Grupo Antolin India Private Limited, Pune V. Assistant Commissioner of Income tax, Pune

ITA 1208/PUN/2017

AI Insights

The case involves Grupo Antolin India Pvt. Ltd., which appealed against the orders of the Commissioner of Income-tax (Appeals) confirming the transfer pricing adjustments made by the Assessing Officer and the Transfer Pricing Officer. The adjustments were related to the 'Receipt of Advisory Services' from an associated enterprise, which were deemed not at arm's length. The Tribunal examined the methods used for benchmarking these transactions and the evidence provided by the assessee. The Tribunal found that the assessee had sufficiently demonstrated the receipt of advisory services and that the adjustments made were not justified. The Tribunal also considered the provision for slow moving inventory and the disallowance of certain travel expenses.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 137598 (ITAT-PUNE)
• Duration Of Justice: 5 year(s) 8 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-01-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: C
• Next Hearing Date: 16-01-2023
• Assessment Year: 2011-2012
• Appeal Filed On: 14-05-2017
• Other Referred Cases: Bharat Earth Movers Ltd v CIT, Rotork Controls Ltd v CIT, Tupperware India Pvt Ltd, IBM India Ltd, Atlas Copco (India), Wolkem India Ltd, Chainrup Sampatram vs. CIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Transfer pricing; International transaction
• Section: 143(3); 264; 43

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “C”, PUNE BEFORE SHRI S.S. GODARA, JUDICIAL MEMBER AND SHRI G.D. PADMAHSHALI, ACCOUNTANT MEMBER ITA No.1208 & 2721/PUN/2017 निर्धारण वषा / Assessment Years : 2011-12 & 2013-14 Grupo Antolin India Pvt. Ltd. (erstwhile known as “Grupo Antolin Pune Pvt. Ltd.) B 25, MIDC, Ranjangaon, Taluka Shirur, Pune – 412220 PAN : AAACA6730G Vs. ACIT, Circle 1(2), Pune Appellant Respondent आदेश / ORDER PER S.S. GODARA, JM : These assessee‟s twin appeals arise against the CIT(A)-13, Pune‟s separate orders dated 25-02-2017 and 30.08.2017, passed in case No.PN/CIT(A)-13/DCIT, Circle-1(2), Pune/05/2015-16/624 (A.Y. 2011-12) and PN/CIT(A)-13/DCIT, Circle-1(2), Pune/189/2016-17/250 (A.Y. 2013-14); respectively, in Assessee by Shri Jhangir D Mistri Revenue by Shri Suhas Kulkarni, Addl.CIT Date of hearing 17-01-2023 Date of pronouncement 19-01-2023 ITA Nos.1208 & 2721/PUN/2017 Grupo Antolin India Pvt. Ltd. 2 proceedings under Section 143(3) r.w.s. 144C(3) of the Income Tax Act, 1961, in short „the Act‟. Heard both the parties. Case files perused. 2. We proceed appeal-wise for the sake of convenience and brevity. ITA No.1208/PUN/2017 (A.Y. 2011-12) 3. The assessee pleads the following substantive grounds in the instant appeal: 1:0 Transfer Pricing adjustment of Rs.3,74,85,331/- while determining the Arm's Length Price ["ALP"] of international transactions in respect of "advisory services": 1:1 The Commissioner of Income-tax (Appeals) ["CIT(A)"] has erred in confirming the view of the Assessing Officer ["AO"] / the Transfer Pricing Officer ("TPO") that the international transactions entered into by the Appellant with its Associated Enterprise ("AE") in respect of "receipt of advisory services" is not at an arm's length and in thereby, holding that the ALP thereof is only Rs.35,48,420/- as against the amount of Rs.4,10,33,751/- paid by the Appellant and determined to be the ALP thereof. 1:2 The Appellant submits that considering the facts and circumstances of the case and the law prevailing on the subject the value of international transactions pertaining to "receipt of advisory services" is Rs. 4,10,33,751/-, and the CIT(A) ought to have held as such. 1:3 Without prejudice to the aforesaid, and on the facts and circumstances of the case and on the law prevailing on the subject the transaction vis-à-vis "advisory services" should also be aggregated under "manufacturing activity" (along with aggregating other international transactions being receipt of ITA Nos.1208 & 2721/PUN/2017 Grupo Antolin India Pvt. Ltd. 3 research and development services and purchase of raw materials) while determining the ALP of the international transactions of the Appellant. 1:4 The Appellant submits that the AO / TPO be directed to delete the transfer pricing adjustment vis-a-vis the receipt of advisory services and to re-compute its total income accordingly. Without prejudice to the grounds of appeal No. 1 raised hereinabove: 2:0 Re.: Not restricting the amount of transfer pricing adjustment to the 'transactions' between Associated Enterprises: 2:1 The CIT(A) has erred in not restricting the amount of transfer pricing adjustment to the value of international transactions. 2:2 The Appellant submits that considering the facts and circumstances of its case and the law prevailing on the subject the CIT(A) ought to have held that the transfer pricing adjustment should be restricted to the value of the international transactions in dispute. 2:3 The Appellant submits that the AO / TPO be directed to the re- compute its total income after restricting the transfer pricing adjustment, if any, to the value of international transactions in dispute. 4. It emerges during the course of hearing that the CIT(A)‟s detailed discussion has followed his earlier findings in A.Y. 2009- 10 as follows: “1.8 This appeal has been decided by following my decision in the AY 2009-10. It is seen on perusal of the Appellant's submissions filed before the learned TPO that the facts, the issue, and the Appellant's arguments before the learned TPO during the year under consideration are the same as they were in the AY 2009-10. Therefore, by following my decision in the Appellant's appeal for the AY 2009- 10, O proceed to decide the Appellant's appeal as under: Ground 1 General ITA Nos.1208 & 2721/PUN/2017 Grupo Antolin India Pvt. Ltd. 4 2.1.1 This is a general Ground of Appeal. Findings on this Ground of Appeal will be covered by the findings on other Grounds of Appeal. Ground 2 Receipt of Advisory Services Rs 4,10,33,751 2.2.1 During the year under consideration, the Appellant made the payment of Rs 4,10,33,751 to its AE-Grupo Antolin Irausa, SA- for availing the specified administrative support services. The nature of the services availed by the Appellant pertained to the services in the areas of general management, finance IT, legal, human resources, industrial audit. As stated; the Appellant has used the TNMM method to benchmark this international transaction. 2.2.2 The learned TPO during the transfer pricing assessment proceedings observed that in the AY 2008-09, the Appellant had rejected the CUP method as the most appropriate method for benchmarking the international transaction of the receipt of advisory services. The Appellant in its Transfer Pricing Study Report of the AY 2008-09 reasoned that it rejected the CUP method because the AE did not enter into similar comparable transactions with other independent parties. Hence, similar comparable transactions were not available for the comparison under the CUP method. En the AY 2009-10, the Appellant had used the CUP method to benchmark this international transaction for the reason that the AE had provided similar services to the other group companies on similar terms and conditions. However, during the year under consideration, the Appellant has used the TNMM as the most appropriate method for benchmarking, its international transactions of the receipt of advisory services, which has been clubbed under the -manufacturing segment. 2.2.3 Further, the learned TPO stated that just because the TNMM is applied at the enterprise level and other international transactions are accepted to be at the arm's length, it does not automatically follow that each class of the transactions is at the arm's length. The teamed TPO placed reliance on the several decisions in the transfer pricing assessment Order in support of the above proposition. 2.2.4 With respect to the international transaction of the receipt of advisory services, the learned TPO stated that it has paid the amount of Rs 4.10 cr towards availing advisory services when the total value of all its international transaction is of Rs 15.26 cr. The learned TPO has pointed out several factual inconsistencies in the Appellant's ITA Nos.1208 & 2721/PUN/2017 Grupo Antolin India Pvt. Ltd. 5 claim and has raised doubts over the genuineness of the Appellant's claim of the receipt of services. 2.2.5 I have considered the facts and arguments of the Appellant. I find that the facts are same as they were in the Appellant's appeal of the AY 2009-10. As stated, I have already decided the issue of the determination of the ALP of the international transaction of the receipt of advisory services in the AY 2009-10. The baste of my decision was independent of the transfer pricing method used by the Appellant to benchmark its international transaction of the receipt of advisory services, 2.2.6 In this connection, on perusal of the evidence furnished before the learned TPO, I find that that the Appellant has furnished the evidences only for the receipt of the following five services: i. Information Technology Services  Some of the bills are not pertaining to the AY 2011-12 (bill no. 2,3,4, 5,6, 10,11,12,13,14,15, 17,18,19, 22,24,25,27,28,30,34,35,36, and 37). ii. Technical Support Services  Includes research activity as per agreement - innovation and Research  28 documents submitted - mail no. 5, 9, and 21 not pertaining to the relevant year, other documents are of general nature  These documents are of general nature- providing information about the machines- general presentations and drawings, iii. Negotiation and Pricing  Purchasing division as per agreement and Purchases as per the summary sheet.  Document no. 2 and 3 out of 15 documents submitted not pertaining to the relevant period.  The Other advices are in the nature of share-holders activities. iv. Accounting/Finance Services ITA Nos.1208 & 2721/PUN/2017 Grupo Antolin India Pvt. Ltd. 6  Economic-financial division as per the agreement, finance as per the summary sheet v. Human Resources  Document no. 6, 7, 8, and 9 out of 19 documents submitted not pertaining to the relevant period. 2.2.7 Further, I find that the Appellant has not furnished the break-up of the payment of Rs 4,10,33,751 made for availing different services under the head of advisory services. The facts of the year under consideration being similar to the facts of the AY 2009-10, I direct the learned AO to work out the amount of the ALP of the international transaction of the receipt of advisory services by following my directions in the Appellant's appellate Order of the AY 2009-10. The learned AO is directed to obtain the break-up of the payment of Rs 4,10,33,751 from the Appellant for this purpose. Accordingly, the learned AO is directed to work out the amount paid for availing services, which are not authorized by the Appellant's service agreement with AE or not mentioned in the Appellant's transfer pricing study report, ascertain the amount of the payment for the services for which, no evidence is furnished by the Appellant and quantify the amount of the payment made for duplication of services. Out of the remaining payment, ALP should be determined @ 50% of the remaining amount. 2.2.8 If he Appellant does not furnish the break-up of the payments of Rs 4,10,33,751 then the ALP maybe determined on the basis of the amount of the ALP determined En the Appellant's appeal of the AY 2009-10. Accordingly, the ALP during the year under consideration would be equivalent to the amount of Rs 4,10,33,751 x 31,72,140/3,66,82,466 = Rs 35,48,420. However, the ALP of Rs 35,48,420 should be taken only if the Appellant does not furnish the break-up of the payment of Rs.4,10,33,751.” 5. We further note with the able assistance coming from both the parties that this tribunal‟s recent coordinate bench‟s order involving assessee‟s appeal ITA No.1207/PUN/2017 dated ITA Nos.1208 & 2721/PUN/2017 Grupo Antolin India Pvt. Ltd. 7 13.10.2022 for A.Y. 2009-10 has already decided the very issue against the department as follows: “3. Learned senior counsel states that the assessee at this stage only presses for its former grievance seeking to reverse both the lower authorities’ action making arm’s length price “ALP” adjustment of Rs.3,35,16,306/- in respect of the payments to its overseas associate enterprise “AE” in lieu of “Receipt of Advisory Services” in the relevant previous year. It is in this factual background that we proceed to decide the instant former issue in succeeding paragraphs. 4. The assessee herein M/s. Grupo Antolin Pune Private Limited “GAPPL” is a company engaged in the business(es) inter alia of manufacturing of car interiors including headlines, door panels, sun visors, parcel trays etc followed by computer aided design services as well. The assessee had filed its return on 30.10.2009 disclosing loss of Rs.7,90,07,284/- which stood “summarily” processed. The Assessing Officer took up scrutiny thereafter. He came across the assessee’s international transactions amounting to Rs.17,86,29,123/- with its overseas group entities Associated Enterprises “AEs” inter alia involving purchases of raw materials/components, press machine, software license, “Receipt of Advisory Services” (issue herein), payment of telephone charges, receipt of Research & Development (R&D) services, provision for engineering, drawing & designing services, payment of maintenance charges for software license and paid/received reimbursement; involving varying sums, respectively. The Assessing Officer, therefore, made section 92CA(1) reference to the Transfer Pricing Officer “TPO” for determining arm’s length price “ALP” thereof. 5. It emerges from a perusal of TPO’s order dated 10.01.2013 that so far as the sole issue before us involving arm’s length price adjustment relating to “Receipt of Advisory Services” is concerned, the assessee had paid Rs.3,66,82,446/- to its spanish associated enterprise M/s. Grupo Antolin Irausa. The TPO’s order makes it clear that the assessee’s transfer pricing report (Form 3CEB) had claimed that the recipient AE hereinabove charged “a portion of total expenditure incurred on account of these techno commercial services to its group companies. The said amount is increased by supplementary 5% profit margin. Usually this charging is based on the turnover as budgeted by the group companies at the start of the year”. It had further benchmarked the foregoing transaction in “Receipt of Advisory ITA Nos.1208 & 2721/PUN/2017 Grupo Antolin India Pvt. Ltd. 8 Segment” by using the comparable uncontrolled price “CUP” method thereby declaring that “as per the information available with the company, AEs provide similar services to its other group of company based on similar terms and conditions and therefore have entered into comparable transactions with other group companies which can be compared”. 6. The TPO went for a very elaborate discussion in his order running into 36 pages to conclude that although the assessee had paid the sum in issue of Rs.3.66 crores towards “Receipt of Advisory Services” involving M/s. Grupo Antolin Irausa, but, it could not demonstrate the actual receipt of any kind of services in tune with the terms of the service agreement dated 02.10.2003. He therefore determined arm’s length price of assessee’s advisory services to be of “nil” value in order to adjust the entire sum of Rs.3,66,82,466/-. He also appears to have taken note of Dispute Resolution Panel “DRP” directions dated 26.09.2012 in preceding assessment year 2008-09 declining the assessee very segment of advisory services taken at “Nil” price after adopting the Transactional Net Margin Method “TNMM” as per relevant discussion in para 69 page 35 of the TPO’s order before us. 7. The Assessing Officer framed his section 143(3) r.w.s. 144C(1) assessment dated 30.05.2013 in very terms making the impugned adjustment as per the TPO’s findings. The assessee preferred appeal. We note that although the assessee had filed its relevant documents which already formed part of the case file, the CIT(A) sought for the field authorities’ remand report on 18.07.2014 directing the Assessing Officer to determine arm’s length price of assessee’s advisory services in issue. The said remand report came to be filed vide TPO’s letter dated 26.06.2014. The CIT(A)’s detailed discussion running into 43 pages has thereafter granted relief of Rs.31,72,140/- i.e. 50% of estimation qua cost allocation regarding the assessee’s payment of Rs.63,44,281/- made to its foregoing AE thereby confirming the impugned adjustment of Rs.3,35,08,058/- in other words. This is what leaves the assessee’s aggrieved. 8. We have heard rival arguments/submissions. Learned senior counsel first of all took us to the TPO’s order; and more particularly, page 2 para 4 to paragraphs 10, 13, 18, 26, 35, 47, 63 and 68 dealing with instant issue of “Receipt of Advisory Services”. He invited our attention to the fact that the assessee had used “CUP” method only sole in A.Y. 2008-09 as well as A.Y. 2009-10 before us. And that the TPO had rejected the assessee’s CUP in the impugned assessment year as per para 18 page 12 therein. He thereafter choose to ITA Nos.1208 & 2721/PUN/2017 Grupo Antolin India Pvt. Ltd. 9 aggregate the assessee’s three transactions involving “Receipt of Advisory Services”, “Payment of Telephone Charges” and “Receipt of R&D” in manufacturing with Profit Level Indicator “PLI” as “OP/OR”. Mr. Yadav could hardly dispute that the TPO’s order in para 36 page 18 initially arrived at transfer pricing adjustment of Rs.27,58,88,444/- by using the Transactional Net Margin Method “TNMM” only. This adjustment figure fail to inspire the TPO’s confidence. He observed that this sum turned out to be much more than the assessee’s gross value of transaction in both manufacturing as well as computation aided design “CAD” segment (supra). We find that the learned TPO went further to compute the impugned nil arm’s length price of assessee’s advisory services by once again following CUP method only. 9. We note that TPO’s detailed discussion from 41 onwards considered the assessee’s service agreement dated 02.10.2003 comprising various stipulations involving definition in “i to ix” clauses regarding administrative support services vis-a-vis the list of cost incurred for implementation thereof. He next compared the assessee’s international transactions of Rs.14,19,46,657/- with the impugned payment amounting to Rs.3,66,82,446/- (totalling to Rs.17.86 crores) to observe that the latter constituted almost 25% of the former gross value which; in his opinion, carried no clarity at all. Faced with this situation, the TPO rejected the assessee’s evidence submitted involving various e-mails correspondence(s) with the group/recipient entity by observing that the same hardly proved any specific instance of actual rendering of services by the latter. He also invoked “benefit test” as well as to conclude “nil” price represented the value before going receipt of advisory services. He accordingly made the impugned transfer pricing adjustment representing the entire sum of Rs.3.66 crores which stands upheld in the CIT(A)’s order. 10. We have given our thoughtful consideration to vehement arguments against and in support of the impugned addition. Learned senior counsel explained the assessee’s arrangement with its group entities in light of the service agreement dated 02.10.2003 as well as the various nitty-gritty(ies) thereof involving definition clauses, services and cost allocation and stipulations incorporated therein. We note that there is hardly need for us to delve that deeper in the relevant factual matrix. Suffice to say, we wish to reiterate here that the very issue had arisen between the parties in A.Y. 2008- 09 (supra) as well wherein the learned co-ordinate bench’s order in assessee’s own appeal in ITA No.299/PUN/2013 dated 17.10.2018 has rejected Revenue’s stand as follows :- ITA Nos.1208 & 2721/PUN/2017 Grupo Antolin India Pvt. Ltd. 10 “17. Another aspect of the issue which has to be kept in mind is that while applying TNMM method which has been applied by both the Assessing Officer and TPO, percentage of margins of assessee is to be compared with the margins of comparables and the advisory fees paid by assessee cannot be taken at Nil especially ignoring the evidences filed by assessee during the course of proceedings. The TPO has failed to come to a finding in this regard as to whether advisory services have been availed by the assessee or not but has gone to take the value of same at Nil. Where an expenditure or payment has been incurred for the purpose of business, the same cannot be disallowed on any extraneous reasoning. The TPO cannot determine arm's length price at Nil without going into merits of rendition of services by the assessee to associated enterprises. The TPO in the final analysis has only commented that since unadjusted margins of assessee are (-) 11.56% and that of comparables are at 6.39%, hence TNMM analysis used for benchmarking was not correct and further held the advisory services were not at arm's length price and hence, taken at Nil. We find no merit in the stand of TPO in this regard, which has been upheld by DRP. In any case, we have already allowed the claim of adjustment to be made on account of extraordinary cost to be reduced while arriving at operating margins of assessee and the same would work out to 7.13%.” 11. Mr. Yadav sought to draw distinction in A.Y. 2008-09 vis-a-vis A.Y. 2009-10 on the ground that although the assessee therein had proved receipt of services in the said former assessment year but it could not demonstrate the actual benefits flowing therefrom whereas the facts in the instant latter assessment year raise the dispute of actual rendering of services itself. He pinpointed the fact that the assessee has not filed any evidence in support of its “Advisory Services” claim throughout except that involving various e-mails which are only self-serving in nature. Learned senior counsel at this stage invited our attention to the assessee’s voluminous box file containing all the e-mails regarding information technology, technical support, quality check, extra/miscellaneous heads, indexation relating to pricing and account support etc to buttress the point that the assessee had indeed availed the said services from its associated enterprise. Faced with this situation, we find merit in the assessee’s instant arguments. This is more so in light of the learned co-ordinate bench very recent order in the recipient entities M/s. Groupo Antolin Irausa S.A.’s case ITA No.1442/PUN/2017 dated 28.07.2022 wherein ITA Nos.1208 & 2721/PUN/2017 Grupo Antolin India Pvt. Ltd. 11 it has been held that the corresponding e-mails duly proved rendering of managerial/technical services; as the case may be, as follows :- “5.2. In order to decide the taxability or otherwise of the amount under the Act, it would be paramount to first consider the precise nature of services rendered. The services comprise `General services’ of formulating the group’s internal audit plan and assistance in implementation of the same; `Financial services’ of providing assistance in formulation of financial policies and strategies, managing financial operations at group level; `Legal services’ of providing legal assistance in litigious issues; `Human resources services’ of providing performance evaluation procedures and forms with administrative support; `Quality and environment related services’ of defining, managing and supervising the quality and environment strategy of the entire group; `Marketing services’ of developing marketing policy, providing of new market data; `Research services’ of defining and supervising research procedures and policies; `Purchase services’ of defining, implementing and supervising purchase policy and procedures of the group; and `I.T. Support services’ of defining the policy of group information system. From the above description of the services from the Agreement, it turns out that they refer to rendition of services by the assessee to its world-wide group entities and such services are aimed at formulating plans and policies in different spheres of the business to be followed by its world- wide entities so as to have consistency in approach. 5.3. Our attention has been drawn by the ld. AR towards certain email exchanges between the assessee and the Indian entity, whose copies have been placed in the paper book. Pages 231 to 234 demonstrate e-mail exchanges between the assessee and the Indian entity discussing the stiffness of HDL’s with Expanded foam having an acceptable strength. The assessee informing the Indian entity that the test was conducted and it was eventually found that fogging as per Tata specs was OK but for GM specs was not OK. Pages 240 and 241 are again e- mail exchanges between the assessee and Indian entity concerning with the running trials of materials AB 4235/50 and AB NS by the Indian entity on its Plant. The assessee responded by stating that it wants an urgent feedback for this issue as the samples were sent in mail and there was no feedback till November, by specifically mentioning that “this situation is absolutely unacceptable”. To this, the Indian entity responded that it took trial on the above adhesive which is giving good ITA Nos.1208 & 2721/PUN/2017 Grupo Antolin India Pvt. Ltd. 12 bonding but was facing air gap in the package tray packet area. They requested the assessee for further input. Pages 242 to 243 deal with the Indian entity communicating to the assessee that they have got Canon G-300 series PU foaming machine which was calibrating manually by means of calibration nozzle provided by Canon. It further states that “we are in process of clearing Formal Qaudit and securing VW polo business”. This was responded by the assessee stating that from the view of quality explanations to customer, there was no issue if machine is manual or automatic. It was further responded by the assessee that `GA guarantees the ratio control for both cases manual/automatic foaming machines and the only penalty is that with manual machines we lose much more time for calibrating so that we usually work with these machines at some ratio’. Finally, the assessee directed in its next communication to “set machine to a given nominal value and pour 5-10 times and record the values. Calculate CpK and let us know whether we’re OK or not.” Pages 254 and 255 contain e-mails by which the assessee stated to the Indian entity that there was an issue which cropped up lately after new audits by writing that: “We observe a worrying profusion of software development at Grupo Antolin plants worldwide. These developments very frequently support critical process and overlay functionality with corporate tools or platforms. As a rule, this is in place to provide standardized and secure environment........... In case of your plants, the following licenses must be removed”. Thereafter, the Indian entity expressed some difficulties in removing the software. However, the assessee eventually prevailed over the Indian entity by writing that “you can remove this software immediately. Of course keep us informed any problem in SAP. We would not want to disrupt our service to the customer”. Page 258 is again e-mail exchanges between the assessee and the Indian entity about certain hardware procurement. Pages 260 and 261 are e- mails between the assessee and Indian entity about purchase of certain goods. The Indian entity sent new price. The assessee after certain calculations responded that the pricing was not proper and there was a need to renegotiate the price with the suppliers. Pages 264 to 267 are certain e-mail exchanges on Human resources by which the Indian entity was directed by the assessee to furnish particulars of certain employees and also expressing its displeasure over the Indian entity not responding timely. Pages 268 and 269 are copies of e-mail exchanges between the assessee and Indian entity in connection with the IT ITA Nos.1208 & 2721/PUN/2017 Grupo Antolin India Pvt. Ltd. 13 services, discussing about difference in the information under SAP system and the report by which the Indian entity was questioned and called upon to change the information in SAP and report in uniform manner. Pages 270 and 271 again deal with e- mail exchanges between Indian entity and assessee. The Indian entity attached monthly cost reduction plan duly updated for May 2009 for information of the assessee. The assessee required it to submit all information in new format which was attached in the e- mail. Similar is the position regarding other e-mail exchanges placed on record. 5.4. With the above understanding of the nature of services, we now proceed to determine the taxability of the amount under the Act, which encompasses consideration, inter alia, for managerial, consultancy or technical services. The term `manage’ in the context of business, connotes administering and supervising the affairs of a business, encompassing Planning, Execution and Performance evaluation. Ex consequenti, the term `Managerial services’ contemplate services in connection with administration and supervision of the business, starting with establishing proper management systems, policies, standards and procedures in the business areas, such as administration, purchasing, marketing, and Human Resources; then executing the implementation of such systems either through self or someone else; and at the end, ensuring that the systems or policies so formulated have been properly adhered to. Thus, it can be seen that the term `managerial services’ is like a package of planning services, execution services and evaluation services to ensure implementation in the business administration fields. Consultancy services, on the other hand, refer to giving some professional advice on a subject, in which the expert advice is sought and given. Once the expert advice is given, the consultancy service comes to an end. Technical services cover giving expert services in the field of technology. Contextually, consultancy and technical services, being separate species of technical services u/s 9(1)(vii) of the Act, need to be viewed separately from managerial services. Even though, the line may be blur in some cases and a service may appear to be both managerial por ona parte and consultancy or technical por otra parte, the consultancy or technical services need to be characterized as such independent of the managerial services for the purposes of this section. ITA Nos.1208 & 2721/PUN/2017 Grupo Antolin India Pvt. Ltd. 14 5.5. On an overview of the above e-mails exchanges between the assessee and the Indian entity read in conjunction with the services as described in the Agreement, it becomes overt that the services mainly envisage i) formulating the global policies in the spheres of the business, including, Administration, Purchases, and Human resources so as to have world-wide uniformity in compliance; ii) ensuring application of the such policies by all the global entities including the Indian AE; and iii) evaluating their compliance. The services also cater to giving expert advice on certain matters to the Indian entity, such as, Legal services (falling within the domain of consultancy services) and also giving expert technical opinion on Quality and environment, Research and I.T. Support (falling within the domain of technical services). Thus consideration received by the assessee is partly for the managerial and partly for the consultancy or technical services. Ergo, it satisfies the requirement of taxability under the Act.” 12. We wish to reiterate here that the assessee’s service agreement has remained the same throughout since 2003 onwards (supra). We therefore conclude in this factual backdrop that the assessee has sufficiently proved to have received “advisory services” from its group entity(ies) and the learned lower authorities have erred in law and on facts in rejecting the same in entirety. We, accordingly, delete the impugned adjustment of Rs.3,35,16,306/- in these peculiar facts and circumstances. The assessee succeeds in its first and foremost grievance.” 6. We further note that for academic purposes, the only distinction herein is stated that to be correctness of assessee‟s Comparable Uncontrolled Price “CUP” method is nowhere in dispute in A.Y. 2011-12, whereas in the preceding assessment year 2009-10, the Transfer Pricing Officer “TPO” had adopted the Transactional Net Margin Method (“TNMM). This is indeed coupled with the fact that his findings in para 25 page 23 have ITA Nos.1208 & 2721/PUN/2017 Grupo Antolin India Pvt. Ltd. 15 nowhere completely ruled out the assessee having actually availed services to “certain extent”. Be that as it may, we adopt judicial consistency in the absence of any clinching distinction in both these assessment years involving the very issue of correctness of arm's length price adjustment in respect of advisory services. We accordingly delete the impugned transfer pricing adjustment of Rs.3,74,85,331/- in very terms. Ordered accordingly. Learned counsel does not press for assessee‟s second substantive ground herein in light of our detailed adjudication on the foregoing former issue. Rejected accordingly. The assessee‟s instant former appeal ITA No.1208/PUN/2017 is partly allowed in above terms. ITA No.2721/PUN/2017 (A.Y. 2013-14) 7. We find during the course of hearing that the assessee‟s former twin substantive grounds challenge correctness of transfer pricing adjustment of Rs.6,27,73,542/- in respect of advisory ITA Nos.1208 & 2721/PUN/2017 Grupo Antolin India Pvt. Ltd. 16 services only. The same stands deleted once it has come on record that the CIT(A)‟s lower appellate discussion has followed his 2009-10 findings. We thus adopt judicial consistency in light of our detailed discussion in former assessment year 2011-12 hereinabove. This first substantive ground is accepted. Learned counsel does not press for assessee‟s second substantive ground in above terms. Rejected accordingly. 8. The assessee‟s third substantive ground seeks to reverse both the learned lower authorities action disallowing its provision for slow moving inventory of Rs.29,81,185/- in issue. The CIT(A)‟s detailed discussion affirming the Assessing Officer's action to this effect reads as under: “2.3.3 1 have considered the facts and the Appellant's arguments. The Appellant has created the provision for slow moving inventory of Rs 29,81,185. The learned AO has disallowed the provision on the basis of the decisions of the honourable Supreme Court in the case of Bharat Earth Movers Ltd v CIT (2000) 245 ITR 428 (SC) and in the case of Rotork Controls Ltd v CIT (2009) 314 ITR 62 (SC). The learned AO has stated that the Appellant has not furnished the quantitative details with respect to the slow-moving Inventory therefore, he disallowed the amount of Rs 29,81,185. 2.3.4 The Appellant in his submission filed before me has submitted that the basis of creation of the provision for the slow ITA Nos.1208 & 2721/PUN/2017 Grupo Antolin India Pvt. Ltd. 17 moving inventory was already furnished before the learned AO it has a set policy or a standard operating procedure for carrying out the analysis based on which, a provision made in the books towards diminution in the value of stock on the basis of ageing of stock and realizable, price. In support of its contention that such provision is allowable, the Appellant has placed reliance on the decision of the honourable Delhi ITAT in the case of Tupperware India Pvt Ltd, of the honourable Karnataka high Court in the case of IBM India Ltd and of the honourable Pune ITAT in the case of Atlas Copco (India) and of the honourable Rajasthan High Court in the case of Wolkem India Ltd. 2.3.5 I have gone through, the copy of the document furnished by the Appellant, which is stated to be the basis of the creation of the provision of slow moving inventory. The Appellant has submitted the copy of the 'Approval Note' dated 13.03.2013 in which, the Appellant’s Finance Department has recommended that a provision of Rs 24,74,561 be created towards the slow moving inventory. However, it is seen that the Appellant has created a provision of Rs.29,81,185. Therefore, I do not find any correlation between the amount stated to be the basis of the creation of provision and the amount of the created provision. Further, the Appellant has also not furnished the history or the basis of the provision created in the earlier years on this ground to conclude that the Appellant follows the same accounting policy over the years. 2.3.6 According to me, the Appellant has not justified as to the provision created by it was on the basis of reasonable estimate as Said down by the honourable Supreme Court in the above decisions. Again, it has also not established that it follows similar method of estimating and valuing slow moving inventory over the years. Therefore, I confirm the disallowance of Rs.29,81,185 made by the learned AO on account of the disallowance of the provision created for the slow moving inventory.” 9. We have given our thoughtful consideration to vehement rival submissions against and in support of impugned disallowance. We make it clear that a catena of case law (supra) ITA Nos.1208 & 2721/PUN/2017 Grupo Antolin India Pvt. Ltd. 18 stated to have seen upheld upto hon‟ble apex court has settled the issue in favour of allowability of such a provision. 10. Learned CIT-DR at this stage vehemently argued in light of the assessee‟s details submitted at pages 822 to 824 in the paper book that it had failed to produce all the relevant evidence(s) vis-à- vis historical trends. We see no merit in the Revenue‟s instant technical objections. We wish to clarify here that the assessee‟s impugned claim pertains to its two units at Chennai and Ranjangaon out of which it had already filed its finance department‟s recommendations for Rs.24,74,561/-. This is followed the assessee‟s detailed remarks regarding all these items involving a total sum of Rs.56,96,434/-. And that it had already claimed Rs.32,21,872/- in the earlier financial year. Learned counsel has further invited our attention to the assessee‟s detailed statements regarding its provision for slow moving inventories created from assessment years 2011-12 to 2015-16 vis-à-vis opening balances, reversals and closing balance; as the case may be. Faced with the situation, we quote hon‟ble apex court‟s ITA Nos.1208 & 2721/PUN/2017 Grupo Antolin India Pvt. Ltd. 19 landmark decision Chainrup Sampatram vs. CIT (1953) 24 ITR 481 (SC) that such a liability by way of provision would indeed be recognized at the first sign of probability itself and delete the impugned disallowance of Rs.29,81,185/-. The assessee succeeds in its instant third substantive ground thereof. 11. Lastly comes the issue of adhoc disallowance of travelling and conveyance expenses involving the sum in issue of Rs.1,00,000/-. Learned senior counsel could hardly dispute that the Assessing Officer had rejected 5% of the assessee‟s claim of Rs.3,99,50,873/-, coming to Rs.9,97,547/-; which in turn stands restricted to Rs.1,00,000/- only on account of its alleged failure in filing of the relevant details. We hardly see any reason to interfere with the impugned disallowance in very terms. The assessee fails in the instant last substantive ground. No other ground or argument has been pressed before us. This latter appeal ITA No.2721/PUN/2017 is partly allowed in above terms. ITA Nos.1208 & 2721/PUN/2017 Grupo Antolin India Pvt. Ltd. 20 12. To sum up, the assessee‟s instant twin appeals ITA No.1208/PUN/2017 and 2721/PUN/2017 are partly allowed in above terms. A copy of this common order be placed in the respective case files. Order pronounced in the Open Court on 19 th January, 2023. Sd/- Sd/- (G.D. PADMAHSHALI) (S.S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER प ु णे Pune; ददिधांक Dated : 19 th January, 2023 GCVSR आदेश की प्रतिलिपि अग्रेपिि/Copy of the Order is forwarded to: 1. अपीऱधर्थी / The Appellant; 2. प्रत्यर्थी / The Respondent; 3. The CIT(A)-13, Pune 4. 5. The Pr.CIT-1, Pune विभागीय प्रविविवि, आयकर अपीलीय अविकरण, पुणे “C” / DR „C‟, ITAT, Pune 6. गार्ड फाईल / Guard file आदेशान ु सार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अविकरण ,पुणे / ITAT, Pune ITA Nos.1208 & 2721/PUN/2017 Grupo Antolin India Pvt. Ltd. 21 Date 1. Draft dictated on 17-01-2023 Sr.PS 2. Draft placed before author 18-01-2023 Sr.PS 3. Draft proposed & placed before the second member JM 4. Draft discussed/approved by Second Member. JM 5. Approved Draft comes to the Sr.PS/PS Sr.PS 6. Kept for pronouncement on Sr.PS 7. Date of uploading order Sr.PS 8. File sent to the Bench Clerk Sr.PS 9. Date on which file goes to the Head Clerk 10. Date on which file goes to the A.R. 11. Date of dispatch of Order.