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TMI Blog2023 (12) TMI 205X X X X Extracts X X X X X X X X Extracts X X X X ..... percentage on sales as fixed by the quality centre for each product. The assessee has not produced any credible evidence/calculation as to how the provision for warranty has been arrived relating to different products before the authorities below. A specific query was asked to the ld. AR regarding the unutilised provision for warranty in the books of accounts to which the ld. AR replied that in such case it represented increase in the closing balance of the year adjusted in future warranty claims and no separate entry is made for unutilized warranty provision and he referred to the details of provision for warranty in the table extracted above. Before us, the ld. AR produced the basis for calculation of provision for warranty extracted hereinabove and he also submitted that that in remand proceedings by the co-ordinate bench for the assessment year 2010-11, the AO has accepted the provision for warranty expenses debited into profit loss account. Further in assessee s own case the co-ordinate bench of the Tribunal has decided the issue [ 2022 (3) TMI 1522 - ITAT BANGALORE] as held provision for warranty created is based on past experience and historical trend of each product and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icates - HELD THAT:- DRP has given direction to the AO for giving TDS credit after verification. We direct accordingly. - SHRI GEORGE GEORGE K., VICE PRESIDENT AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER For the Appellant : Shri T. Suryanarayana, Advocate For the Respondent : Shri Sunil Kumar Singh, CIT-2(DR)(ITAT) ORDER Per Laxmi Prasad Sahu, Accountant Member This appeal is against the final assessment order dated 20.04.2021 passed u/s. 143(3) r.w.s. 144C r.w.s. 254 of the Income-tax Act, 1961 [the Act] for the assessment year 2009-10 on the following grounds:- The grounds of appeal are as under:- The grounds mentioned hereinafter are without prejudice to one another: 1. The order passed by the Deputy Commissioner of Income Tax, Circle 2(1)(1), Bangalore (hereinafter referred to as the Learned AO ) under section 143(3) r.w.s 144C of the Income- tax Act, 1961 ( the Act ) in so far as it relates to the additions/adjustments made is contrary to law and facts of the case. Transfer pricing grounds 2. The learned Transfer Pricing Officer ( TPO ), Learned AO/ Hon'ble DRP erred in rejecting the economic analysis performed by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eir respective comparability analysis, upper limit on turnover should also have been provided based on the similar principle. 13. The learned TPO/ Learned AO erred in applying service income filter of 75% instead of 50% of the total sales, leading to a narrower comparable set. 14. The Learned AO/Learned TPO/Hon'ble DRP erred in rejecting companies having ratio of employee cost to sales of less than 25%. 15. The learned TPO/ Learned AO/ Hon'ble DRP has erred in not rejecting companies which have been earning abnormal profits. The learned TPO/ Learned AO ought to have appreciated that while companies which were incurring consistent losses were rejected mutually by the Appellant as well as the learned TPO/AO, companies earning super-normal profits should also have been rejected based on the same principle. 16. The learned TPO/ Learned AO/ Hon'ble DRP has erred in not appreciating that there exist a difference in the level working capital of the Appellant and the comparable companies and thereby erred in not providing an adjustment on account of working capital differences between the Appellant and the comparable companies. 17. The learned TPO/ Learned AO/ Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ital expense. 23. The learned AO and the Hon'ble DRP ought to have appreciated that the royalty expenditure has not been incurred by the Appellant for the purpose of bringing into existence any asset or advantage of capital nature but for running the business with a view to generate profits and hence the same is a revenue expenditure. 24. The learned AO and the Hon'ble DRP have erred in contending that proper evidences of the nature of expenses were not submitted and further, grossly erred in stating that except for the copy of agreement, no other details were furnished, without appreciating the fact that Appellant had submitted all the requisite details (such as copy of agreements, detailed submission and necessary explanations from time to time) substantiating the nature of expense and the benefits obtained by the Appellant. 25. The learned AO ought to have appreciated the fact that the term Research Development ( R D ) used in the agreements is only a nomenclature and the Appellant has incurred royalty for use of intellectual property ( IP ) (i.e. technical know-how developed and maintained by the group companies). 26. The learned AO has erred in concluding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hort granting tax credits (TDS and FTC) i.e., only to the extent of INR 16,01,166 as against INR 1,26,92,220 claimed by the Appellant in its return of income. Short grant of interest under section 244A of the Act: 35. Notwithstanding and without prejudice to the above ground No. 34, the learned AO has erred in short granting interest under section 244A of the Act on the amount of refund determined. Arithmetical error in computation of refund amount: 36. Notwithstanding and without prejudice to the above ground No. 34 and 35, the learned AO has erred in computing the total of tax refund (INR 16,01,166) and interest on refund (INR 2,56,107) at INR 18,04,660 instead of INR 18,57,273, which is an arithmetical error. The appellant craves leave to add, alter, rescind and modify the grounds herein above or produce further documents, facts and evidence before or at the time of hearing of this appeal. For the above and any other grounds which may be raised at the time of hearing, it is prayed that necessary relief may be provided. 2. The Appellant is a wholly owned subsidiary of Continental Automotive GmbH, Germany. It is engaged in the manufacturing of component ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. Export of finished goods 6,69,81,587 2. Rendering of research and development engineering support services 29,66,04,344 3. Import of raw material, consumables and other supplies for manufactured goods 12,22,59,618 4. Import of trade goods 82,37,18,163 5. Payment towards technical know-how 7,86,10,914 6. Payment towards networking charges, training expenses, IT support and technical and miscellaneous services 17,70,68,187 7. Payment towards purchase of tangible assets 3,32,89,103 8. Interest on loan 25,02,981 9. Reimbursement of expenses 1,54,09,665 8. The net mark-up on cost earned by the assessee as per TP order is as follows:- Operating Income Rs. 29,99,21,836/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10. Infosys Ltd. 45.61% AVERAGE 25.97% 12. The computation of arm s length price and the TP adjustment made by the revenue is as under:- Arm s Length Mean Mark-up 23.65% Operating Cost 28,17,94,808 Arm s Length Price @129.40% of cost 35,03,27,305 Price Received 29,99,21,836 Shortfall being adjustment u/s. 92CA 5,04,05,469 13. The assessee has taken 36 grounds of appeal, but the during the course of hearing ld AR of the assessee has filed written synopsis relating to the arguments advanced by him which are accordingly considered us for adjudication. 14. The ld. AR submitted that vide ground No. 4, the assessee seeks exclusion of Bodhtree Consulting Ltd, Tata Elxsi Ltd., Sasken Communication Technologies Ltd., Persistent Systems Ltd., L T Infotech Ltd. and Infosys Technologies Ltd. on the ground that they fail the test of comparability. In this regard, the submissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n software products and technology innovation. The company also has substantial intangibles. In contrast, the Assessee is a captive software development service provider and provides services to its AEs based on requirement analysis and directions provided by the AEs. The Assessee does not undertake development or sale of software products and in turn does not own intangible assets. The said company is also being consistently excluded from the list of comparables in the case of other assessees similar to the Assessee. Also, Persistent has a huge turnover of 520 crores whereas the Appellant s turnover is only 29.99 crores. Thus, the company is not comparable to the Appellant. Detailed submissions in this regard are placed at pages 288-292 of the paperbook. Infosys Ltd. 15.3 The ld. AR submitted that the company is a giant in the area of development of software and having its own software products such as Finacle. It is engaged in research and development that has led to creation of intellectual property. Its brand value and ownership of intangibles have led to the company being consistently excluded as a comparable in the case of assessees similar to the Assessee. The com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te before us that the functional profile of the Assessee in this appeal and the Assessee in the decision rendered in the case of Infinera India (P.) Ltd. (supra) are identical. In the case of Infinera India (P.) Ltd. (supra) this Tribunal held that the aforesaid 5 companies are not functionally comparable with a company rendering SWD services. The learned DR could not point out any difference in facts. Hence, we hold these 5 companies be excluded from the list of comparable companies as functionally not comparable with the Assessee company. 11. Similarly one of the comparable company chosen by the TPO and retained by the DRP viz., Sasken Communication Technologies Ltd. was held to be functionally dissimilar with an Assessee who was engaged in the business of providing SWD services to AE such as the Assessee, in the case of VM Ware Software India (P.) Ltd. (supra). The learned DR could not point out any difference in facts. Hence, we hold this company be excluded from the list of comparable companies as functionally not comparable with the Assessee company. 12. Similarly one of the comparable company chosen by the TPO and retained by the DRP viz., Larsen Toubro Infotech Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 19. The learned Chartered Accountant pleaded that out of the six comparables shortlisted above as comparables based on the turnover filter, the following two companies, namely (i) Tata Elxsi Ltd; and (ii) M/s. Flextronics Software Systems Ltd., deserve to be eliminated for the following reasons : (i) Tata Elxsi Ltd., : The company operates in the segments of software development services which comprises of embedded product design services, industrial design and engineering services and visual computing labs and system integration services segment. There is no sub-services break up/information provided in the annual report or the databases based on which the margin from software services activity only could be computed. The company has also in its response to the notice u/s. 133(6) stated that it cannot be considered as comparable to any other software services company because of its complex nature. Hence, Tata Elxsi Ltd., is to be excluded from the list of comparables. 21. We have heard the rival submissions and considered the facts and materials on record. After considering the submissions, we find that Tata Elxsi and Flextronics are functio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y i.e. M/s Persistent Systems Ltd., was in product designing services and into software product development. Since the present assessee company is only providing software development services to the AE, this company cannot be considered as a comparable in the present case. Since the ld. DR of the revenue could not point out any difference in facts, by respectfully following this Tribunal order, we direct the AO/TPO for exclusion of this company from the final list of comparable. 16.1 M/s Infosys Technologies Ltd., For exclusion of this company, reliance has been placed on the judgment of the Hon'ble Delhi High Court rendered in the case of CIT v. Aginity India Technologies (P.) Ltd. [2013] 36 taxmann.com 289/219 Taxman 26 (Delhi) and in particular, our attention was drawn to para-6 of the judgment as available inpage-386 of the case law compendium and the same is reproduced hereunder: 6. Learned counsel for the revenue has submitted that the Tribunal after recording the aforesaid table has not affirmed or given any finding on the differences. This is partly correct as the Tribunal has stated that Infosys Technologies Ltd., should be exclude from the list of comparables ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and in turn does not own intangible assets. The company is therefore not comparable to the Assessee. Also, Sasken has a huge turnover of 480 crores whereas the Appellant s turnover is only 29.99 crores. Thus, the company is not comparable to the Appellant. Detailed submissions in this regard are placed at pages 286-288 of the paperbook. 18.1 The ld. AR placed reliance on the decision of this Tribunal in assessee s own case for AY 2014-15 and Sonus Networks India Pvt. Ltd. (supra) for AY 2009-10. 19. The ld. DR relied on the orders of the lower authorities. 20. After hearing both the sides and perusing the material on record, we note that the assessee has argued that this company has high turnover of Rs. 480 crores, whereas the assessee s turnover is only Rs. 29.99 Crores which is near about 16 times more and other arguments were also made which are extracted as above. However, various Benches of the Tribunal has decided the upper turnover limit should be fixed by the TPO if there is lower turnover filter of Rs. 1 Crore applied. In this case, the assessee s turnover is Rs. 29.99 crores, which is less than Rs. 200 crores turnover of the comparable company. The coordinate Ben ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such transaction, which are likely to materially affect the price or cost charged or paid or profit arising from such transaction in the open market. Further it is also necessary to see that wherever there are some differences such differences should be capable of reasonable accurate adjustment in monetary terms to eliminate the effect of such differences. It was his submission that size was an important facet of the comparability exercise. It was submitted that significant differences in size of the companies would impact comparability. In this regard our attention was drawn to the decision of the Special Bench of the ITAT Chandigarh Bench in the case of Dy. CIT v. Quark Systems (P.) Ltd. [2010] 38 SOT 207, wherein the Special Bench had laid down that it is improper to proceed on the basis of lower limit of 1 crore turnover with no higher limit on turnover, as the same was not reasonable classification. Several other decisions were referred to in this regard laying down identical proposition. We are not referring to those decisions as the decision of the Special Bench on this aspect would hold the field. Reference was also made to the OECD TP Guidelines, 2010 wherein it has been o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t also. What should be upper limit is another factor to be considered. We agree with the contention of the learned counsel for the assessee that the size matters in business. A big company would be in a position to bargain the price and also attract more customers. It would also have a broad base of skilled employees who are able to give better output. A small company may not have these benefits and therefore, the turnover also would come down reducing profit margin. Thus, as held by the various benches of the Tribunal, when companies which arc loss making are excluded from comparables, then the super profit making companies should also be excluded. For the purpose of classification of companies on the basis of net sales or turnover, we find that a reasonable classification has to be made. Dun Bradstreet Bradstreet and NASSCOM have given different ranges. Taking the Indian scenario into consideration, we feel that the classification made by Dun Bradstreet is more suitable and reasonable. In view of the same, we hold that the turnover filter is very important and the companies having a turnover of Rs. 1.00 crore to 200 crores have to be taken as a particular range and the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (6) Tata Elxsi Ltd. 262.58 crores (7) Wipro Ltd. 961.09 crores. (8) Infosys Technologies Ltd. 13149 crores. In present facts, assessee contests following comparables for exclusion by using turnover filter; Tata Elxsi 378.43 crores Sasken Communication 405.30 crores Mindtree Ltd 793.22 crores Larson Tubro Infotech 1950.83 crores Infosys Technologies Ltd 20264 crores Zylog Systems Ltd. 734.94 crores Respectfully following the view taken by this Tribunal in assessee's own case for assessment year 2007-08, and decisions relied by the Ld.AR herein above, we direct exclusion of these comparables final list of comparables for failing turnover filter.' 20.1 Respectfully following the above decision of the Tribunal, we direct the AO/TPO to exclude this company from the comparables because this company fails the turnover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . '14. Remaining grounds i.e. 12 to 15 are in respect of assessee's claim for exclusion of various comparables i.e. (1) . (2) (3) .. (4) . (5) ) (6) Larsen and Toubro Infotech Ltd. (7) .. .. Regarding Larsen Toubro Infotech Ltd., it was submitted that this comparable company fails turnover filter because onsite revenue of this company is only about 55%. The ld. DR of revenue supported the order of AO and DRP. . II. UNREASONABLE COMPARABILITY CRITERIA : 19 . 16. .. Regarding assessee's request for exclusion of Larsen Toubro Infotech Ltd., we find that regarding this comparable company, page No. 24 of the DRP directions is relevant. We find that on page No. 24 of its directions, it is noted by DRP that this was the claim of the assessee before DRP that turnover of this company is Rs. 2081.49 Crores whereas the assessee's turnover is Rs. 33.94 Crores. It was also the objection before DRP that about 55% of total exports of this company are from onsite services whereas in the present case, the transactions with the AE are on offshore model. Regarding high turnover of this company Larsen and Toubro Inf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (B) Actual expenditure (C) Closing balance Net Provision (B-C) 2008-09 1,49,29,932 59,78,651 31,92,102 1,77,16,481 27,86,549 2009-10 1,77,16,481 1,09,35,490 98,57,982 1,87,93,989 10,77,508 2010-11 1,87,94,000 87,37,867 1,95,32,000 79,99,867 (1,07,94,133) 2011-12 79,99,867 5,28,64,672 1,66,77,339 4,41,87,200 3,61,87,333 2012-13 4,41,87,200 7,83,67,911 2,62,34,907 9,63,20,204 5,21,33,004 2013-14 9,63,20,204 1,66,55,739 5,88,40,832 5,41,35,111 (4,21,85,093) 2014-15 5,41,35,111 94,97,052 2, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or warranty consistently over the years. The said methodology has been submitted before the AO during the course of assessment proceedings. The Appellant submits that it creates provision for warranty on a scientific basis. Based on the above, expenses incurred by it towards warranty expense are allowable under section 37 of the Act. Detailed submissions in this regard are placed at pages 634-733 of the paperbook. He further submitted that the said issue is squarely covered by the decision of this Tribunal in assessee s own case for AY 2014-15 wherein it is held that the provision for warranty has to be allowed as a deduction. 24.4 The ld. DR supported the orders of lower authorities and submitted that the assessee has not adopted any scientific method for creating the provision for warranty. Therefore the judgment of Hon ble Supreme Court in the case of Rotork Controls India P. Ltd. (180 Taxman 422) (SC) will not apply in the case of the assessee. During the course of proceedings before the DRP, the assessee was unable to produce as to how the provision for warranty has been made on any scientific basis. The provision for warranty is recognized as per the observation of the ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inted out that a liability is defined as a present obligation arising from past events, the settlement of which is expected to result in an outflow from the enterprise of resources embodying economic benefits. A detailed assessment of the warranty provisioning policy is required particularly if the experience suggests that warranty provisions are generally reversed if they remained unutilized at the end of the period prescribed in the warranty. Thus, the Hon ble Apex Court pointed out that the provision has to be made based on reliable estimation of the obligations. Unless the three conditions recognising the liability are satisfied, the claim could not be automatically allowed as a provision made on a historical trend. 25.1 In the present case the assessee is providing warranty for 24 months on automotive products sold by it on the basis of percentage on sales as fixed by the quality centre for each product. The assessee has not produced any credible evidence/calculation as to how the provision for warranty has been arrived relating to different products before the authorities below. A specific query was asked to the ld. AR regarding the unutilised provision for warranty in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d from basic R D and prescribed percentage on net sales on account of use of intellectual property generated from old application R D. The said expense being incurred for the purpose of business, has been claimed as deduction by the Appellant under section 37 of the Act. The AO disallowed the above contending it to be capital in nature and also that it is not a genuine expenditure while passing the draft order, on the basis that no evidences were submitted supporting the same. The DRP has upheld the disallowance proposed by the AO by observing that the fixed percentage of expenditure incurred by the assessee was in the nature of royalty and it was capital in nature after relying on the judgment of Hon ble jurisdictional High Court in the case of Telco Construction Co. Ltd. v. ACIT (TS-628-HC-2020(KAR) and also observed that the assessee has acquired the right over the technical know-how, patent, drawings and other rights mentioned in the agreement and expenditure incurred on such technical know-how gives enduring benefit to the assessee. However, the DRP held that since the expenditure incurred was capital in nature, the Appellant would be entitled to depreciation under Section 32 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Appellant submits that the annual license fee incurred by was for the use of technology of the Continental Group for manufacturing and sales of the products. Such expenditure should be allowed under section 37(1) of the Act based on following submission:- i. Section 37 of the Act is a residual clause for claiming deduction for any expenditure incurred for the purposes of the business. ii. For the purpose of claiming deduction under section 37 of the Act, the following conditions should be fulfilled: The expenditure must be revenue in nature and should not be covered by any express deductions under sections 30 to 36 of the Act. The expenditure should not be personal in nature. The expenditure should be incurred wholly and exclusively for the purposes of the business or profession. iii. Such payments are made only towards access to technical knowledge and not absolute transfer of technical knowledge or information. iv. Such expenses were incurred by the Appellant for increasing profitability relating to products manufactured by the Appellant by applying new methods of manufacture/ technology provided under the aforementioned agreements. v. The obj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Yes. The licenses are granted for a limited period. The agreement can be terminated at the discretion of both parties. Clause 6.1.2 Restriction on creation of further rights/ assignment Yes. The Appellant can sub-license only on receipt of prior written approval from the Licensor. Clause 2.2 Confidentiality Yes. The Appellant is obligated to hold in confidence all the information provided under the agreement. Clause 8 Degree of transfer Yes. The scope of the license is only to grant right to use licensed intellectual property. There is no transfer of absolute ownership of any intellectual property. Clause 2.1 Nature of royalty Yes. Royalty was paid based on a percentage of net sales as provided in the agreement Clause 5.1 26.6 It is submitted that for the above expenses, the Appellant receives a wide array of assistance, services, support and guidance on a recurring basis. It can be said that these royalty payments made are commens ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls are developed in-house by Continental global or developed by third party and customized for use by Continental group. These tools/software platforms are primarily online tools/platforms and shared drives which facilitate various technical support including: Sharing of best practices/ standard procedures (discussed above). Real-time production control and monitoring. Planning/ forecasting the material and labor requirements. Survey the customer s demands/ requirements. Tracking and overall management of the project on real-time basis. Integration of costing software and accounting software (SAP). Various tools like tech.net, prod.net, log.net, camline etc are provided to the Appellant and some of the key tools in use by the Appellant are discussed below: Sl. No. Tool Name Tool/ platform description Benefit to Continental India 1 Tech.Net It is a platform which provides access to latest technical information, standard practices, procedures, etc. Tech.Net members possess highest level of education (PHd) and provide support centrall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bal has a global strategic sourcing approach i.e. strategy for obtaining raw material/ resources across the world in a standardized manner, which can achieve economic advantages in terms of obtaining significant discounts. Continental global locates suppliers, seeks samples from them and tests their products. Upon satisfaction about the quality of the product, Continental global provides such information of suppliers located across the globe, to the group. It also negotiates for bulk discounts and set quality standards for the suppliers. This in turn helps the Appellant in procuring quality raw materials at best price without any efforts. Provision of designs, procedures and layouts (a) Every product that the Appellant manufactures is unique and complex. Continental global develops and shares its designs, layouts and drawings relating to products, manufacturing process, etc. with the Appellant. The requirement of the customers varies from country to country and therefore, Continental global provides customized versions of its designs, layouts and drawings to the Appellant which are best suited for the Indian market. Training (a) Continental global conducts online ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss the specific and routine issues and bring down the occurrence of quality incidents. Other assistance (a) Continental global enters into centralized agreements for procuring certain techniques, technical services. This helps the Appellant to improve the product quality. The aforesaid assistance received from Continental group helps in improving the technological performance of the Appellant s operations in terms of quality and cost and also helps in optimum utilization of resources in an efficient manner. It also creates synergy among the group entities including the Appellant and ensures access to latest technical information. Project R D (a) The technical service, support and guidance received from Continental Group is essential for the uninterrupted conduct of Appellant day to day business activities. Continental Global invests their efforts for providing the said services on a continuous basis. 27. The objections of the AO and Appellant s submission is tabulated below: Sl. No. AO s contention Appellant s submission Reference by the appellant 1. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... depreciation in terms of Section 32 of the Act. However, the Assessing Officer failed to follow the directions issued by the DRP. It is therefore submitted that the Assessing Officer be directed to grant depreciation in terms of the directions issued by the DRP. 27.3 It is therefore prayed to allow the appeal and set aside the final assessment order, in the interests of justice and equity. 28. The ld. DR strongly supported the order of the ld. DRP. The ld. DR further referred to the order of the DRP at para 2.19.13 and strongly supported that the Hon ble jurisdictional High Court in the case of Telco Construction Co. Ltd. v. ACIT (TS-628-HC-2020(KAR) (supra) has decided similar issue in favour of revenue and the ld. DRP has examined this issue in detail in line with the judgment. He further submitted that in this judgment, there is slight difference for the period. In the assessee s case the period of agreement was initially for one year from the effective date, thereafter the agreement shall automatically renew for additional term of one year each unless terminated by any party giving written notice with a period of six months before the end of initial term or the then curr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rence it shall be adjusted. The currency was in Euro. We further note from pg. 204 of PB, the following services were obtained by the assessee from its group companies:- (a) Standard practices (b) Access to various tools/platforms (c) Assistance in sourcing. (d) Provisions of design, procedure and layouts. (e) Training (f) Validation, (g) Testing (h) Problem resolution; and (i) Other assistances. 29.1 The agreement was made on 1st January, 2009 for one year and it was automatically renewable unless terminated. This is the second round of proceedings. There is nothing to show that there is termination of the agreement and hence the agreement is still in force. Further on perusal of the order of the ld. DRP at para 2.19.5 the assessee could produce only the copy of agreement with it AEs. It was the primary duty of the assessee to establish whether the expenditure incurred was not enduring benefit and it was recurring expenditure with credible evidence. But the assessee has failed to do so by merely submitting the copy of agreements, TDS certificate and benefit received. The assessee is also not eligible for claim of deduction u/s. 35(1)(iv) of the Act si ..... X X X X Extracts X X X X X X X X Extracts X X X X
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