee has never been controverted by the Revenue. Therefore, it is fact on record that out of total WDV of office equipments on which the assessee had claimed depreciation at therate of 15% of Rs. 2.36 crores, Rs. 2.24 crores value of office equipments had all along been allowed depreciation at the rate of 15% by the Revenue in the past. 31. With respect to these assets, we find, the Revenue has changed its stand of asset qualifying for depreciation at the rate of 10% merely on account of change of view that too without any basis. It is not that the Revenue has now come in possession of som ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcumstances of the case and in law, the ld.AO erred in disallowing seminar expenses, exhibition expenses and advertisement expenses amounting to Rs. 32,82,122/- under section 40(a)(ia) of the Act without appreciating the fact that the said payments were not subject to TDS. 35. The ld.counsel for the assessee fairly admitted before us that the above ground does not arise from the order of the DRP. Thus, this ground no. 6 is dismissed as not maintainable. 36. Ground No. 7 raised by the assessee reads asunder: On the facts and in the circumstances of the case and in law, the Ld. AO under the directions of Hon'ble DRP erred in disallowing provision for advertisement expenses amounting to Rs. 85,500 by considering it as an ad hoc provision without appreciating the break-up of the said expense and the fact that taxes had been withheld and deposited to the credit of government on the said provision amount. 37. Briefly, the facts relating to the issue are that the AO on verification of the details filed by the assessee in respect of advertisement expenses noted that the assessee had made a provision of Rs. 85,500/- on account of advertisement expenses on adhoc basis, hol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Sr. No. Particulars Party Name Amount (Rs.) 1 Graphics designing work for Bosch Rexroth - India training calendar 2010 including PDF interactive designing work. Vrushabh Art 15,000 2 FULL PAGE-FOUR COLOUR.SEARCH 1.3.10 Network 18 and Media Investment Ltd. 23,500 3 FULL PAGE-FOUR COLOUR.SEARCH 1.3. Network 18 and Media Investment Ltd. 23,500 4 FULL PAGE-FOUR COLOUR Network 18 and Media Investment Ltd. 23,500 Total 85,500/- The above table indicates that the provision for advertisement expense is not ad hoc in nature. Instead, the provision amount has been created on the basis of the abovementioned details and is in respect of an ascertained liability. The same were not submitted with the Ld. AO as it were not called for by the Ld. AO during the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd in the circumstances of the case and in law, the Ld. AO under the directions of Hon'ble DRP erred in disallowing devaluation of inventory amounting to Rs. 1,79,46,564. While making the addition, the Ld. AO erred in law and on facts on the following: i. in disregarding the stock valuation made by the Appellant as per AS 2 and section 145A of the Act; ii. in not appreciating the fact that no adverse remark is made by the Auditors in the audit report; iii. in disregarding the contention of the Appellant that the current method of valuation of inventory has been followed consistently over the past years; The Appellant prays that the aforesaid addition be deleted. 42. Briefly stated facts are that the AO noted on verification of the details of inventory that the assessee has reduced the value of closing stock by an amount of Rs. 1,79,49,564/- being written off of slow moving stock. On being asked to justify and explain its claim, the assessee responded by stating that devaluation of stock had been done following the method of accounting prescribed under AS-2 for valuation of inventories requiring inventories to be valued at cost or net realizable value, whichever ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 to 2.4 of his order are as under: 2.1 We have considered the submission made by the assessee as reproduced above which is exactly the same in contents and in legal aspects filed before the Assessing Officer as in the case of Hagglund Drives India Pvt.Ltd. The Assessing Officer as un every aspect of the assessee's submission and arguments in the draft assessment order. Bosch rexorth (India) Ltd.is now merged with Hagglund Drives India Pvt. Ltd. Further, the assessee has not produced any submission on working of closing stock valuation to the panel of DRP as given in the case of Hagglund Drives Pvt.Ltd. 2.2 We have considered the arguments of the Assessing Officer as well as the assessee and its Authorised Representative. It is abundantly clear from the chart of closing stock, purchase and sales, is out of all spare parts, whether it is sold within 6 months or within 24 months or even from non moving items, that the realizable value of the closing stock was much more than the cost of item sold. From the profit earned on sale of spare parts it is clear that the sale price of items sold are not less than the cost price. There appears to be no justification for declaring th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... devalued below the purchase price. Hence, it is held that the Assessing Officer has rightly disallowed the devaluation of closing stock and has made addition of Rs. 1,79,46.564/-. In view of the above facts and circumstances of the case, the objection raised by the assessee against the addition made on account of devaluation of closing stock is rejected. 44. The AO in compliance of the direction of the DRP accordingly disallowance of devaluation to the extent of Rs. 1,79,49,564/-. 45. Before us, the ld.counsel for the assessee reiterated contentions made before the authorities below. Briefly, his arguments were i) Devaluation was in compliance with the AS-2 issued by the Institute of Chartered Accountants of India for accounting of valuation of inventory prescribing inventory to be valued at lower of cost or net realizable value; ii) That the assessee was consistently following the prescribed accounting standards and complied with the provision of section 145A of the Act in this regard also; iii) That devaluation of the inventory was done by a team of technical experts of the assessee-company in accordance with a system devised noting the reduction in value of sto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the devaluation of each item (placed before us at page no. 351 to 495 of the PB) containing the details of item-code, its description, its quantity in stock, before and after evaluation, the last date on which the stock was received and any movement in the stock in the impugned year or preceding years. From this, it was pointed out that all the items of inventory which was devalued had shown no movement by way of receipt of impugned order and/or even by way of issue for production, thus confirming the fact that they were slow moving items and the devaluation was done in accordance with age-wise analysis method adopted by the assessee. Letter dated 10.12.2014 addressed to the DRP pointing out all the details and explanation relating to devaluation of stock, which were also furnished to the AO and summarizing the devaluation so done by the assessee in each of its unit, thus pointing out that all necessary details and explanation also furnished before the lower authorities (placed before us at Page no. 617 to 620 of the PB). 47. The ld.counsel for the assessee therefore submitted that having furnished complete details and explanation regarding devaluation of the stock, and dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its inventory based on age-wise analysis and has been applying it universally to all its inventory consistently from year to year. We fail to understand what further evidence the assessee was required to furnish to justify its claim. The claim of the assessee being based on scientific basis, approved by the statutory auditors also, and which has been following consistently year to year, we find no reason or justification for disallowing the same. The claim of the devaluation of inventory is accordingly allowed and disallowance so made of Rs. 1,79,49,564/- is directed to be deleted. This ground is allowed. 52. The ground no. 9 reads as under: On the facts and in the circumstances of the case and in law, the Ld. AO under the directions of Hon'ble DRP erred in capitalising interest expense amounting to Rs. 59,12,913 to the capital work-in-progress ('CWIP') without any basis. It is prayed that the interest be allowed u/s 36(1)(iii) of the Act since it is for the purpose of business. 53. The brief facts relating to the issue are that the AO noted that the assessee has shown capital work-in-progress at Rs. 7,29,94,068/- which included capital advance of Rs. 70,1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h directions of the DRP, the AO disallowed claim of interest expenditure amounting to R.59,12,913/-. 55. Before us, solitary contentions of the ld.counsel for the assessee was that the assessee had sufficient own interest free funds for investing in CWIP and presumption therefore was that interest bearing funds were utilized for the said purpose warranted no disallowance of interest as per the provisions of section 36(1)(iii) of the Act. In this regard, he drew our attention to the audited balance sheet of the assessee placed at PB 73 pointing out therefrom that total capital and reserves of the assessee during the impugned year stood at Rs. 134 crores as opposed to CWIP of Rs. 1.29 cores which facts clearly demonstrated that the assessee had more than sufficient interest free funds, which accordingly have to be presumed to have been invested in CWIP calling for no disallowance under section 36(1)(iii) of the Act. The reliance was placed on the decision of the ITAT, Ahmedabad in the case of CIL Nova Petrochemicals Ltd. Vs. ITO, ITA No. 1401/Ahd/2017 order dated 25.3.2019. (copy of which was placed before us). 56. The ld.counsel for the assessee further pointed out that its ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evenue has no basis for disallowing the interest expenditure treated to have been incurred for acquiring CWIP except for facts and figures noted in the financial statement of the assessee showing huge CWIP and interest expenditure incurred by the assessee. In view of the fact that the assessee has demonstrated that it was consistently following AS-16 which prescribes basis for accounting of interest cost in relation to fixed assets, and had demonstrated so also from its financial statement pertaining to the succeeding year and this fact was certified by the statutory auditors and even the tax auditors and further noting the fact that the assessee had sufficient interest free funds of its own for investing in CWIP, we hold that there was no basis with the Revenue nor any justification for holding that the assessee had huge interest bearing funds for CWIP and thus capitalizing the interest to the extent of Rs. 72,54,775/-. In view of the above, we direct the deletion of disallowance of interest expenditure to the extent of Rs. 59,12,913/-. Ground No. 9 is allowed. Now we take up Revenue s Appeal in IT(TP) 850/Ahd/2015 for A.Y.2010-11 58. Ground no. 1 reads as under: (i) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as only a provision for expenses and hence not allowable under section 37(1) of the Act. He accordingly proposed the disallowance of Rs. 60,22,515/-. 61. The assessee objected to the same to the DRP who noted that identical claim had been allowed to the assessee in the preceding year both by the AO in Asst.Year 2009-10 and the Ld.CIT(A) and ITAT in earlier years including Asst.Year 2006-07. His finding at para-6 of the order in this regard are as under: Addition on account of disallowance of provision of product support expenses: The next objection raised relates to disallowance of provision for product support expenses. The assessee mentioned that for A.Y 2009-10, the AO has passed in favourable assessment order and allowed the claim of the Assessee of provision for warranty expense. Further CIT(A) and ITAT has ruled in favour of the assessee regarding allowability of provision for warranty expenses. Reproduced below is are extract from the order fof CIT(A) for A.Y 2006-07 Similar issue in earlier years has been decided in favour of the appellant by CIT (A) as well as IT A T in the appellants own case. The claims have been made on the basis of pending warrant claims ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oup companies, the details of which are reproduced at page 2 of the DRP s order as under: Name of the AE Nature of payment Amount Allowed/disa llowed by TPO Bosch Rexroth AG Information Technology Consulting Charges 59,76,501 Disallowed Information Technology Consulting Charges 58,65,189 Disallowed Information Technology Support Charges 25,23,700 allowed Information Technology Support Charges 7,18,384 allowed Template charges 2,91,40,800 disallowed Shanghai Bosch Rexroth Hydraulics Automation Ltd Information Technology Consulting Charges 14,61,126 disallowed Information Technology Consulting Charges 14,33,913 disallowed Robert Bosch Gmbh Infrastr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tities The AE providing services to control over all monitoring of the operations of the subsidiary/related entity (other than day-today management).The services were provided to align the operations of the assesee to the group's operations. 2,91,40,800 Control and supervisory functions of the provider- ensure most benefits for global collaboration. RAINBOW furthermore is the ideal enabler for the V lerger of Bosch AT and Rlexroth in the various countries. RAINBOW helps 0 integrate the different business processes in the Country Units and to roll out new business rules and new reporting requirements of the Bosch Rexroth Group to the Country Units 2 -do- IT consulting charges The payment was made to avail support in relation . to the implementation of SAP module in respect of the issues faced in initial implementation. This is in relation to the implementation of RAINBOW. The AE providing services to control overall monitoring of the operations of the subsidiary/related entity (other t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d charged the assessee for this software on cost basis, and as evidences, invoices for purchase of the SAP were furnished and also mechanism followed for determining the cost allocated to the assessee provided. The explanation in this regard furnished by the assessee to the AO/TPO vide letter dated 7.1.2014 was placed before us at PB Page No. 196. At PB at page no. 199 a detailed write up on the said software Rainbow and its utility for the business of the assessee was placed pointing out that the Rainbow was nothing but an application software developed from SAP adapted to the needs and requirement of Bosch group of companies and was a bundled package of modularized SAP scenarios and processes, generic projects plans and templates, global master data maintenance, standardized customizing concepts, change process and documentation etc. The object being to achieve a coordinated approach of all IT activities within the Rexroth group and thus develop a new information management strategy. 69. Considering the above, the DRP held that since this is an undisputed fact that the assessee by way of template charges bought a software, its price could not be said to be NIL unless it wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ped by its AE for streamlining the business transactions of the assessee. We, therefore, agree with the DRP that the cost of acquisition of software cannot be treated at NIL. Moreover, since undisputedly, the purpose of the software was to smoothen the business activity and information management system in the assessee-company, it cannot be said to be providing services only of supervisory and stewardship nature. Benefits from this software surely arose to the assessee directly. The ld.DR was unable to point out as to how this SAP software provided to the assessee was only for the purpose of playing a supervisory role. In view of the above, we concur with the DRP that TPO had erred in treating intra-group services of template acquired by the assessee as being in the nature of supervisory services. We accordingly uphold the order of the DRP directing deletion of adjustment made to the template charges of Rs. 2,91,40,800/-by determining ALP at NIL. Ground no. 2 raised by the Revenue is dismissed. 71. Now coming to the issue of infrastructure consultancy and support charges paid by the assessee, we have noted from the orders of the authorities below that the assessee had expl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the TPO. Building of a plant according to certain standards, may be set by the group, is not per se an activity in the nature of stewardship. The services rendered by the AE have essentially helped the assessee in building a new world class plant. Most of the expenses have been capitalised as cost of the plant. The adjustment proposed by the TPO, in such circumstances is totally unjustified. We direct the AO/TPO to delete the adjustment. 73. The ld.DR was unable to controvert the factual finding of the DRP that infrastructure and consultancy services were for development of a new plant in Sanand. We therefore see no reason to interfere in the order of the DRP holding that these services cannot be held to be supervisory and stewardship services rendered by the AE to the assessee, as contended by the TPO and as argued by the ld.DR before us. We accordingly uphold the order of the DRP directing the deletion of adjustment made to the infrastructure consultancy and support services by the TPO at NIL, as opposed to Rs. 31,86,790/- incurred by the assessee on account of the same. 74. Ground no. 3 raised by the Revenue is also dismissed. 75. In view of the above, the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rk-in-progress and no expenses as such claimed by the assessee in its profit loss account, no adjustment therefore needed to be made to the income computed by the assessee on account of determination of ALP at NIL by the TPO. 79. On both these issues, the DRP had granted relief to the assessee setting aside the proposed adjustment by the TPO to the ALP of the said two transactions. The Department has come in appeal before us against the order of the DRP in Ground No. (ii) (iii) raised in its appeal in IT(TP)A. No. 850/Ahd/2015 which has been dealt by us in the foregoing paragraph-68 to 70 of our above order, upholding the order of the DRP. In view of the same, since we have held that no upward adjustment is warranted in the case of international transaction of both template charges and infrastructure consultancy support services claimed by the assessee, relief sought by the assessee vide its CO are of no relevance. Hence, both grounds raised in the CO are dismissed. 80. In the result, the CO of the assessee is dismissed. 81. In the combined result, appeal of the Revenue is dismissed; appeal of the assessee is partly allowed and the CO of the assessee is dismissed. ..... 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