DCIT, CIRCLE- 8(1), NEW DELHI V. .E.I. DUPONT INDIA P. LTD., GURGAON

ITA 7454/DEL/2017

AI Insights

The case involves Corteva Agriscience India Pvt Ltd, which appealed against the transfer pricing adjustments made by the Deputy Commissioner of Income Tax (DCIT), Circle-11(1), New Delhi, for the Assessment Year 2008-09. The adjustments were related to the payments made for administrative support services and other services received from its Associated Enterprises. The Tribunal examined the nature of the services provided, the method of transfer pricing applied, and the comparables used in the assessment. The Tribunal's decision was influenced by the detailed analysis of the services rendered, the functional comparability of the selected companies, and the application of the arm's length principle in pricing these services.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 36828 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2024
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Assessment Year: 2008-2009
• Other Referred Cases: ACIT vs Nalco Water India Ltd, Bechtel India (P.) Ltd. v. Addl. CIT, Emerson Process Management Power and Water Solutions India Pvt. Ltd. vs. ACIT, PCIT (International Taxation) vs AT Kearney Ltd (India Branch Office)
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHETAN RAO
• Assessee Lawyers: DEEPAK CHOPRA
• Keywords: Additional evidence; Transfer pricing; International transaction; TDS; Related party transaction
• Section: 64; 48; 43; 22; 13; 73; 72; 20

Judgement Text

"Page | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “I”: NEW DELHI BEFORE SHRI M. BALAGANESH, ACCOUNTANT MEMBER AND SHRI SUDHIR KUMAR, JUDICIAL MEMBER ITA No. 6879/Del/2017 (Assessment Year: 2008-09) Corteva Agriscience India Pvt Ltd (earlier known as E.I. DuPont P. Ltd), 17th Floor, Tower-C, DLF Cyber Greens, Sector-25A, Phase-3, Gurgaon Vs. DCIT, Circle-11(1), New Delhi (Appellant) (Respondent) PAN: AAACE2462M ITA No. 7454/Del/2017 (Assessment Year: 2008-09) DCIT, Circle-11(1), New Delhi Vs. Corteva Agriscience India Pvt Ltd (earlier known as E.I. DuPont P. Ltd), 17th Floor, Tower-C, DLF Cyber Greens, Sector-25A, Phase-3, Gurgaon (Appellant) (Respondent) PAN: AAACE2462M Assessee by : Shri Deepak Chopra, Adv Shri Harpreet Singh Ajmani, Adv Shri Pulkit Pandey, Adv Revenue by: Shri Chetan Rao, CIT DR Date of Hearing 25/09/2024 Date of pronouncement 19/12/2024 O R D E R PER M. BALAGANESH, A. M.: 1. The appeal in ITA No.6879/Del/2017 filed by the assessee and ITA No. 7454/Del/2017 filed by the revenue for AY 2008-09, arise out of the order of the Commissioner of Income Tax (Appeals)-44, New Delhi [hereinafter ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 2 referred to as ‗ld. CIT(A)‘, in short] in Appeal No. 61/2012-13/CIT(A)-44 dated 29.09.2017 against the order of assessment passed u/s 144C/143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‗the Act‘) dated 24.01.2012 by the Assessing Officer, DCIT, Circle-11 (1), New Delhi (hereinafter referred to as ‗ld. AO‘). 2. The assessee has raised the following grounds of appeal:- ―General Grounds 1) The Ld. CIT(A) erred in law and on facts in not holding the order of the Learned Assessing Officer (\"AO\") being bad in law, illegal and without jurisdiction. 2) Grounds for Transfer Pricing Adjustment made to Administrative Support Services (\"IGS\") availed by the Appellant from its Associated Enterprises (AES) 3.1 That the Ld. CIT(A) erred in law and on facts in giving only 30% relief on account of adjustment with respect to Product Technical and Marketing Services, Business Support Services (\"IGS\") and no relief with respect to Accounting and Financial Services and Legal Services availed by the Company from its Associated Enterprises (AES). 3.2 The Ld. CIT(A) erred in law and on facts in disregarding the Rule of Consistency. 3.3 The Ld. CIT(A) failed to appreciate the fact that the Company is not guided by any motive to evade taxes and has in accordance with the provisions of the Income Tax Act adequately deducted taxes from payments made to AE's for services availed. 3.4 The Ld. CIT(A) erred in law and on facts in accepting the CUP method as used by the Ld. TPO as the Most Appropriate Method instead of the TNMM method adopted by the Appellant. The Ld. CIT(A) has also erred in not accepting the alternate CUP analysis provided by the Appellant. 3.5 The Ld. CIT(A) erred in law and on facts in not accepting the impugned services at arm's length since the business segments wherein their cost is allocated have been held at arm's length by the Ld. TPΟ. ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 3 3) Grounds for Transfer Pricing Adjustment made to Provision of Administrative Support Services Segment 4.1 The Ld. TPO erred in law in rejecting the valid transfer pricing analysis carried on by the Appellant Company. 4.2 The Ld. CIT(A) erred in facts and in law in considering the related party filter at 25% of the sales as a suitable filter for identifying comparable companies. 4.3 The Ld. CIT(A) erred in facts and in law in considering India Cements Capital Limited as comparable although this Company has been rejected by the Ld. TPO in his order and is not functionally comparable also. 4.4 The Ld. CIT(A) erred in not adjudicating on reason for rejecting Rites Ltd. and WAPCOS Ltd. as being Government Companies and functionally not comparable. 4.5 The Ld. CIT(A) erred in facts and in law in not considering Alka Broking Limited as comparable. 4.6 The Ld. CIT(A) erred in not adjudicating on allowing the Appellant with risk and other adjustments to arrive at true comparability. 4) Grounds for Transfer Pricing Adjustment made to Provision of Research and Engineering Support Services Segment 5.1 The Ld. TPO erred in law in rejecting the valid transfer pricing analysis carried on by the Appellant Company. 5.2 The Ld. CIT(A) erred in facts and in law in considering the related party filter at 25% of the sales as a suitable filter for identifying comparable companies. 5.3 The Ld. CIT(A) erred in facts and in law in not considering IDC India Limited as comparable. 5.4 The Ld. CIT(A) erred in facts and in law in not considering Max Neeman Medical International Limited as comparable. 5.5 The Ld. CIT(A) erred in not adjudicating on reason for rejecting Mahindra Consulting Engineers Ltd. as being functionally not comparable and which largely caters domestic market. ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 4 5.6 The Ld. CIT(A) erred in not adjudicating on allowing the Appellant with risk and other adjustments to arrive at true comparability.‖ 3. The revenue has raised the following grounds of appeal:- ―1. Ld. Commissioner of Income Tax (Appeals) erred on law and on the facts of the case in deleting the addition on account of \"Sourcing/ Logistics/ HR services, Internal Audit, IT Services, Safety Business Services, Treasury Services, Technical and Marketing Services and Business Support Services\" made by the TPΟ. 2. Ld. Commissioner of Income Tax (Appeals) erred on law and on the facts of the case in deleting the comparables in the segment of administrative and business support services using TNMM method\". 3. Ld. Commissioner of Income Tax (Appeals) erred on law and on the facts of the case in deleting the comparables in the segment of research and development and engineering support services\". 4. The appellant craves leave to add, alter or amend any ground of appeal raised above at the time of hearing.‖ 4. The Ground No. 1 raised by the assessee is general in nature and does not require any specific adjudication. 5. The Ground Nos. 3 to 3.6 raised by the assessee were stated to be not pressed by the learned AR at the time of hearing. The same is reckoned as a statement made from the bar and accordingly Ground Nos. 3 to 3.6 raised by the assessee are hereby dismissed as not pressed. 6. The assessee vide letter dated 2-7-2021 had filed additional grounds of appeal claiming deduction towards education cess paid by it. No arguments were advanced by the Learned AR before us at the time of hearing qua these additional grounds. Hence, these additional grounds are not even admitted and hence not taken up for adjudication. 7. The Ground Nos. 2.1 to 2.5 raised by the assessee and Ground Nos. 1 and 2 raised by the revenue are challenging the transfer pricing adjustment ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 5 made towards administrative support services (intra group services ) availed by the assessee from its Associated Enterprises (AEs). 8. We have heard the rival submissions and perused the materials available on record. The assessee was set up in 1994 with a majority shareholding of DuPont India limited, USA. Its ultimate holding company is EI DuPont de Nemours and Company Inc, USA (herein after referred to as DuPont US). Engaged in manufacturing and sale of agricultural chemicals, engineering polymers, Teflon non-stick finishes , Autorefinish , monofilament and Trading in DuPont and other products and acting as agent for which it earns commission. The various international transactions undertaken by the assessee with its AE during the year under consideration are as under:- Nature of transaction Method used by Assessee Value of transaction (InlNR) CPP Manufacturing • Import of raw material • Export of Finished Goods • Payment of Royalty TNMM 732,919,870 183,509,889 7,870,406 EP Manufacturing • Import of Raw Materials ♦ Export of Finished Goods TNMM 603,057,428 46,841,066 OC Manufacturing • Import of Raw Materials TNMM 207,959,932 Distribution of Finished Goods • Import of Finished Goods • Export of Finished Goods • Commission Income • Commission Expense TNMM 3,266,946,037 31,025,020 269,583,169 1,957,104 Support Services Availed from AEs TNMM 457,891,784 Transfer of Business Unit CUP 40,612,560 Research and Engineering Services Rendered TNMM 111,493,809 9. The international transaction which is in dispute before us is support services availed from AEs by the assessee for which it has paid Rs 45,78,91,784/-. The assessee had benchmarked this international transaction of availing support services from AEs by using Transactional Net Margin ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 6 Method (TNMM) as the Most Appropriate Method (MAM). The Profit Level Indicator adopted by the assessee was Operating Profit divided by Operating cost (OP / OC). The assessee had incurred administrative support services with mark up of 5% and the comparables chosen by the assessee in the Transfer Pricing Study Report (TPSR) (enclosed in Page 166 of Paper Book) had margins of 4.44% and accordingly the assessee claimed that the Intra Group Services (IGS) paid by the assessee to its AE to be at Arm‘s Length Price (ALP). 10. The breakup of the amounts paid by the assessee towards support services are as under:- Nature of Charge Treasury Charges Services from Asia Pac DuPont companies SAP Charges Safety Consultancy& others Total Amount (INR) 26,55,269 35,13,43,135 6,32,62,401 4,06,30,979 45,78,91,784 11. From the above, the Learned TPO after going through the details submitted by the assessee decided to direct his attention to the payment for services to DuPont companies amounting to Rs 35,13,43,135/-.The various services received by the assessee from its AE are as under:- a) Product Technical Services - These services include providing advisory services to the employees or the customers on product properties or process modifications for the entire gamut of product range that is being manufactured and sold by the company. With regard to product technical services, the Learned TPO observed that assessee has not been able to provide any evidence of the kind of technical services that it had obtained from its AE. The evidences submitted by the assessee are mere emails exchanged between the ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 7 production managers in India and some technical personnel of the AE. Further, the emails produced before the Learned TPO were pertaining to assessment year 2010-11 whereas the year under consideration is assessment year 2009-09. Accordingly, the Learned TPO concluded that the assesssee had not discharged its basic onus that lies upon it. The Learned TPO in page 4 of his order observed that assessee had woken up to the need to maintain proper documentation in this regard only when the issue was raised in the course of the audit. This shows that the assessee is simply dictated by its AE and it does not carry out any sort of cost benefit analysis. This behavior of the assessee does not meet the arms length standard. That apart, these documents / emails give an impression that the Indian entity is independently carrying out its activities independently and the help that they are being rendered is of a very simple and nominal kind. The production activity would no way be hindered if these inputs were not received. The assessee had been asked to provide the details of the cost that the AE‘s bear on this account. The assessee has submitted the cost allocation that the AE sends it as evidence. Despite that, the Learned TPO observed that assessee has not been able to provide any proof whatsoever of the cost that the AE has incurred. The Learned TPO also observed that assessee has not been able to demonstrate that it actually needed the services that they were so vital that its production would have been hampered if they were not received. Hence, there is no need for the assessee to pay any amount towards product technical services to its AE. ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 8 b) Marketing Services – These services include providing assistance towards development of marketing program, sales plans, sales forecasts, price and quantity targets, marketing strategies etc. Again, DuPont India can and does avail of these services for its entire business portfolio that it manages as an independent manufacturer and seller. The Learned TPO observed that the assessee had submitted evidences in Annexures 1 to 7. On examination of those evidences, they are only routine email conversations between assessee and AEs marketing team and the emails show that inputs are flowing both ways and it is not as if the assessee alone is the beneficiary of those emails. The Learned TPO thereafter examined the detailed notes mentioned with regard to the marketing effort in respect of each segment such as Sales, Distribution & Marketing, EP Segment , Organic Chemicals Segment and Packaging Products Segment. On perusal of the same, the Learned TPO concluded that assessee is well equipped to meet its marketing needs and there is no need for the assessee to incur the payments towards marketing support services to its AEs. c) Finance Services – These services include providing assistance towards the company‘s accounting and financial operations. The AEs provide services that assist the Company in achieving operational efficiency that leads to overall cost optimization. The Learned TPO observed that the assessee had submitted evidences in Annexure 3. These include some emails , that propose schedules of audit, some audit reports concerning performance etc. The Learned TPO concluded that these services may at best be construed only as shareholder activities not requiring any payments to the AEs. ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 9 d) Business Services – These services include providing assistance towards facilities, human resources, safety standards, logistics, procurement and other advise on initiatives like expansion of through new ventures or product lines, advise on cost containment and advise on efficient use of resources etc. The Learned TPO observed that the assessee had submitted evidences in Annexures 1 to 7. The evidence consist of one power point presentation on SHE module and some travel advisories for different parts of the world. He concluded that these are routine services rendered by the AEs for which no payments are required to be made by the assessee to its AEs. d) Legal Services – These services include- a) Providing strategic advice to business / project managers and other internal clients that is creative and solution driven. b) Working on strategic real estate, global outsourcing, joint ventures , mergers and acquisition, divestures & varied international projects concerning DuPont India. c) Assisting the legal team in India to work with the business leaders & other internal clients to structure, prepare, negotiate and finalize agreements and letters of intent for regional and country sales, projects, marketing, consulting, procurement, sourcing, transition activities and product support activities. d) Assist in designing and supervising the compliance framework of DuPont India and reviewing legal compliance of DuPont India under various corporate, environmental, health & safety , industrial, factories & employment laws. e) Playing an active role in the development and training of Indian legal team. The Learned TPO observed that assessee had not produced any specific evidence to support the receipt of this service. He observed that assessee who is already spending sufficient amount under the head of legal and other consultancy charges can manage its affairs by itself and there is no need ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 10 for availing the services from the AE and make payments there on to the AE . He observed that assessee has not been able to give a single instance of strategic advice that the AE has provided to the project managers or any assistance provided to the legal team to work with business leaders. 12. The Learned TPO also observed that assessee was unable to prove that any service was received for which payment was made. All the payments made by the assessee to its AE towards administrative support services are only the nature of shareholder activity services and hence no payment per se is required to be made. The assessee had further justified the arm's length nature of these payments by stating that the transaction has been aggregated with other transactions and found to be at arm's length by use of TNMM. This was buttressed by the Learned TPO by stating that TNMM analysis in respect of two segments have been found to be faulty. That apart, the impugned transaction of administrative support services need to be benchmarked separately. Hence the Learned TPO by applying Comparable Uncontrolled Price (CUP) method as the MAM, determined the entire payment of administrative support services arm's length price to be Rs Nil. 13. The Learned TPO also observed that assessee was asked whether any such services availed from AEs have also been performed by assessee or availed from independent parties . He observed that in response there to, the assessee was unable to give any third-party comparable. As far as the cost incurred by the AE, there is no independent verification of the same . Hence, the Learned TPO observed that the assessee has obviously not employed due diligence in entering into the said agreement and making such a huge payment . In effect, the Learned TPO determined the ALP of Administrative ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 11 support services paid by the assessee at Rs Nil by applying CUP method based on the following conclusions drawn by him :- ―1. The taxpayer‘s agreement with the associated enterprises related to intra group services is to be examined to see as to what kind of services were to be provided by the AE to the taxpayer. As normally such agreements refer to a large number of services which could be rendered by the AE . The taxpayer has to specify the service which is actually received by it for which the payment is made . 2. Whether the taxpayer really needed such services or not . If so, what direct or tangible benefit it has derived? 3. Contemporaneous information on the basis of which rate or payment for the service is determined . This includes the cost-benefit analysis done by the taxpayer at the time of entering into agreement . Whether any benchmarking analysis was done by the taxpayer so as to compare the amount which he would have paid to an independent person under similar circumstances . 4. Whether an independent person would have paid such amount in comparable circumstances 5. Whether the expected benefit commensurates with the payment 6. Whether the taxpayer has separately incurred any expenditure on similar services and if so the necessity of making further payment to the AE for the same activity or it is a duplicate payment 7. Whether the payment is in the nature of shareholders activity or largely for the benefit of the AE 8. Whether the AE is rendering such services to other AEs or independent parties and if so the rate / amount charged from such persons 9. The cost incurred by the AE for providing such services and the basis of allocation key 10. If the AE has charged any markup on such payments the arm's length margin is also examined. 14. The learned TPO applied the aforesaid parameters to the present case and concluded that the assessee could not show that the above mentioned criteria were fulfilled. The assessee was not able to show as to when and how the various services were requisitioned from the AEs, whether the services were actually needed by it, whether the same were actually received by it by ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 12 producing contemporaneous documentary evidence at the time of entering into agreement or at the time of availing the service( if actually availed), what benchmarking analysis was done, what cost benefit analysis was done, particularly when a huge payment has been made by it to the AEs. The learned TPO concluded that in arm's length situation, before availing any service, an independent person would consider the nature of services required by it and would make the payment which commensurates with the nature of service and expected benefit derived therefrom. Accordingly he concluded that irrespective of the need for those services from the AE, the payments were made even without ensuring whether the services per se have been rendered by the AE to the assessee and cost has been shared on the basis of cost allocation keys. Accordingly in concluding paragraph at para 7, the learned TPO held that he had applied CUP method to determine the ALP of international transaction of administrative support services and determined the ALP at Rs Nil as against Rs 35,13,43,135/- determined by the assessee. 15. The break up of services totaling to Rs 35,13,43,134/- are as under:- S.No . Service Description Regional Billing Direct* Total 1. Product Technical and Marketing Services, Business Support Services 205,050,732 - 205,050,732 2. Accounting and Financial Services 45,08,4,578 45,084,578 3. Sourcing/ Logistics/ HR services 22,764,818 - 22,764,818 4. Internal Audit 2,666,051 2,666,051 5. IT Services 42,134,296 63,262,401 48,496,697 6. Legal services 3,255,241 - 3,255,241 7, Safety Business Services 26,380,057 40,630,979 67,011,036 8. Treasury Services 1,972,190 2,655,269 4,627,459 9. Engineering Services 2,035,171 2,035,171 351,343,134 457,891,784 ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 13 16. During the course of first appellate proceedings, the assessee filed additional evidences in terms of Rule 46A of the Income Tax Rules with regard to availing of administrative support services from the AE, vide letter dated 21-03-2013. Those additional evidences were duly admitted by the Learned CITA and were sent to Learned TPO for his comments, vide letter dated 31-03-2013. The assessee tabulated the additional evidences in Annexure 1; the summary of evidences submitted before the Learned AO during the course of assessment proceedings were tabulated as Annexure 2 ; segmental accounts of the assessee were enclosed in Annexure 3 and basis of cost allocation for administrative support service segment was enclosed as Annexure 4. The remand report was received from DCIT Circle 1(2)(1), New Delhi, vide letter dated 10-04-2017 which was forwarded to the assessee for his comments, wherein the Learned TPO observed that most of the documents / agreements / emails / powerpoint presentations filed by the assessee are irrelevant and the assessee had submitted evidences like emails sent for review of work done, monthly reports, accounting entry, emails pertaining to review and permission of data etc. New evidences submitted by the assessee to reflect the receipt of services from AEs and cost of such expenses have been allocated to the assessee. But no revenue has been allocated to the assessee which accrued as a result of these expenses. The Learned TPO also observed in the remand report that the evidence furnished by the assessee is vague and inadequate as it does not in any way establish the purpose of intra-group services claimed to have been availed by it from its AE. Most of the services for which payment has been made are at best duplication of assessee‘s efforts. Moreover, those services were never specifically requisitioned by the assessee. No demonstration or cost benefit analysis has been carried out to substantiate that the service has led to benefit / cost cutting etc. for the assessee. The emails filed do not show any ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 14 commercial or economic benefits derived by the assessee. The assessee furnished its rejoinder to the remand report vide letter dated 22-06- 2017 which is reproduced in pages 10 to 13 of the order of Learned CITA. Further, the assessee vide letter dated 6-09-2017 submitted the basis of cost allocation of administrative support services amounting to Rs 35,13,43,135/- to DuPont India from its AEs as a part of its business operations and in order to avail the internal skills and experience available . DuPont group has a system where in identified employees in each regional business / functional unit i.e. each company would also provide services to the other regional business / functional units (referred to as regional resource). Such regional resource has been assigned a cost center to capture their cost which include employees cost, travel cost, postage and other miscellaneous expenses. The total cost of cost centers is allocated to different entities on the basis of sales turnover for business related regional resource and percentage of time / effort for functions related regional resource. Such cost is increased by 5 percent markup while billing. It was submitted that details of regional resource, their role, cost incurred by these employees and their allocation to all the DuPont Asia Pacific entities are maintained in the internal database. 17. Basis of cost allocation of administrative support service by DuPont India among its segments - the total charge of Rs 35,13,43,135/- is allocated by the assessee company in the ratio of sales / service turnover among the segments as the given service transaction is closely interlinked with the relevant business service of the assessee company. Since the business segment wherein such cost allocated have been held to be at arm's length by the Learned TPO , the service fees should be charged at arm's length price. ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 15 18. The Learned CITA observed that the Learned TPO in his report had held that new evidences submitted by the assessee appeared to reflect the receipt of services by the assessee from its AEs. The Learned TPO had also pointed out that though the cost of services has been allocated, but revenue which had accrued as a result of such expenses had not been allocated to the assessee. The Learned TPO had only stated that the assessee has not been able to establish the purpose of the service, requisitioning of these services, benefit derived out of these services, etc. Further, the Learned TPO had held that these services were at best duplication of assessee‘s own efforts. The main contention of the assessee is that the Learned TPO had incorrectly calculated the value of services as 76% instead of actual number of 49%. Factual mistakes committed by the Learned AO in the computation part were duly pointed out by the assessee before the Learned CITA coupled with so many incorrect statements assumed by the Learned TPO. The Learned TPO had not disputed the direct administrative support services availed by the assessee from its AEs which pertain to IT services, safety business services and treasury business services received from DuPont Singapore. However, the Learned TPO had not accepted the services received from regional resource centers for which payment was made through regional billing. The assessee submitted before the Learned CITA that the total cost of services availed from AEs was Rs 45,78,91,784/- which included services amounting to Rs 35,13,43,135/- payment for which was made through regional billing. It was submitted that the services availed helped the assessee to leverage the expertise which was available with its‘ group and which may not have been available within the company or locally. The assessee pointed out that allegation of the Learned TPO that the services were duplicative in nature was purely based on surmises and conjectures. Further, it was brought to the notice of the Learned CITA that the rate of ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 16 taxation in most of the jurisdictions where the AEs resided were either equal to or higher than the rate of taxation in India. Hence, there was no question of shifting profits from India. The assessee had duly deducted withholding taxes on the said payments made to AEs. Further, the benefits derived by the assessee out of availing these services from AEs had been reflected in the form of increase in sales of the assessee. Further, the Advance Pricing Agreements (APAs) of the assessee‘s AEs showed with the tax authorities in Australia and New Zealand that the said authorities had held that the services were rendered at ALP. It was also submitted that the treatment given to the similar services in earlier years and subsequent years in tabular column are as under:- Service from Asia Pac Dupont Cos. A.Y. 02.03.0 7 A.Y. 07-08 A.Y. 08-09 A.Y. 09-10 AY 10-11 A.Y. 11-12 TPO TPO CIT(A) TPO TPO TPO TPO -Business Support & Marketing Services Allowed Disallow ances d other than amount allocate d under CPP & OC Segmen t Disallowed Disallowed Disallowed Disallowed Allowed Sourcing/ Logistics/ HR Allowed Disallowed Disallowed Disallowed Disallowed Allowed - legal services Allowed Disallowed Disallowed Allowed Allowed Allowed Accounting and Financial services Allowed Disallowed Disallowed Disallowed Disallowed Allowed - internal Audit Allowed Allowed Disallowed Allowed Allowed Allowed - IT Services Allowed Allowed Disallowed Allowed Allowed Allowed Safety Business services Allowed Allowed Disallowed Allowed Allowed ' Allowed Treasury Services Allowed Allowed Disallowed Allowed Allowed Allowed Product Technical services Allowed Allowed Disallowed Disallowed Disallowed Allowed 19. It was also submitted that the against the order of Learned CITA, the matter travelled to Tribunal and the Tribunal in ITA number 4774 & 5043 /Del/ 2014 dated 20-5-2016 for Assessment Year 2007-08 had remanded the issue back to the file of Learned AO. ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 17 20. The Learned CITA categorically observed that the Learned TPO had not doubted per se the rendition of services by the AEs to the assessee. The Tribunal in assessee‘s own case for assessment year 2007-08 had accepted the reasoned decision of Learned CITA in accepting that no adjustment was required for treasury services, safety business services, internal audit services, product technical services and information system services. By following the order of the Tribunal, the Learned CITA directed the Learned TPO to delete the addition made on account of such services. He also observed that in the instant year, the assessee had not provided a figure separately for product technical services, but has included it in the heading ―product technical and marketing service, business support services‖. 21. With regard to sourcing / logistics / HR services and engineering services, the Learned CITA agreed with the assessee‘s contention that such services are required by it in the running of business and the same cannot be construed as duplicative in nature. Accordingly, the adjustment made in respect of such services were directed to be deleted. 22. With regards to accounting, finance services and legal services, the Learned TPO had stated that a substantial amount has already been claimed by it as expenditure incurred in India in the profit and loss account. Hence, those services are to be construed as duplicative in nature and accordingly upheld the action of the Learned TPO. 23. As regards marketing services and business support services, the Learned CITA observed that assessee has an infrastructure in India. The Learned TPO in his remand report had pointed out that there is a high possibility that the services may be duplicative in nature. However, the Learned TPO had not pointed out any specific instances vis-a-vis the additional evidences submitted by the assessee. Further, the said payments ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 18 were duly subjected to withholding tax by the assessee on the services rendered. Further, the Learned CITA took cognizance of the fact that the Learned TPO had accepted the contention of the assessee that six different segments among whom the cost of administrative support services availed by the assessee stood distributed are at ALP. It is also seen that product technical services form part of the marketing and business support services and the Tribunal in its order for assessment year 2007-08 had accepted that no adjustment was required on account of such services availed by the assessee. Accordingly, the Learned CITA granted deduction of 30 percent of the expenditure incurred under the head ‗marketing service and business support services and product technical services‘ and confirmed the balance sum. Aggrieved by this order, both the assessee as well as the revenue are in appeal before us. 24. We find from Page 8 of the order of the Learned CITA, wherein the list of services with figures have been listed out by the Learned CITA, that items in Serial Numbers 1,2 & 6 are subject matter of assessee‘s appeal herein and Serial Numbers 3,4,5,7,8 & 9 are subject matter of revenue‘s appeal before us. 25. We find that the Learned AR before us had furnished a detailed chart duly explaining the type of services received from its AEs under each category , manner in which the services were rendered by the AEs to the assessee, benefits derived by the assessee out of availing those services from the AEs, cost benefit analysis for the said services and documents enclosed on sample basis in support of these contentions in Pages 1499 to 1507; Pages 456 to 725; Pages 727 to 730 of the Paper Book which are reproduced hereunder:- Page | 19 Refer Paper book 1499 - 1507 S.No. Descrip tion of Service Type of Services Received How are these Services received Benefits Derived Cost Benefit Analysis Documents Submitted on Sample Basis 1 Product Technical Services Technical assistance provided to two Customers namely -Duflon and Fluoroflon with respect to products supplied by DuPont India, to resolve the product performance issue on PTFE 62N tubing and to resolve the problems faced in CFP 6000 resin processing, Teflon seal application and resolving query relating to ASTM D3294. Richard Cheung made a personal visit to India to address the technical issues in relation to products supplied by DuPont. The receipt of Services depend on facts and circumstances of the case. The personnel may at times travel to India for supporting big customer. Also regular conerence calls and communications via e- mail take place to provide necessary business guidance both on technical and non technical aspects including production process. Enabling solution to the problems faced by the propsective and/or existing customers of DuPont India customers and generating revenue for DuPont India. Richard Cheung is a Bachelor in the Field of Chemistry and had joined DuPont in 1988. He is the Techncial and Marketing Development Manager for the AP Region for Engineering Polymer Business. During the FY 2007-08, only a cost of USD 33,274/- was charged to India which constitutes approx 15.97% of his total cost. 1. Travel claim receipts are enclosed at Annexure 1. 2. Copy of Invoices raised on Duflon and Fluroflon on sample basis is enclosed at Annexure 1. 3. Report on the problems relating to PTFE tubing process is enclosed at Annexure 1. 4. Travel claim receipt is enclosed at Annexure 1. 5. Email exchange on the problems relating to CFP 6000 resin processing and Teflon seal application is enclosed at Annexure 1. 6. Email exchange on handling query relating to ASTM D3294 is enclosed at Annexure 1. ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 20 2 Technical and HR Services Technical assistance provided to two Customers namely -Duflon and Fluoroflon with respect to products supplied by DuPont India. -Human resource related services like taking final interviews, designing roles and responsibilties, undertaking appraisal etc. -Regular conference calls -By personal visit to Mumbai and Madurai and advise tollers and DuPont Plants for operational efficiencies. -Regular Exchange of e-mails. Guidance provided with respect to Employee selection and appraisals. Enabling Solution to processing issues around processing of NXT 85 (FREE FLOW MODIFIED GRADE),Tefzel* 280 and 2183 and compounding PTFE 7B with 0.16% Mos2 filler. Enabling solution to the problems faced by the propsective and/or existing customers as well as employees of DuPont India. He was also responsible for providing neceessary guidance with respect to setting up a debulking station at DuPont India's processing site in Madurai. Ta-Wei Fu is a qualified person and was Regional Technology Manager, having thorough knowldege of the proiducts manuratured and the related process. Having such a resource on the rolls of DuPont India shall be a highly costly affair. During the FY 2007-08 approx. an amount of USD 20,508/- was charged to DuPont India which is approx. 6.43 % of his total cost. Sample emails exchange with DuPont employee describing his visit to India and undertaking performance appraisal of one of the employee is enclosed at Annexure 2. ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 21 3 Business Support services, Finance and IT Services -Creating Awareness on New Product offerings. -Guidance on cost allocation of Customer Service Manager, development and promotion of new products etc. -Recruitment Guidance -Sharing Brochures / PPT's on new product offerings. -Regular conference calls and personal visits on need basis. -Regular Exchange of e-mails. Received education on new products offerings in the Engineering Polymer Business to create additional Business for DuPont India. It may be noted that the sales of one of the Products Zytel has moved to 77.97 Crores in FY 2009-10 from 66.51 Crore in FY 2008- 09. Have a proper check on the efforts put in by various support people performing staff functions for the group for the correct allocations and correct recording within the group. Philippe Hanck is a qualified Engineer and had joined DuPont in 1987. Over the years he has gained rich experience though handling multiple roles in DuPont. He is the Regional Sales Director for the Asia Pacific Region of Engineering Polymer Business. During the FY 2007- 08, an amount of only USD 26,238/- was charged to India which is only approximately 6% of its total efforts put in for the AP Region. Having such a resource on the rolls of DuPont would have only enchanced the total cost of the Indian Business. 1. E-mail sent to Indian Employee providing a guidance on new offerings of EP business - Zytel is enclosed at Annexure 3. 2. E mail sent by an Indian Employee seeking Guidance of Cost allocation to Engineering Polymer (EP) Business is enclosed at Annexure 3. 3. E-mail exchange demonstrating guidance on Recruitment(s) done for EP business in India so as to ensure that new possibilites of business in India for Extrusion and Blow molding segments are taken care of is enclosed at Annexure 3. 4. E-mail exchange between Philip and Balvinder Kalsi (DuPont India Managing Director) having discussion on development of EP business in Sri Lanka the revenue from which shall from part of Indian Revenue is enclosed at Annexure 3. 5. Travel Details is enclosed at Annexure 3. ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 22 4 Product Marketing Services Guidance on Corporate Brand Campaign. Developing Advertisement Banners. Corporate Brand Strategies adopted in other regions are shared with Indian Team for necessary guidance thorugh e- mails and conference calls. The strategies and PPT's providing necessary training and guidance are also shared. Indian Team gets the basic guidance from the Region and further work on it to customise the brand development activites to reach out to the Indian Market. The fundamentals of Brand Campaigning for the DuPont Group as a whole remains the same owing to Global Appeal. Mini Lam is the Brand & Corporate Marketing Communication Leader. During the FY 2007-08, an amount of USD 138,166/- was charged to India which constitutes approx. 25% of her total cost. 1. Job description of Mini Lam is enclosed at Annexure 4. 2. Email exchange with DuPont India employee having a discussion on Banners to be developed / customised for Indian Businesses. PPT's and other relvant material are being shared is enclosed at Annexure 4. 3. An e-mail providng guidance to handle Media on proposed change in the CEO of the DuPont Group is enclosed at Annexure 4. 4. Email exchange with DuPont India employee providing guidance with respect to the design of the Advertisement and also sharing survey questionaire relating to Corporate Brand Campaign is enclosed at Annexure 4. ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 23 5 Accounting and Finance Services Perform cost accounting for assigned strategic business units (sbu), Managing and overseeing audit requirements, reporting metrics communications, inventory reporting, respond to all technical queries relating to MACS and others, etc. The Central Inventory Team is based out of Australia and there are dedicated resources which provide the said services not only to India but to other countries in AP Region. The resepctive countries don not have any teams or personnel to do such activities. By way of ongoing support and advice, undertaking necessary communications (e-mail / Conference calls) etc. Helping India to have a proper check on their operations and attain efficiencies, resolving of queries as and when arises because of technical issue involved resulting in continuous course of actions without delay. This being an outsourced function has helped India to save on overall costs of putting certain employees to Inventory Management job and related administrative costs. 1. Email exchanges of the employees within the group evidencing Inventory Audits being conducted, handling technical queries etc. is enclosed at Annexure 5. 2. Formats of Monthly R3 accounts for reconciliation and others to meet the DuPont Internal Control standards and Sarbanes Oxley lesgislation is enclosed at Annexure 5. ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 24 6 Safety Business Services Consultation and Support on development and training of Emergency Response Competency and Distribution Safety. Conducting Regular Training Sessions. Sharing of e-mails, PPT's. Regular Conference Calls. Visits on need basis. Evaluation of Plans on regular basis through safety audits. Evaluation of Preparedness of India to Emergency Situations and the path forward. Training conducted at Savli to Start up new DuPont Performance Coating facility in the most secure and safe manner. Manage the Indian ER program including development of Indian ER plan, development and training of response team, development of budgeting plans in the most viable manner Gregory Richard Malcolm is a Senior Person and Safety Health Environment (SHE) Leader for the AP Region. He and his team is actively engaged in providing regular trainings to all countries in Asia Pacific Region and also evaluating the preparedness of each country at regular intervals to the emergency situations. It may be noted that Safety Health and Environment is one of the core values of the DuPont Group and the i t l t 1. Email exchange of the employees within the group describing the training to be given at the Savli plant of DuPont India and between Greg and Indian Employee reporting the incident that occured in India is enclosed at Annexure 6. 2. Copy of invoice of the assets procured for the Savli plant with ongoing support of Malcolm is enclosed at Annexure 6. 3. Asia Pacific off site emergency response incident responses 2008 is enclosed at Annexure 6 and a PPT shared by Greg on Evaluation of Emergency Response(s) in the AP Region is enclosed at Annexure 6. 4. Email exchange showing dispatch of Tychem Responder protective suits by Greg Richard, to be used by Indian Offsite ER team and of the employees within the group thanking Nick for detailed training provided to DPC/GCS team is enclosed at Annexure 6. 5. Asia Pacific off site emergency response 2008 shared by Greg is enclosed at Annexure 6. 6. Email exchange of the employees within the group for conducting distribution code audit for Savli site and Madurai site and between Greg and Nick sharing his views on India 3 years plan and of the employees within the group for Training program for India is enclosed at Annexure 6. 7. Power point presentation shared by Greg on India Off site ER t i i d f I di 3 ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 25 7 Product Technical Services Support on Product and colour issues and development of new products to meet customer demands in Car Industry By way of regular teleconference, email based activity and personal visits. Enabling solution to the problems faced by the propsective and/or existing customers and bringing into new products to meet the demands of prospective customers. The car industry in India is highly dynamic and customers may have there own chice of colours. The experience of Steve enbales the DuPont India to meets its customers demands and resolve issues if any helpign India business not only retain customers but create new ones. Steve J Burns has graduated from Science and had joined DuPont in 1980. He is a Six Sigma Champion and the Product Manager for Performance Coating Business for entire AP Region. Availing services of such a senior and seasoned person for a paltry sum of USD 37,925/-, which is approx. 9.22 % of his total cost, shall be cost effective at any time. 1. Email exchange of the employees within the Group is enclosed at Annexure 7. 2. Presentation on India Color Issues is enclosed at Annexure 7. 3. Summary of a conference call is enclosed at Annexure 7. ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 26 8 Support services Management of all the aspects relating to crop protection business By way of advice, taking monthly regional operation conferenc calls and discussing the various facets of their business line and resolving their issues with giving - Ensure that all functional groups develop tactics and measurable objectives that support the implementation of the buy, make, deliver, strategies. - Accountable for the supply plan from the global & regional supply chain planners in the region that provide production estimates to contract manufacturers against which orders are filled. - Reviews performance versus mutually acceptable standards in the arenas of safety, occupational health, environmental control and waste disposal, product quality, production rates, costs and shipping practices. Provide assistance in upgrading in these arenas as needed. - Accountable for operations planning process for in and outputs such as production rates estimates, unit consumption rates estimates, etc. to ensure an effective and accurate planning process. Mei Zhu Fang is a qualified Engineer and had joined DuPont in 1996. He is the Business Director for the AP Region. Availing services of such a senior and seasoned person for 1. Job Description of Mei Zhu Fang and Arshad Shafiq is enclosed at Annexure 8. 2. Email exchange of the employees within the Group is enclosed at Annexure 8. 3. Power point presentation on Zero Leak Kickoff Planning prepared by Mei Zhu Fang and delievered during one of the dashboard review meets is enclosed at Annexure 8. ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 27 9 Safety Business Services Safety Consultancy Services supporting DuPont Safety Business in India By way of advice to DuPont India for its clents like Tata Chemicals Ltd. - Mithapur, Tata Steel Limited, HUL, Aditya Birla Group, by way of drafting DSR India marketing effort, by way of giving speech to prospective clients on DuPont safety resources, Meeting Clients and Doing Case Study help DuPont Safety Business generate revenue. Soo Leng Chee and his team have helped India Safety Business generate additional business during the FY 2008-09. DuPont India was charged only USD 7,173/- for the services of such an experienced person, which constitutes only 2% of his total cost. 1. Correspondences from Tata Chemicals Ltd. & Tata Steel limited. is enclosed at Annexure 9. 2. Power point presentation of Cement business safety Improvement communications plan outline for Aditya Birla Group is enclosed at Annexure 9. 3. Power point presentation of DSR India Marketing Effort 2009 & 2010 is enclosed at Annexure 9. 4. Talking points of Mr. Simon Herriott representing DuPont on safety before ONGC, a Global Fortune 500 leader in Oil & Gas E&P is enclosed at Annexure 9. 5. Copy of Invoices raised on Tata Chemicals and Tata Steel during the FY 2008-09 is enclosed at Annexure 9. 6. Case Study done on DuPont Knowledge Centre at Hyderabad and HUL is enclosed at Annexure 9. 7. Meeting details of DSS India extended team meeting where Soo Leng Chee delivered speech on New DSS naming guidelines and marketing update is enclosed at Annexure 9. ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 28 10 Business Support and Marketing (training) services Assistance on Indian crop protection business, usage of Asia Pacific CPP database, on smooth Trade India projects covering grapes and gherkins, on undertaking testing (Eurofin residue testing) for Indian grapes to meet the export norms and on enhancing marketing skills. By way of auditing SMP plan for core crops - rice and fruits & vegetables developed by Indian team, developing correspondences and presenting the same before various authorities, have audio discussions for Indian projects, sharing database and undertaking DuPont Marketing Excellence (DMX) trainings for DuPont Employees. Entering into new markets and attaining the efficiency in the operations of the crop protection business with the help of shared global expertise (say through DuPont Smooth Trade Solutions), leverage on the expertise that is available within the DuPont Group etc. Siew Ling Cheh is the Product Manager for Crop Protection Business for AP Region. He had joined DuPont in 1991 and have handle multiple portfolios in DuPont over a span of two decades. DuPont India was charged only USD 28,844/- for the services of such an experienced person, which constitutes approx 15% of his total cost. Kindly note that the sales of Curzate has increased from INR 14.46 Cr. in FY 2009- 10 to INR 22.36 Cr. in FY 2010-11, an increase by 54.63%. 1. Email sent by Indian Employee appreciating the training given by Siew Ling Chen is enclosed at Annexure 10. 2. Power point presentation for SMP training is enclosed at Annexure 10. 3. Power point presentation on DuPont Smooth Trade Solutions prepared by Siew Ling Cheh for Indian projects is enclosed at Annexure 10. 4. Summary of various audio discussions held is enclosed at Annexure 10. 5. Correspondence on DuPont Grape Project as part of DuPont Smooth Trade initiative shared by Siew ling cheh is enclosed at Annexure 10. 6. Correspondence on DuPont Curzate M8 as part of DuPont Smooth Trade initiative shared by Siew ling cheh is enclosed at Annexure 10. 7. Research on India Smooth trade Opportunities 2009 and export data is enclosed at Annexure 10. 8. Email exchange of Siew Ling Cheh with Dr. Werner Nadar is enclosed at Annexure 10. 9. Details of the tests undertaken by Eurofins on samples given by DuPont india is enclosed at Annexure 10. ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 29 11 Accounting & Financial, IT and Business Support Services Demand forecasting & training, distribution planning, time scheduling through planned design, supply & inventory planning tools; developing India BP model related to JDA. Assistance on errors generated through India specific JDA system. By way of advice through conference calls and designing various templates specially for DuPont India -Enabling meeting the expectations of the customer by giving on time delivery of the products through matching the demand- supply equations -Enabling accurate demand forecasting and meeting the demand supply equations. Se Young Oh is a qualfied person and enable the Indian team to implement demand/DRP Planning and Master Production Scheduling process. Having such a resource on the rolls of DuPont India shall be a highly costly affair. Kindly note that only approx 9% of his cost (i.e. USD 7,129/-) has been charged to DuPont India in the FY 2007- 08. 1. Email exchange of the employees within the Group sharing Training information and tools to improve Demand Planning is enclosed at Annexure 11. 2. Email exchange within the employees of the DuPont Group is enclosed at Annexure 11. 3. Errors file supplied by the Indian couterpart for the solution is enclosed at Annexure 11. 4. Power point presentation developed by Se Young on Savli MPS Workshop is enclosed at Annexure 11. 12 Safety Business Services Consultation and Support on development of safety culture in DuPont India's clients. By way of undertaking safety audits through personal visits. Additionally calls and exchange of e-mails also happen between the employees to share experience and guidance. Enabling solution to the problems faced by the propsective and/or existing customers of DuPont India customers and generating revenue for DuPont India. Charles Weber is a qualified person having rich experience in the field of safety audits. Availing services of such a senior and seasoned person for a paltry sum of USD 8,340/-, which is approx. 10% of his total cost, shall be cost effective at any time. 1. Power point presentation made to Vedanta to obtain contract for providing safety services is enclosed at Annexure 12. 2. Power point presentation on closing meeting with CGPL and Tata Power shared by Charles Weber is enclosed at Annexure 12. 3. Working sheets for safety audit of CGPL and Tata Power is enclosed at Annexure 12. ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 30 13 Business Support Services (Training) Support on Wave 82 and 99 Black belt training By way of arranging flights, visas and providing master trainings. Participants are able to complete their projects significantly faster than those who don't attend these training sessions. Some of the Indian employees (participants) for Wave 99 black belt training are Amit Panwar, Alok Bhatia and DN Reddy Manchuri, Vikas Yadav and P.K.Eshwar Providing such trainings on its own by DuPont India or engaging an independent party shall be a highly costly affair. 1. Email exchange within the employees of the DuPont group sharing the schedule for Wave 93 BB week 4 Core, Wave 99 BB week 3 Core, Wave 99 BB Week 1 Preparation and Wave 82 BB Week 4 core training programs is enclosed at Annexure 13. 2. Copy of the Evaluation sheet for the project undertaken by Indian participants on sample basis is enclosed at Annexure 13. 3. DMADV and DMAIC Project Presentation Template, briefing on the work undertaken during the projectis enclosed at Annexure 13. ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 31 14 HR Services Support on Global Expatriate transfer. -Regular conference calls and exchange of e-mails. -Developing various policies for the safe and easy transition of expatriates from home country to host country. -Frances G. Pensabene also made a personal visit to India to address the global mobility issues. Enabling provision of expatriates in the most economical manner and also in compliance of law. Each country has its laws to deal with the expatriates in relation to their social security, tax chargeability and migration. It always essential to have an expertise to deal with such issues so that the Company can enjoy the real services of the expatriates. Frances G. Pensabene is a APAC global mobility manager and have a rich professional and working experience in the field of global mobility. Availing services of such a qualifed person for a paltry sum of USD 5,829/-, which is approx. 8% of his total cost, shall be cost effective at any time. 1. Email exchange with the employees of DuPont India is enclosed at Annexure 14. 2. Expense report of his visit to India is enclosed at Annexure 14. 3. Power point presentations on various policies drafted by him is also enclosed at Annexure 14. 15 Accounting and Financial Services Support on supply network planning (Kanban system for Inventory planning) -Monthly conference calls and exchange of e-mails. -Providing trainings Enable DuPont India to have the timely availability of the inventory and consequent meeting the requirements of the customers. Jeffrey X Huang is a qualified person having rich experience in the planning function. Availing services of such a senior and seasoned person shall be cost effective at any time. Kindly note that the sales of Zytel has increased from INR 66.16 Cr. in FY 2008-09 to INR 96.72 Cr. in FY 2010- 11, a CAGR of 20.91%. 1. Email exchange of the employees within the Group and other supportings is enclosed at Annexure 15. 2. Copy of business reports of supply network planning for DPP Savli is enclosed at Annexure 15. 3. Copy of invitation for weekly review for fluff is enclosed at Annexure 15. 4. Training record of participants for Zytel is enclosed at Annexure 15. ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 32 16 Marketing and IT Services -Support on continuous improvement in DIBM -Helping the Indian team in bringing the Rynaxypyr Brazil to India and in promotion of Rynaxypyr in sugarcane in India. -Helping in undertaking new project initiatives. By way of email exchange, taking monthly conference calls and personal visits. The various activities conducted during the travel included -Meeting with sugarmill & sugar industry officials -Farmer meetings -Coragen treated sugarcane field visits -Market visits, distributor meetings and retailer visits and also bringing sugar consultant in Indian market. -Better forecast on demand and supply of products resulting in required inventory and working capital. -Development of rynaxypyr market for sugarcane and launching new projects in India. Seong Dal Lee is a qualfied person and worked as Business Integration Manager. Seong Dal Lee plays an important role in bringing Manoel Pedrosa and Dr. Garcia (sugar consultant) to India. Having such a resource on the rolls of DuPont India shall be a highly costly affair. Availing services of such a senior and seasoned person shall be cost effective at any time. 1. Email exchange of the employees within the Group providing inputs on DIBM improvements is enclosed at Annexure 16. 2. Email exchange between Seong Lee and Indian employees describing the agenda and other related particulars for DIBM Meeting is enclosed at Annexure 16. 3. An extract of audit checklist describing the various findings obtained during DIBM review is enclosed at Annexure 16. 4. Email exchange of the employees within the Group sharing sugarcane market support provided by Regional people is enclosed at Annexure 16. 5. Worksheet describing the key projects and initiatives designed for India is enclosed at Annexure 16. 6. Email exchange of the employees within the Group related to monthly calls is enclosed at Annexure 16. ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 33 17 Business Support Services Assistance on undertaking DKC lab start up project -Regular conference calls and personal visits on need basis. -Regular Exchange of e-mails. Starting up of DKC lab in most economical and efficient manner. Joji Inoue is a senior qualified person and is part of core management team in charge of technical consultation for DKC lab project. Availing services of such a senior and seasoned person shall be cost effective at any time. 1. Email describing his role is enclosed at Annexure 17. 2. Project charter is also enclosed at Annexure 17. 3. Expense reports are enclosed at Annexure 17. ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 34 18 Product Technical Services Support on colour development as DuPont India was struggling to match Light Blue Mica in Cromax Pro in a Toyota Bodyshop. It is to be noted that the color Formulae developed in India are sent to a regional Lab wherein the same are tested to confirm if they meet the DuPont Environment Safety Norms. DuPont has laid down very high safety standards and Environmental Stewardship is one of the Core Values of the company. It ensures that the products developed by DuPont are not harmful for the environement in any way. In case the formulae provided fails the tests, the team shall redevelop the same and check for acceptability. The various tests which need to be carried out are perofrmed in regional Lab and the color combinations which meet the acceptable standards are uploaded in a central database from where it can be accessed by Indian Customers. The Service recepient may by way of e-mail send in the Excel Sheet giving details of Color combinations which need to be developed for various customers such as Hyundai, Maruti, Mahindra and Mahindara , Toyota etc. or undertaking various training programmes Enabling solution to the problems faced by the existing customers. The car industry in India is highly dynamic and customers may have there own choice of colours. The experience of regional people enable the DuPont India to meets its customers demands and resolve issues if any helping India business not only retain customers but create new ones. Further, kindly note that having the testing facilites in India would have requried huge invetsment in infrastructure and also related employee and administration cost. It may be noted that Methinee Kietdisorn is a Bachelor of Science in the Field of Chemistry and has been with DuPont since May 2002. It may be noted that only about 12% of the total cost (US$ 34,750/-) of Methinee has been charged to DUPont India and remaining has been charged out to other countries in Asia Pacific in the FY 2007-08. Further, An extract from Regional Billing Database for the FY 2006-07 giving the list of entities to whom cost has been charged and what proportion is enclosed at Annexure 18. 1. Email exchange of the employees within the Group is enclosed at Annexure 18. 2. Email Exchanges between Indian and Regional Employees of having sent the Color Panels for testing in regional lab is enclosed at Annexure 18. 3. A copy of Report shared by Regional Color Centre giving the matrix of services renedered, type of services rendered and the countries to which services has been rendered is enclosed at Annexure 18. 4. Screeshots of relevant website where the Color Combinations developed are uploaded and accessed by Customers is enclosed at Annexure 18. 5. E-mail exchange giving the Agenda of training and also requesting the concerned employees to share their particulars to process visa formalities is enclosed at Annexure 18. ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 35 19 Business Support Services DuPont is very High on Ethics compliance and for this purposes DuPont has separate team investigating Ethics Violation for USA / Canada, Europe/Middle East and Africa/ LatinAmerica/ Mexico and Asia Pacific. DuPont has its own charter defined in relation to Ethics. Gordon Yee the Senior Audit Consultant travelled to India during February to March 2008 for investigating a few cases. For rendering these serivces, the Investigating team may either travel or may even give advice over Conference Calls / E-mails depending on the level of investigation required to be made or the gravity of the matter. The team also keeps on updating the DuPont Ethics charter from time to time based on new cases invetsigated. The cases scrutinsed are also shared with all the employees in the region whcih serve as guidance and lesson to employees to refrain from being engaged in Ethics violation incident. The task of Investigating Team is to probe into Potential violations of the DuPont Code of Conduct by employees or contractors in Asia Pacific entities of DuPont. Such investigtion helps the organisation to know the weak links in its system and help either remove them or take timely corrective action. To hire an outside agency to carry out such investigation shall be a costly affair who may not be engaged full time. Moreover the company may not prefer using an outside agency as it involves sharing confidential information with Outsiders which may jeopardise the company's reputation. Kindly note that a sum of USD 20,457/-, which is approx. 15% of his total cost, has been charged to DuPont India for his services in the FY 2007-08. 1. Report of DuPont India employee from Crop Business engaged in Ehics Violation case is enclosed at Annexure 19. 2. DuPont's Code of Conduct documentation to substantiate the fact that the DuPont Group invests heavily on Ethics Compliance is enclosed at Annexure 19. 3. E-mail from Gordon Yee, senior Audit Consultant describing his role is enclosed at Annexure 19. 4. Details of Travel Plan of Gordon Yee and team to India for investigating a case is enclosed at Annexure 19. ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 36 20 Financial Services Planning the Demand for DuPont Performance Coating Business in the entire Asia Pacific Region on Monthly Basis. Such services are received through Monthly Conference calls taking place between the Country Business managers and their teams from each of the countries in Asia Pacific. Also there are regular e-mail exchanges between business people and conference calls. It is not possible to create a record of conference calls. Country Business Managers get a perspective as to how the business is doing in other parts of the AP region and what are the challenges faced by them. Infomration sharing on the new porjects, new business strategies employed in one country proves to be a valuable guidance available free of cost. Various tools have been developed at Asia Pacific level to gauge the Business Performance on various parameters. Having these tools developed and run for India alone is not feasible from cost perspective. The business performances are reviewed on monthly basis by senior leadership giving invaluable isngihts into the business conditions prevailing in the region. The issues faced by various teams are discussed and an effort is made to resolve the same thoguugh mutual discussion and sharing of experience. 1. E-mail from Scott Nigel is enclosed at Annexure 20. 2. Power Points Presentations which are shared on monhtly basis over conference calls sharing the busienss performances for each country in the region and the path forward is enclosed at Annexure 20. ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 37 21 Business Support Services Training on Demand Planning aspects of Business Through workshops held at regular intervals and also over conference calls. Those who may not have been able to attend workshops are educated subsequently by there supervisors. Business team gets useful insight into the Demand Planning Process and gets to gain knowledge from the wide and rich experience of the trainer. The hitches and glitches faced in one area work as gudiing factor for team in other areas. Conducting such Business Trainings from outside agencies for employees at various locations is neither feasible nor cost efficient. Moreover the company believes in leveraging on the rich exeprience of its personnel in the relvant field and develop people to take key management decisions. A power point presentation of the workshop conducted in Shanghai is enclosed at Annexure 21. 22 IT Services Support on R&D IT for DKC, Evaluation and strategic plan for GSS and S&D etc. By way of advice and personal visit Improved services from KDC to its customers. Played role in import clearance lead time reduction, warehouse process optimisation and integrating key customers. Anita Ho possessee master degree in management - information technology and has a rich experience of 30 years in DuPont. Having such a resource on the rolls of DuPont India shall be a highly costly affair. 1. Email exchange of the employees within the Group is enclosed at Annexure 22. 2. Travel support sheet of one of the associate of Anita Ho providing the agenda of the travel is enclosed at Annexure 22. ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 38 23 Accounting, HR and Business Support Services Advisory services on a) Accounting guidance b) Possibility of establishing share services in India c) Share service study and vendor selection d) Operation efficiency study e) HR Functions By way of advice, audio discussions, training, virtual meetings and acting as a coordinator for HR related services. It helps DuPont in efficient operationalisation of shared services in India. It aslo helps DuPont India to finalising and have the HR related services resolved and undertaken from a third party adminsitrator by sharing the experiences. The services enable DuPont to have a proper check on the efforts put in by various support people performing staff functions for the group for the correct allocations and correct recording within the group. Fanny Li is a qualified person and having good experience in resolving HR related services. Having such a resource on the rolls of DuPont India shall be a highly costly affair. Email exchange of the employees within the Group is enclosed at Annexure 23. ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 39 24 HR Services People development and career planning process facilitation, people review meeting facilitation and promotion or annual compensation process facilitation By way advice and interaction through audio meetings, sharing templates & four quadrants process etc. with the Indian HR team Human resource is one of the essential pillar of the organisation. They can deliver their best only when the employer will understand their needs and endeavour to feel them. This results in higher productivity for the company and lesser attrition rates contributing to fulfillment of long term goals. Toshimitsu Yamaguchi is a qualified person and having good experience in human relation. Having such a resource on the rolls of DuPont India shall be a highly costly affair. Availing services of such a qualifed person for a sum of USD 31,375/-, which is approx. 10% of his total cost, shall be cost effective at any time. 1. Email exchange of the employees within the Group is enclosed at Annexure 24. 2. Four Quadrant Personnel Planning Model and draft template as provided by Toshimitsu is enclosed at Annexure 24. ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 40 25 Business Support & HR Services Support India's commodity, ensure proper supply to meet the demand, accountable for setting up India's COFP and BPO Hub for P&IP business By way advice, interaction with the Indian HR team and through personal visit as well Setting up of India's COFP and BPO Hub at Hyderabad has supported the P&IP CSR Centralisation project, streamline the P&IP back end processes as well, handling many global processes such as Finance and Sourcing, impressive transition management process - training, quality metrics and to ensure qulaity performances and continuous improvement. it has also resulted in higher customer satisfaction through provision of update information as and when required. Higher customer satisfaction results in higher revenues and more mouth-to-mouth pubilicty of the company's products. Chris Y K Han is the Asia Pacific P&IP commodity business as well as commerical manager. He has the overall responsibility to set up the service hub at Hyderabad alongwith the Indian team. Having such a resource on the rolls of DuPont India shall be a highly costly affair. Email exchange of the employees within the Group is enclosed at Annexure 25. ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 41 26 Financial Services Consulting service around import and export operations, import and export compliance program, ITL (International Trade Logistics) network, AP ocean/air modal By way advice and interaction through audio meetings, sharing templates etc. with the Indian team Helped India to develop FSOP import and export manuals, Helped India to establish NC (nonconformance) metrics and communication process, Helped India team by providing training materials on Incoterms, payment terms, Insurance claim process, FSOP, FTA program, duty drawback, etc. Helped India to utilize global ocean/air contract rates by leading AP ocean/modal team Y S Choi is a qualified person and having good experience in logistics. Having such a resource on the rolls of DuPont India shall be a highly costly affair. Email exchange of the employees within the Group is enclosed at Annexure 26. ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 42 27 Financial, Sourcing and Business Support Services Warehousing Optimization By way of Blackbelt project Reduction in warehousing cost, improving efficiency, reduction in inventory and improving health of inventory. Improving over all supply chain and service to customers. Rosemary G F Ren role was black belt for AP SC and Operations DPT. During the period, her projects on AP regional contract converters and warehousing optimization are more concerned with India. Having such a resource on the rolls of DuPont India shall be a highly costly affair. 1. Email exchange of the employees within the Group is enclosed at Annexure 27. 2. Power point presentation on AP Warehousing Optimisation is enclosed at Annexure 27. ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 43 28 IT Services Support in BizVAP implementation, AP RO#3 SAP Implementation etc. By way advice and interaction through audio meetings, sharing templates, meetings etc. with the Indian IT team Processing of complex data in a meaningful and undertstandable format and understanding the high level design of the DB. Taemyung Jung has educated in MS in Technology management from the University of New York. He has an experience of more than 18 years and had a variety of roles in application development and project management. Having such a resource on the rolls of DuPont India shall be a highly costly affair. Availing services of such a qualifed person for a sum of USD 27,646/-, which is approx. 11% of his total cost, shall be cost effective at any time. 1. Email exchange of the employees within the Group is enclosed at Annexure 28. 2. Copy of power point presentation on AP RO#3 SAP Implementation is enclosed at Annexure 28. 3. Copy of power point presentation on AP SAP Implementation - Leadership Team Meeting is enclosed at Annexure 28. ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 44 29 Marketing Services Negotiation with car manufacturers headquatered in Japan to get global product and system approval of DuPont refinish paint. Develop training manual for some car makers. By way of negotiation, making training manual for Indian auto makers and trip to India to meet makers or importers offices of Japanese OEMs to get local product and sytem approval. Due to negotiation with Honda, Japan, the local approval from Honda in India is also obtained. This helps to have higher revenues for the DuPont India refinish paint business. Kenichi Itakura is a qualified person and having good experience in having the new customers on board. Having such a resource on the rolls of DuPont India shall be a highly costly affair. Availing services of such a qualifed person for a sum of USD 13,415/-, which is approx. 9% of his total cost, shall be cost effective at any time. 1. Email exchange of the employees within the Group is enclosed at Annexure 29. 2. Honda approval letter is enclosed at Annexure 29. ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 45 30 Business Support and Safety Services Corporate and Operation services and Leadership By way of advice on mumbai bombing attack and responses, second party security audit - salvi plants, first party security audit of all sites in India and training of country safety health and environment (SHE) for country security leader. Manage security risk at operation sites such as process & manufacturing plants and non-operation sites such as offices, R&D or business centres. Sharing of experiences enables employees to be well prepared for contingencies. The team also shares news on any untoward incident which may have happened in any country so that the employees may plan there travels accordingly. Ken Chiu is a qualified Asia Pacific Security Manager. Having such a resource on the rolls of DuPont India shall be a highly costly affair. 1. Sample e-mails which are sent by Ken Chiu to all employees in AP Region creating awareness about the mishappenings in the AP and other region is enclosed at Annexure 30. 2. E-mail from Ken Chiu describing his roles and responsibilities is enclosed at Annexure 30. 31 IT Services 1. Gather data relating to Manufacturing for the Savli factory and review this in respect of SAP. 2. Train key personnel who would be involved in the MFG module for SAP. 3. Travelled to Mumbai to work with selected members of the SAP Group. 4. Work with India MFG Team in relation to scenario Testing in preparation for SAP implementation. By way of ongoing support and advice and personal visit on need basis. Efficient implemenation of SAP in India. Eddie Steele is a qualified person having rich experience in IT implementations. Having such a resource on the rolls of DuPont India shall be a highly costly affair. Email exchange of the employees within the Group is enclosed at Annexure 31. ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 46 32 IT Services 1. Review and approval of security request forms for SAP R3. 2. Resolve security related issues. 3. Coordinating SAP R3 Annual access review. 4. SAP R2 access request management. 5. SOD Management - mitigating control update. By way of ongoing support and advices. Efficient control on the usage of SAP, mitigation of security issues relating to IT system. Jeff Chan is a qualified person and is AP SAP Security leader. During the FY 2007-08, only an amount of $ 20,666 was charged to India. Having such a resource on the rolls of DuPont India shall be a highly costly affair. Email exchange of the employees within the Group is enclosed at Annexure 32. 33 Business Support services Onboarding and management of DuPont India Product Stewardship and Regulatory (PS&R) country expert employee, Consultation on India PS&R issues and advocacy. Training and System Improvement Services. -Sharing Brochures / PPT's on new product offerings. -Regular conference calls and personal visits on need basis. -Regular Exchange of e-mails. -Visit to India. Availability of required human resource as and when required. Development of Indian human resource(s) and there competencies. The Indian employees get an insight into the various issues beign faced in other parts of the AP region and leverage on the learnings to handle complex situations. Martin F Mills is a qualified person and is Asia Pacific Product Stewardship and Regulatory Competency leader. Having such a resource on the rolls of DuPont India shall be a highly costly affair. Availing services of such a qualifed person for a meagre sum of USD 5,043/-, which is approx. 5% of his total cost, shall be cost effective at any time. Email from Martin Mills describing his roles and responsibilites is enclosed at Annexure 33. ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 47 34 Marketing Services Manage the Asia Pacific region and give directions By sponsoring and attending workshops (having facilitators from USA) with Indian team , carry out project reviews and lead the Indian leadership team Higher reach of the products with the help of shared expertise, resulting in increased revenue. Peter J Skellern is an Engineer by Qualification and has graduated in the Field of Chemistry. He joined DuPont in 1995 and has handled a no.of porfolios over the years in DuPont. He is the Director of Corporate Marketing & Sales for Asia Pacific. During the FY 2007-08, an amount of $ 12,836/- has been charged for his services. Having regard to the fact that such a senior person is available at all times to assist Indian Employees such a cost is very immaterial and hence cost effective from DuPont India's perspective. Email from Peter describing his roles and responsibilites is enclosed at Annexure 34. ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 48 35 Business Support services Earnings optimisation for the DuPont CPP business in India by way of Information exchanges on present and potential herbicide portfolio By way of regular teleconference, email based activity and personal visit Scoping potential new product entries into the Indian market and enable increased market exposure for rice, sugarcane and soyabean herbicide projects Scott J Huf is the Regiona Herbicide Manager having rich experience in the field of herbicides. During the FY 2007- 08, an amount of $ 5,876/- was charged to India for his services which is very nominal having regard to the nature of services and gudiance received from Scott. Email from Scott describing his roles and responsibilites is enclosed at Annexure 35. ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 49 36 Accounting and Financial Services Inventory management - improvement on GM/GMT and FP inventory reduction, DIBM process and ESOPT implementation By way of Blackbelt project, tracking lead excess inventory, making RCCA etc. Reduction in warehousing cost, improving efficency, reduction in inventory and improving health of inventory. Improving over all supply chain and service to customers. Shinichiro Nomura is a senior person who joined DuPont in 1987. He was Regional Six Sigma black belt for TLG/Marketing and worked for AP Inventory investment 2008 and AP 177 DCP Reduction of Excess Inventory in AP projects meant for DuPont India also. Having such a resource on the rolls of DuPont India shall be a highly costly affair. During the FY 2008-09, only a sum of $ 10,000/- was charged to India for his services. Email received from Shinichiro describing his roles and responsibilities is enclosed at Annexure 36. ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 50 37 Product Technical Services Imparting knowledge with respect to Refinish products and their suitability to various geographies. On the spot practical demostration of use of products to repair damaged car. Mr. Prasert (Regional Techncial Manager) travelled to India for imparting the training. There are overall 10 participants from DuPont India who attended this Training program. The aim of such trainings is to impart latest insights into the world of Refinsh paint industry and to help DuPont India serve their customers in a better way. Prasert qualified as Mechanical Engineer in 1981. He has been with DuPont since February 1997. An extract from Regional Billing Database giving the list of entities to whom cost has been charged and what proportion in the FY 2006-07 is enclosed at Annexure 37. Kindly note that a sum of US $ 23,548 has been charged for the services of such qualified person which is 12% of his total cost. 1. E-mail Exchange giving the Agenda of Training and also even requesting the participants to fill up Product Training Survey so that he is better equipped to provide the training is enclosed at Annexure 37. Copy of Travel expense Report of Prasert is enclosed at Annexure 37. ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 51 38 Internal Audit Services Chiaprasert Malika was the part of Internal Audit team which carried out Audit of Indian Facility. The Internal Audit team travelled to India in January 2007 and issued an Audit Report. The copy of Audit Report is enclosed at Annexure 38. An Audit was conducted for checking the effectiveness of various controls employed by DuPont with respect to Sales and Revenue Generation activites at Chennai office and with respect to Inventory Process at Savli Office. It is abundantly clear that Internal Audit was conducted by employees on Regional Role. Had DuPont India employed personnel of its own to carry out the Audit, it would have resulted in significant employee cost and related administrative cost. Availing services of such a qualifed person for a sum of USD 3,065/-, which is approx. 3.5% of his total cost, shall be cost effective at any time. E-mail from Tina Garewal (DuPont India's Internal Audit Member) giving a Internal Audit Organisation Chart clearly demostrating the fact that DuPont leverages on the skills internal resources to achieve business efficiencies is enclosed at Annexure 38. It may be noted that even Tina Garewal's cost has been charged to various entities for Audit Services rendered by her. An extract from RB database is enclosed at Annexure 38 for your ready refrenece substantiating the fact that Tina Garewal's cost was also charged to various entities. ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 52 39 Accounting Services Advice on Wharehouse Management and Reporting to ensure adequate controls Kyle Ahn, who is a Business Analyst, participates in Wharehouse Management Call of DuPont India. The objective is to review the MIS Reporting requirements. The Business Analyst share various time to time which help the DuPont India in better appreciation of facts and take decisions for better managemnt of inventory in whaehosue and related cost. Regular Conference Calls are conducted to discuss wharehouse management strategy and reporting requirements. Such discussions enable to the businesses to manage the inventory lying in wharehouses. It also results in developing better formats to represent the data in more meaningful way to assist imporved decision making. It may be noted that only an amount of $ 214 was charged to DuPont India. An e-mail confirming holding of conference call and also describing the agenda is enclosed at Annexure 39. 40 Product Technical Services Conducting Tests on Materials and maintenance of Database. Materials are sent to ULSAN lab ( In South Korea) for testing and a reqeust is generated in Database specifically created for the purpose. The materials are duly tested as per request from DuPont India and reports issued. Such material testing enables DuPont India to ensure that its products complies with the specific charectarisitc as may be required by Indian Customer and thus help generate additional revenue. Having such a laboratory in India shall require additional investment and may not be cost efficient. Extracts from Technical Service database wherein Material Testing requests are placed by Indian employees is enclosed for consideration at Annexure 40. In the enclosed documentation material testing request has been raised for getting DuPont Products qualify for sale to Asahi India. ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 53 41 Marketing Services To develop new products based on Customer Requirements. Based on Customer Specific Requirements, new products are developed and sold to customers in India by DuPont India. It helps DuPont India business to generate additional revenue upon satisfaction of customer requirments. Since most of the products developed are highly technical in nature, it shall require additional skilled manforce to be employed which again shall depend on customer specifications. Jin Kim being a regional resource was responsible for developing new products for various customers. Moreover a existing product developed for one customer may require a slight modification to meet the requirments of another customer, Jin Kim being responsible for all these activites has the necessary skills and information to do the same. The emails contains communication with India sales rep to discuss about sample roll preparation and specification to start qualification at customer is enclosed at Annexure 41. ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 54 42 Product Technical Services Providing Technical and Business Solutions for Indian Customers. The receipt of Services depend on facts and circumstances of the case. The personnel may at times travel to India for supporting big customer. Also regular conerence calls and communications via e- mail take place to provide necessary business guidance both on technical and non technical aspects including production process. It helps DuPont India gain necessary insight into the production process and how to improve the same for the satisaction of the customer. The Indian employees receives necessary guidance for there development from the vast experience of Regional Folks. Jim Demetriou was Regional Technical Manager for the Asia Pacific Region and has been with DuPont since 1975. With more than 35 years of experience - he has been instrumental in generating business for DuPont India. His total cost charged to DuPont India is around $ 61,818/- which is approimately 9% of his total cost in the FY 2007-08. 1. Enclosed is the travel Diary of Jim for his AP Travel at Annexure 42. 2. Enclosed is a discussion between Indian employee and Jim for developing a new product for Indian customer at Annexure 42. 3. Enclosed is an e-mail from Pranjal Pandey -India stating that he has sent certain panels developed for Indian Customer for his expert advise at Annexure 42. 4. Also Enclosed is an e-mail communication wherein Indian employee is requesting Jim to advise on the process of mixing the additives for Indian Customer at Annexure 42. 5. In yet another e-mail Jim is addressing all Asia Pacific employees in his team of his observations during his travel in the region is enclosed at Annexure 42.. ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 55 43 Accounting and Financial Services • Perform and review inventory costing and associated functions including value, quantity, and UTP/RTP reconciliation to ensure provision of accurate and timely costing of financial inventory. • Lead the Value Reconciliation process as the Process Owner for the Value Reconciliation process for the Cost and Inventory team. The Process Owner is responsible for reviewing Value reconciliations to ensure compliance with SOX controls, train and assist team members in resolving reconciliation issues. • Lead the analysis, design and provision of training for existing and future staff of Inventory Accounting Centre. This includes acting as a specialist for all other staff on day to day issues. • Perform reconciliations in compliance with DuPont internal control standards and Sarbanes Oxley legislation. • Participate in Cost & Inventory Six Sigma process improvement projects to streamline / improve current processes. • Identify and develop continuous improvement opportunities within the Cost and Inventory accounting area. Exchange of Reports on Periodic basis. Generation of Customised Reports helps business to concentrate on analysing the information to take timely action to manage Inventory Cost. Different Businesses may require different kind of reports for their analysis purposes. Generating such reports from the database may require each business to have an employee of their own to create such reports for them. Having a regional person do such a job shall provide economies in operation and allow business to concentrate on other important tasks. During the relevant Financial Year approx. $ 39,310/- has been charged to DuPont India. It may be noted that Erika Alanis has over 18 years of experience and has been with DuPont for more than 9 years. Having such an experienced employee on the roles of DuPont India would certainly cost more than $ 39,310/- and also shall bring in additional administrative cost. E-mail from the employee describing the experience of the employee in handling various profiles is enclosed at Annexure 43. ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 56 44 Business and Finance Support Services. Strategic and Tactical Planning. By conducting regular Conference Calls and e-mail exchanges. Further services are even available on Call. Help in Business Planning thorugh analysis of financial data and business trends in the Region. Assistance in setting Profitability Objectives for the business and analyse variances if any. The regional business folks inclduing DuPont India employees are also educated on developing pricing strategies. Jason is a qualified accountant and has also done Black Belt Six Sigma process. Having such a resource on the rolls of DuPont India shall be a highly costly affair. E-mail from the employee describing the experience of the employee in handling various profiles is enclosed at Annexure 44. ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 57 45 Safety Services Safety Health and Environment Coordination Services By conducting regular Conference Calls and e-mail exchanges. Further services are even available on demand. Further, the service provider or his representative personally visits the plant sites to plug the loopholes. Safety and Health is one of the core values of DuPont India. Presence and adherence of these values are very essential to have the continuous services of human. The regular checks and sharing of global expertise on the adoption and implementation of these core values enable the Company to have lower recruitment cost and higher employee satisfaction resulting in achieving long term goals of higher productivity. The given service is provided by Woona Choi or her representative. She was the Safety Health and Environment coordinator for the Asia Pacific regions. Having getting the safety audits done by an independent person is very confidential and costly exercise and thus, needs to be duly compensated. Kindly note a small sum of USD 5,464 has been charged for her services to DuPont India. Audit Reports of Savli plant visit is enclosed at Annexure 45. ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 58 46 Business Support Services Guidance as to how DuPont as a brand needs to be positioned in the market. By conducting regular Conference Calls and e-mail exchanges. Further services are even available on demand. Further, the service provider or his representative personally visits the plant sites to plug the loopholes. The Indian employees receive regular guidance from the leaders in AP region before undertaking any brand campaign / Advertisement Activity. DuPont group hs chalked out its own guidelines of Do's and Don'ts and Rules with respect to Brand Campaign which serves as a guding principles for DuPont Employees. The said rules and charter are regularly re- visited for necessary amendments and updations. Roger Kant is the AP Technical Support and Development Manager and during the FY 2007-08, only an amount of $ 6,820/- was charged to DuPont India. An email correspondence between Indian employee and Roger Kant with respect to guidance on Brand campaigning is enclosed at Annexure 46. 47 Product Technical Services Usage of product Tyvek for mulching of grapes Guidance has been provided on the usage of Tyek. The said service has acted as a guidance as to in what all sectors the Tyvek (DuPont product) can be used and hence creating new business opportunities in India. This shall result in creating additional business opportunities and hence additional revenue. Enclosed at Annexure 47, the regional employee experience of using the Tyvek product in Japan for mulching and what are the benefits and issues with respect to its usage. The employee has even shared pictures as to how to use Tyvek for mulching. ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 59 48 Business Support and Marketing Services General Business Administration Supply Chain Planning Marketing Services. The said services are available on Call. More often than not, the Indian Employees consult the Regional Employees over call and even seek guidance through e- mails. Appropriate control of the business across region enabling uniform standards and service to the clients. Uniform standard enables uniform service, resulting in higher client satisfaction. Email from the employee describing the roles and responsibilties is enclosed at Annexure 48. 49 General counselling services By way of advice to business/project managers & other internal clients that is creative & solution driven, actual working on strategic real estate, global outsourcing etc., assisting the legal team in India etc. Satisfy strategic legal needs as and when required. Getting on demand advice on legal aspects enable the Company to get going in their business and carry on operations without delay. Emails from the employee is enclosed at Annexure 49. 50 Financial Services Guidance as to the recording of transaction into the Company SAP Accounting package. Enabling extraction of reports for carrying out analysis. Guiding on data entries based on the information in YGLOBET. It enables better reporting of transactions for carrying out detailed analysis on various business aspects. Getting on demand advice on Financial aspects enable the Company to get going in their business and carry on operations without delay. Emails from the employee of the AE is enclosed at Annexure 50. ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 60 51 Business Support Services Business ethics & Compliance certification, Legal Eagle training and Asia Pacific Core values Annual Refresher training By way of Personal visit by the service provider on need basis and also through conference calls and e-mail exchanges. Ensure employees understanding of policies and procedures critical to achieving the DuPont Core Value of ethical behaviour. Help achieve a strong internal control environment and execute company policy as required in the Annual Ethics Reporting procedure. John Quiney is qualified person and has a rich experience in ethical training. Having such a resource on the rolls of DuPont India shall be a highly costly affair. Availing services of such a qualifed person for a sum of USD 21,479/-, which is approx. 5% of his total cost, shall be cost effective at any time. Emails from the employee describing in detail the activities carried out benefiting Indian Business is enclosed at Annexure 51. ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 61 52 IT Services 1. Applications support (including SAP, MOS or other ERP systems) 2. Data Support - database warehouse support, enhancement and maintenance 3. Operations - Providing IT support mainly to operations team at site 4. Security - DISO 5. Infrastructure - Support on midrange machines, Telecommunications, PC, Laptops & blackberry support 6. Marketing & Sales - Collaboration projects between IS & BU to drive sales and revenue 7. CIOs in BUs The said services are available on Call. More often than not, the Indian Employees consult the Regional Employees over call and even seek guidance through e- mails and net neetings. Helps DuPont India in managing and controlling its entire IT infrastructure. The regional team provides regular guidance on maintenance of adequate controls over IT to avoid any Information leakages and any other IT crime. Having such an IT Team of its own shall be a highly costly affair for DuPont India. Moreover, DuPont India learns through experience gained over a period of time by such employees and in various regions. Emails from the employee of the AE is enclosed at Annexure 52. 53 Marketing Services Chalking out the business plan and goals for the entire Asia Pacific including India By way of advice and personal visit In developing the Indian market for the product - Appeel RX 190 for the company Reduced coating thickness and non- solvent based properties may enable to attract pharma & other food companies Emails from the employee of the AE is enclosed at Annexure 53. ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 62 54 IT Services Lead the Indian IT applications team in implementing and supporting the SAP Systems By way of advice Processing of complex data in a meaningful and undertstandable format Mark King is a qualified person and has more than 29 years of work experience with DuPont. Having such a resource on the rolls of DuPont India shall be a highly costly affair. Emails from the employee of the AE is enclosed at Annexure 54. 55 Assisting in the day to day activities of the Asia Pacific Cost and Inventory Accounting Centre. Providing procedures on how to find the FICS imbalance. Processing of complex data in a meaningful and undertstandable format Huey Li Chan is a qualified accountant and has more than 14 years of work experience. Having such a resource on the rolls of DuPont India shall be a highly costly affair. Availing services of such a qualifed person for a sum of USD 6,914/-, which is approx. 10% of his total cost, shall be cost effective at any time. Emails from the employee of the AE is enclosed at Annexure 55. ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 63 56 Manage teams to deliver application support for Lotus Notes & SQL & Web Support Specific projects undertaken like 1. Upgrades of intranet and internet websites, 2. PVC Database - price value capture utility used regionally 3. Data Mart Logistics LN Solution 4. CVC Distribution management tool Processing of complex data in a meaningful and undertstandable format Ruth Pattison is a qualified person and has more than 17 years of work experience. Having such a resource on the rolls of DuPont India shall be a highly costly affair. Emails from the employee of the AE is enclosed at Annexure 56. 57 Marketing & IT Services India Marketing Competency Tracking using SMP and Pricing Tools By way of Personal visit by the service provider Enable the process of diversifying the business portfolio and progress further in its journey to reach the Business Revenue target Indian Employees are trained on various Management and Marketing tools to enhance their know how to create business opportunities. Emails, travelling expense report and the power presentation used is enclosed at Annexure 57. 58 Guidance on advertising Through exchange of e-mails and net meetings. Regular conference mails. Travel on need basis. On demand calls. Getting on demand advice and related resources enable the Company to advertise their products in a better manner and attract prospective clients resulting in increased revenues. Prospective increase in reveneue on one side and associated cost on the other. Emails from employees exchanging advertisements templates used in other region which may be used for India as well is enclosed at Annexure 58. 59 Business Support Services Review the operation metrics of various products Worked closely with people in the plants at Savli. Conduct monthly calls and meetings Ensures Continuous supply of Zytel and Delrin for supply of products to indian customers. This enables DuPont India to meet customers demand on time and help grow business. Meeting Minutes of Conference calls wherein the demand planning is discussed is enclosed at Annexure 59. ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 64 60 Finance & IT Services Help the Indian IT applications team in upgrading and supporting the SAP Systems By personal visit to resolve A2 related issue in SAP, upgraded GP1 system from v4.0 to v4.6, update all training materials and train key users, design and develop new report for India service tax etc. A2 ledger is a tool used for India specific reporting as India has financial year (April to March) reporting whereas other jurisdictional entities within the DuPont Group have calendar year reporting. A2 ledger was specifically, thus, developed for India to meet its reporting requirment. Shane Sims, Kay Nix and Helen Dazevedo are qualified Australian CPAs and has worked for more than 15 years. Having such a resource on the rolls of DuPont India shall be a highly costly affair. Emails of the employee of the AE is enclosed at Annexure 60. Page | 65 26. From the above, it is clearly established beyond reasonable doubt that assessee had indeed requested for rendition of services, the AEs have indeed rendered the various services to the assessee, the manner in which those services were rendered are also elaborated in the aforesaid chart, the cost benefit analysis made by the assessee for deriving the said services and benefits derived by the assessee out of rendition of services. Further we find that the payments made to AEs were duly subjected to withholding tax by the assessee in India. This also goes to prove that the AE had indeed rendered services to the assessee and this tax withheld by the assessee on the rendition of services had been duly accepted by the income tax department in the TDS assessments of the assessee company and no doubts or any adverse inference were drawn or entertained thereon. While this is so, in the income tax assessment, the income tax department cannot challenge or cannot doubt the very rendition of services by the AE to the assessee. Furthermore, we find the Learned TPO had accepted the rendition of services rendered by US AE to the assessee and accepted the same to be at arm's length price. Only the services rendered by Asia Pacific AEs were subjected to dispute in the instant case which had been elaborately dealt by the assessee in the aforesaid chart by proving all the essential elements such as need for services, rendition of services, manner in which services were rendered, cost benefit analysis and benefits derived by the assessee out of such rendition of services. Hence the assessee was duly justified in making payment of administrative support services charges to its AEs. Accordingly, the entire payment deserves to be allowed. Further, we find that the Learned TPO having applied CUP method for benchmarking the international transaction of administrative support service charges segment had not brought any comparables to justify the ALP of these services to be at Rs Nil. That itself goes to prove that the entire TP adjustment made by the Learned TPO deserves to be deleted on that count itself. Hence, in view of ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 66 the aforesaid observations, we find that assessee is indeed entitled for making payment of administrative support service charges to its AEs and the same is hereby accepted to be at ALP in the facts and circumstances of the instant case. 27. Further we find that the Co-ordinate Bench of Pune Tribunal in the case of ACIT vs Nalco Water India Ltd reported in 133 taxmann.com 531 (Pune Trib) dated 30-9-2021 for the Assessment Year 2009-10 had observed as under:- “7. The assessee elaborated the benefits derived by it from the services rendered by the Nalco Pacific Pte Ltd., Singapore. The TPO has tabulated the benefits claimed to have been derived by the assessee and his Remarks on page 126 onwards of his order. For example, the first category is 'Finance and Accounting'. The assessee gave description of the benefits derived by it from such services in a structured manner catering to Expense claim Reimbursement system; Cash Collection & Credit Control Training; Expense Reimbursement System; Budgeting process and Timetable; India Business Contract and Tax Training; Training for Asia Pacific Sales Improvement so on and so forth. The assessee substantiated the receipt of such services with the help of corresponding e-mails and other documents. The TPO negatived the assessee's contention by simply holding that no direct benefit was received or these were duplicate services. Similar is the position qua other services, namely, 'WPS and water services' for which the assessee stated the benefit in the nature of Integrated Water Management Training Workshop; Integrated Water Management Presentation; Cost aspects of various units, Technical Water Treatment Proposal after site visit; Technical Audit report etc. The TPO rejected the assessee's claim again by holding that no direct benefit was received. Similar position prevailed for other services availed by the assessee from Nalco Pacific Pte Ltd., Singapore for which complete details, backed by the corresponding e-mails and other documents, were submitted that have been set out by the TPO in his order in the tabular form. All such contentions did not convince the TPO, who rejected the same by simply holding that no direct benefit was received. 8. On a careful perusal of the services received by the assessee from Nalco, USA and Nalco Pacific Pte Ltd., Singapore, it becomes abundantly clear that the services facilitated the carrying on the business operations by the assessee in a more efficient and effective manner by adhering to the international standards in a globally uniform manner. ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 67 9. The moot question is whether the services under consideration are in the nature of stewardship activity as has been held by the TPO or core business intra-group services as claimed by the assessee? In order to appreciate the controversy, it is sine qua non to first comprehend the term 'stewardship', which has not been defined either in the Income-tax Act, 1961 or in the Income-tax Rules, 1962. In commercial parlance, stewardship activities are those which are undertaken by an enterprise to protect one's own interest. When Y engages X for rendition of some service, any activity of Y to ensure that the work assigned to X is performed as per its specifications, constitutes a stewardship activity. On the other hand, if an activity/service of the renderer company produces some effect on the recipient company, whether or not resulting into a tangible benefit to the recipient, the same, in our considered opinion, ceases to be a stewardship activity. One of the forms of stewardship activities is a shareholder activity, which takes place when some act or service is done by a shareholder to the company in order to ensure that his investment in the shares is safe and further such an act or service does not produce any effect to the company receiving it. For example, if company X is a shareholder in company Y and it does some activity to protect its investment therein, and the effect of such an activity is confined to it alone, the same would be construed as shareholder activity. A stewardship activity in general or a shareholder activity in particular in the case of two related companies, is quite different from a normal intra- group service, which is rendered for the purpose of the recipient company. Effect of a non-shareholder activity is rendered to the company receiving it, which is in sharp contrast to the effect being rendered to a company rendering such service in the case of a stewardship or shareholder activity. If we expand the scope of shareholder activity to producing some direct or indirect effect to the recipient company with the consequence of higher profits to it and the resultant higher dividends to the renderer or the shareholder company, then probably most of the activities, including even operational activities, would fall within the sweep of shareholder activity, which is an absurd proposition. In our opinion, stewardship activity or shareholder activity excludes such activities which produce any effect to the recipient company. 10. It was in 1968 that section 482 regulations of the USA Treasury Regulations on intra-group services provided the first U.S. transfer pricing rules on services. New service regulations were proposed in 2003, which took the form of Temporary regulations in 2006, and eventually Final Regulations for Treatment of Services under section 482 (USA Regulation 2009) were issued. The final regulations are effective for taxation years beginning after 31-7-2009. It has been mentioned in the 2009 Regulation that: 'Section 1.482-9T(1)(3)(iv) of the 2006 temporary regulations provides that an activity is a shareholder activity if the sole effect of that activity is either to protect the renderer's capital investment in the ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 68 recipient or in other members of the controlled group or to facilitate compliance by the renderer with reporting, legal or regulatory requirements applicable specifically to the renderer, or both.' There was some debate as to whether the 'sole effect' language should be employed to brand any activity as a shareholder activity or it should be substituted with the 'primary effect'. In other words, if the primary effect of the activity or service is produced to the renderer company but some incidental effect also flows to the recipient company, then also it should be categorized as shareholder activity. After considering all the opinions, the Treasury Department and the IRS believed that : 'the \"sole effect\" language is appropriate.' It was noticed that : 'The \"primary effect\" language in the 2003 proposed regulations could inappropriately include activities that are not true shareholder activities and may even consist of substantial activities that are non-shareholder activities.' Thus, it explained: \"Shareholder activities. -An activity is not considered to provide a benefit if the sole effect of that activity is either to protect the renderer's capital investment in the recipient or in other members of the controlled group, or to facilitate compliance by the renderer with reporting, legal, or regulatory requirements applicable specifically to the renderer, or both. Activities in the nature of day to day management generally do not relate to protection of the renderer's capital investment.\" Certain examples have been given for ascertaining whether or not an activity is a shareholder activity. Example 13, which is relevant in our context, is - 'Company X establishes detailed personnel policies for its subsidiaries, including Company Y. Company X also reviews and approves the performance appraisals of Company Y's executives, monitors levels of compensation paid to all Company Y personnel, and is involved in hiring and firing decisions regarding the senior executives of Company Y. Because this personnel-related activity by Company X involves day-to-day management of Company Y, this activity does not relate solely to Company X's role as an investor of capital or a shareholder of Company Y, and therefore does not constitute a shareholder activity.' Thus it emerges even from the USA Treasury Regulations that an activity will be considered as a shareholder activity if its 'sole effect' is either to protect the renderer's capital investment in the recipient etc. or to facilitate compliance by the renderer with its own reporting, legal, or regulatory requirements. It is further manifested that activities in the nature of day to day management cannot be considered as protection of the renderer's capital investment and hence they cease to be stewardship or shareholder activity. 11. We have noticed the description of services performed by Nalco, USA under the broader heads of Insurance & Risk Management; Treasury; Marketing; Credit and Collections; Operations Planning; Supply chain; Procurement; Safety, Health & Environmental; Information Technology; Customer service; Human resources etc. We have also noticed supra the portrayal of services performed by Nalco, Singapore under the broader ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 69 heads of Commercial advice; Advice and technical assistance; Centralized financial planning services; Advice and assistance regarding budget control systems; Advice on the establishment and enhancement of computer systems; Advice and assistance with respect to the production planning; Advice on procurement of raw materials ; and Advice on Asia/Pacific risk analysis etc. It gets vivid on such a perusal that the services are in the nature of regular business services performed by the group entities with a view to enable the assessee to carry on its business operations, thereby causing effect on it. As such, these do not qualify as 'stewardship activities'. 12. …………………. 13. ………………… 14. Adverting to the facts of the instant case, we observe that the rendition of services by Nalco, USA and Nalco Pacific Pte Ltd., Singapore has given effect only to the assessee and has, in no manner, resulted in protecting the individual interests of such companies. All the services rendered by them facilitated the carrying on of the assessee's business. In such circumstances, we are satisfied that the reliance of the AO on the decision in Morgan Stanley & Co. (supra) is misconceived. We, therefore, accord our imprimatur to the conclusion drawn by the ld. CIT(A) that the services rendered by the two companies were in the nature of intra group services and not stewardship activity. 15. Ordinarily, after answering the character of the services, the next point would have been to determine the ALP of the intra group services. We have noticed above that the TPO determined Nil ALP by holding that the services provided by Nalco, USA and Nalco Pacific Pte Ltd., Singapore were in the nature of stewardship activity. The ld. CIT(A) overturned the TPO's view on this score and further held that the transacted value of the intra group services was at ALP, albeit without carrying out any analysis. The ground taken by the Revenue, as reproduced above, is confined only to challenging the decision of the ld. CIT(A) in construing the services as intra group services. There is no challenge to the decision of the ld. CIT(A) on the second aspect of the international transaction being at the ALP. We, therefore, refrain from going into the aspect of the ALP determination, for which no ground has been raised. In the ultimate analysis, the ground raised in the appeal is not allowed.‖ 28. Further we find that the Hon‘ble Jurisdictional High Court in the recent decision rendered in the case of PCIT (International Taxation) vs AT Kearney Ltd (India Branch Office) reported in 161 taxmann.com 310 (Del HC) dated ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 70 21-3-2024 wherein it was held that where assessee had incurred expenses in respect of intra group services (IGS) to its AE and had submitted detailed break-up of such costs and rendering of services was an aspect which was neither questioned nor doubted, Tribunal was right in deleting adjustment on account of payment of IGS. 29. In view of the aforesaid observations and respectfully following the judicial precedent relied upon hereinabove, the entire TP adjustment made by the revenue on account of administrative support services segment deserves to be deleted. Accordingly, the Ground Nos. 2.1 to 2.5 of assessee‘s appeal are allowed and Ground Nos. 1 and 2 of revenue‘s appeal are dismissed. 30. The Ground No. 4 raised by the assessee is challenging the transfer pricing adjustment made to provision of research and engineering support services segment. 31. We have heard the rival submissions and perused the materials available on record. The Learned TPO observed that as per pages 51 to 53 of TP study report, the assessee had performed in-house research and development and engineering support services for its AE and had received engineering and consultancy service charges from AEs in the sum of Rs 11,14,93,809/-. The assessee selected TNMM as the Most Appropriate Method (MAM) with OP /OC as the Profit level indicator (PLI). The PLI of the assessee was 5%. The assessee selected four comparable companies and average margin of comparables was computed at (-) 20.55 %. Accordingly, the receipt of research and development engineering consultancy services from its AE by having a margin of 5 % was considered to be at arm's length by the assessee in its TP study report. The Learned TPO ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 71 rejected all the comparables chosen by the assessee and selected the following comparables as the final list:- S, No Company Database Total income (Cr) Service income (%) RPT(%) PBIT/Cost (%) 1 Mahindra Consulting Engineers Ltd. PROWESS 5.04 99 15.56 28.96 2 Alphageo (India) Ltd. PROWESS 81.89 99.6 0 41.61 3 Stup Consultants Pvt Ltd. PROWESS 101.91 98.12 3.04 36.72 4 Semac Ltd. PROWESS 31.73 98.4 15 49.65 5 Mitcon Consultancy Services Ltd. PROWESS 21.1 93.69 0 41.21 6 Kirloskar Consul CAPTAUN E 10.92 75 0 21.29 7 Computronics Fin CAPTALIN E 1.6 94.37 0 38.02 Average 36.78 32. From the above table, it could be seen that the Learner TPO had arrived at the comparables margin of 36.78 % and accordingly proceeded to make an adjustment. Before us, the learned AR pleaded for exclusion of only one comparable i.e. Mahindra Consulting Engineers Limited. The learned TPO with regard to this comparable company had observed that the said comparable company is engaged in rendering consultancy services in areas of special economic zone, water supply and sewerage, solid waste management etc primarily related to management and effective utilization of natural resources. Having said that, the Learned TPO observed that in contrast, the services provided by the assessee company are in relation to technical assistance in relation to EPC contracts. This observation of the Learned TPO is factually incorrect. The functions performed by the assessee company had already been elaborated in the earlier part of the order itself. It does not cater to any EPC contracts at all. Hence, the preliminary objection made by the assessee before the Learned TPO that M/s Mahindra Consulting Engineers Limited is functionally not comparable with that of functions performed by the assessee herein is proved ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 72 correct. Further, the Balance Sheet of Mahindra Consulting Engineers Limited are enclosed in page 3205 of the Paper Book. The assessee herein recognizes revenue from its AE on cost plus 5 % margin, whereas the comparable company recognizes revenue on percentage of completion method (POCM) which is reflected in page 3222 of the Paper Book. We also find that the coordinate bench of this Tribunal in the case of Emerson Process Management Power and Water Solutions India Pvt. Ltd. vs. ACIT vide order dated 13-04-2016 reported in 69 taxmann.com 185(Delhi Tribunal) had categorically held that Mahindra Consulting Engineers Limited cannot be considered as a good comparable for assessment year 2008-09 by observing as under:- ―MAHINDRA CONSULTING INDIA LTD. 20. The ld. AR for the assessee contended that this comparable company is functionally dissimilar, having significant related party transactions and relied upon order passed by Delhi Tribunal in case cited as Bechtel India (P.) Ltd. v. Addl. CIT [2014] 146 ITD 733/[2013] 33 taxmann.com 213 (Delhi - Trib.) 21. The TPO, while selecting the Mahindra as a comparable company, has returned the following findings :— \"The assessee has objected to the use of this company as a comparable on account of being functionally different and submitted that consultancy services provided by this comparable company in multidisciplinary areas. In contrast, the services provided by the Assessee are in of an entirely different nature. Further, the Assessee has provided arguments on application of related party transaction filter to reject companies having controlled transactions in excess of 15% of revenue, the Assessee has submitted that during the FY 2007-08, Mahindra had transactions with its related parties to the extent of 15.51% of the total revenue. Here again the objection of the assessee is mainly on verticals of the company. It has already been discussed earlier in this order. Therefore, this company can also be used as a comparable having regard to assessee's functional profile. ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 73 Further the taxpayer has objected this company on the basis of its own contention of RPT filter. This has already been discussed in the relevant para in this order and accordingly the company has less than 25% of RPT. Hence it is retained.\" 22. A perusal of the profile of the aforesaid company lying at page 2 of Compendium of Annual Report shows that this company is into infrastructure sector by providing consultancy services in the areas of Special Economic Zones, Water Supply & Sewerage, Solid Waste Management, Urban Infrastructure, Agri Infrastructure, Social Infrastructure, Ports & Harbour & Offshore Terminal, Industrial Infrastructure, etc. The company has also worked on innovative projects like Centre of excellence for Horticulture, Dedicated Offshore terminal for Coal Handling and is augmenting its efforts to consolidate its position as a front runner in innovative projects. 23. Similarly, perusal of page 24 of Compendium of Annual Report goes to prove that the comparable company is having related party transactions to the extent of 15.51% of the total value whereas, on the other hand, the assessee company is into providing application \"Engineered Software Development and Related Services\" to its group company which is diametrically dissimilar to the functional profile of the comparable company. 24. The TPO has disposed off both the objections to the inclusion of this comparable company as to the functional dissimilarity as well as a related party transaction to the extent of 15.51% by returning cryptic finding that, \"the comparable companies is also operating in the area of consultancy only and the company having less than 25% related party transactions and has taken as comparable\". However, when admittedly, the comparable company is engaged in infrastructure in the area of special economic zone, water sewerage, solid waste management, urban infrastructure, agri-infrastructure, social infrastructure, ports and harbor & offshore terminal, horticulture, coal handling, etc., the same cannot be compared with the assessee company which is into application \"Engineered Software Development and Related Services\". This comparable has been rejected by the coordinate Bench of the Tribunal in case cited as Bechtel India (P.) Ltd. (supra) and restored the file back to the TPO. Ld. DR for the revenue has not controverted the proposition mooted out by the assessee as to the aforesaid decision of the coordinate Bench in Bechtel India (P.) Ltd. (supra).‖ 33. In view of the aforesaid observations and respectfully following the judicial precedents relied upon hereinabove, we hold that Mahindra Consulting Engineers Ltd is not a good comparable with that of the assessee. Accordingly, Ground No. 4.5. raised by the assessee is allowed. ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 74 34. No arguments were advanced by the Learned AR before us with regard to comparables mentioned in Ground Nos. 4.3 and 4,4. raised by the assessee. Accordingly, the same are treated as not pressed and hence dismissed. 35. The Ground Nos. 4.1., 4.2. and 4.6. raised by the assessee are treated as general in nature and does not require any specific adjudication. 36. The Ground No. 3 raised by the revenue is challenging the action of Learned CITA in not including and excluding certain comparables with regard to Research and development and engineering support services segment. 37. We have heard the rival submissions and perused the materials available on record. The revenue wanted – A. INCLUSION OF ALPHAGEO INDIA LIMITED We find that the Learned CITA had observed from the annual report of the said comparable company for the financial year 2007-08, that the said comparable company was a leading player in niche business of seismic surveys and dealt in 2D and 3D seismic survey operations ,seismic data acquisition etc, which was not related with the nature of research services rendered by the assessee herein. No contrary evidence has been brought on record by the revenue before us in this regard. Hence, we hold that the Learned CITA was duly justified in excluding Alphageo India Limited from the final set of comparables by treating it as functionally not comparable with that of the assessee company. B. INCLUSION OF STUP CONSULTANTS PVT LTD The Learned CITA on perusal of the annual report of the said comparable company for the financial year 2007-08 observed that the said company is ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 75 carrying on profession of civil engineering and architecture consultancy which is not related with the nature of contract research and engineering services rendered by the assessee company and hence should not be considered as comparable with the assessee. The Learned CITA for this purpose had also relied on the segment information provided in the annual report of the comparable company wherein there was an abnormal growth in the revenue during the year under consideration which also makes the said comparable company not comparable with that of the assessee company. Hence the Learned CITA held that the said comparable company becomes functionally dissimilar and the economic circumstances are also unusual during the year under consideration thereby making the said comparable company not comparable with that of the assessee. No contrary evidence has been brought on record by the revenue before us in this regard. Hence, we hold that the Learned CITA was duly justified in excluding Stup Consultants Pvt Ltd from the final set of comparables by treating it as functionally not comparable with that of the assessee company. C. INCLUSION OF SEMAC LIMITED The Learned CITA observed that the Learned TPO had included the said comparable company on the ground that it derived all its income from professional fees on account of technical consultancy and hence it was functionally comparable with that of the assessee. This finding was not agreed upon by the Learned CITA as the assessee is engaged in contract research activities along with engineering support services which differ in nature from technical consultancy. Accordingly, the Learned CITA held that the said comparable company is functionally not comparable with that of the assessee company. No contrary evidence has been brought on record by the revenue before us in this regard. Hence, we hold that the Learned CITA was ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 76 duly justified in excluding Semac Ltd from the final set of comparables by treating it as functionally not comparable with that of the assessee company. D. INCLUSION OF MITCON CONSULTANCY SERVICES LTD The assessee objected to the inclusion of the said comparable company on the ground that the said comparable company has been rejected by the learned TPO for failing the service income filter of 75%, but included the same later in the final list. The learned CITA observed that on perusal of the order of learned TPO, it was noticed that the income of the comparable company from consultancy services is only 57% as evident from the annual report and hence it is not to be taken as a comparable as it does not qualify the 75% income filter used by the learned TPO during the such process. Accordingly, the learned CITA had directed the learned TPO to exclude Mitcon Consultancy services limited from the final set of comparables. No contrary evidence has been brought on record by the revenue before us in this regard. Hence, we hold that the Learned CITA was duly justified in excluding Mitcon Consultancy Services Ltd from the final set of comparables. E. INCLUSION OF KIRLOSKAR CONSULTANTS LIMITED The assessee submitted that the annual report of the said comparable company for financial year 2007-08 clearly mentioned that it was engaged in many areas of consultancy like project management, architectural consultancy etc. and had executed some major assignments unlike that of the assessee who provided contractual support services for research and engineering and did not execute similar projects as undertaken by the comparable company. Further, it was pointed out by the assessee that the ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 77 said comparable company had a negative networth and was going on financial restructuring phase. Hence, by placing reliance on the Special Bench decision of this tribunal in the case of DCIT vs Quark Systems Limited reported in 38 SOT 307 wherein it was held that business organization with negative networth cannot be treated at par with a normal business organization , this comparable company was sought to be eliminated. The learned CITA duly appreciated the said fact of various functions performed by the said comparable company and observed that the said comparable company is engaged in significantly diversified operations and accordingly deserves to be treated as functionally dissimilar with that of the assessee company. No contrary evidence has been brought on record by the revenue before us in this regard. Hence, we hold that the Learned CITA was duly justified in excluding Kirloskar Consultants Limited from the final set of comparables. F. INCLUSION OF COMPUTRONICS FINANCIAL SERVICES (INDIA) LTD The assessee objected to the selection of this company on the ground that it has been rejected by the Learned TPO originally as functionally dissimilar as the said company was engaged in providing services such as those related to mutual funds, share transfers, etc as compared to contract research services provided by the assessee. However, the Learned TPO had subsequently included the said comparable company in the final set of comparables. This fact was duly appreciated by the Learned CITA and accordingly the Learned CITA directed the Learned TPO to exclude the said comparable company from the final set of comparables as it is functionally dissimilar with that of the assessee. No contrary evidence has been brought on record by the revenue before us in this regard. Hence, we hold that the Learned CITA was ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 78 duly justified in excluding Computronics Financial Services (India) Ltd from the final set of comparables. G. EXCLUSION OF MAVENS BIOTECH LIMITED The assessee submitted before the Learned CITA that the said comparable company is to be included in the final set of comparables as its revenue includes trading income from agri and pharma business. The said comparable company is a plant biotechnology company with revenue coming from three divisions namely tissue culture unit, agri bioinformatics center and agricultural and pharmaceutical trading. It is engaged in research and development activities of tissue culture protocol for banana and sugarcane and achieved success in the field. All these facts are enclosed in the annual report of the said comparable company. Accordingly it was pleaded before the Learned CITA that the functional profile of the said comparable company match with the functional profile of the assessee. This fact was duly appreciated by the Learned CITA and accordingly the Learned CITA directed the Learned TPO to include Mavens Biotech Limited in the final set of comparables as functionally comparable with that of the assessee company. No contrary evidence has been brought on record by the revenue before us in this regard. Hence, we hold that the Learned CITA was duly justified in including Mavens Biotech Limited from the final set of comparables. 38. In view of the aforesaid observations, the Ground No. 3 raised by the revenue is hereby dismissed. 39. The Ground No. 4 raised by the revenue is general in nature and does not require any specific adjudication. ITA No. 6879/Del/2017 ITA No. 7454/Del/2017 Corteva Agriscience India Pvt Ltd Page | 79 40. In the result, the appeal of the assessee is partly allowed and appeal of the revenue is dismissed. Order pronounced in the open court on 18/12/2024. -Sd/- -Sd/- (SUDHIR KUMAR) (M. BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 18/12/2024 A K Keot Copy forwarded to 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi "