Nalco Water India Limited, Pune V. Assistant Commissioner of Income Tax, Pune

ITA 742/PUN/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 1657 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-09-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 22-04-2019
• Assessment Year: 2012-2013
• Appeal Filed On: 30-03-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S B PRASAD
• Assessee Lawyers: J D MISTRI SHRI KETAN VED
• Keywords: Capital asset; Depreciation; Transfer pricing; Double taxation relief; International transaction; Rule of consistency; Additional evidence; Initiation of penalty proceedings; Wholly owned subsidiary; Capital receipt
• Section: 271(1)(c); 143(3); 234B; 195; 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO. 742 /P U N/201 7 / ASSESSMENT YEAR : 20 12 - 13 NALCO WATER INDIA LIMITED, SR NO.238/239, 3 RD FLOOR, QUADRA 1, PANCHSHIL, MAGARPATTA ROAD, SADE SATRA NALI, PUNE 411028 . / APPELLANT PAN: AAACO4994N VS. THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE 2, PUNE . / RESPONDENT / APPELLANT BY : SHRI J.D. MISTRI, SHRI KETAN VED AND MS URVI MEHTA / RESPONDENT BY : SHRI S.B. PRASAD , CIT / DATE OF HEARING : 11 . 0 6 .201 9 / DATE OF PRONOUNCEMENT: 06 . 0 9 .201 9 / ORDER PER SUSHMA CHOWLA, J M : THE APPEAL FILED BY ASSESSEE IS AGAINST ORDER OF A CIT , CIRCLE - 2, PUNE, DATED 2 3 . 0 2 .201 7 RELATING TO ASSESSMENT YEAR 20 12 - 13 PASS ED UNDER SECTION 143(3) R.W.S. 144C(13) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . ITA NO. 742 /P U N/20 1 7 NALCO WATER INDIA LTD. 2 2. THE GROUND S OF APPEAL RAISED BY ASSESSEE READ AS UNDER : - GENERAL 1 . ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND ON THE LAW PREVAILING ON THE SUBJECT, THE LEARNED AO/TRANSFER PRICING OFFICER ('TPO'), PURSUANT TO THE DIRECTIONS OF THE HON'BLE DRP, HAS ERRED IN MAKING A TRANSFER PRICING ADJUSTMENT OF INR 7,95,78,453 TO THE VALUE OF INTERNATIONAL TRANSACTIONS BY MODIFYING THE BENCHMARKING METHODOLOGY ADOPTED B Y THE APPELLANT AND CONCLUDING THAT CERTAIN INTERNATIONAL TRANSACTIONS OF THE APPELLANT DO NOT MEET THE ARM'S LENGTH TEST. THE LEARNED AO HAS ALSO ERRED IN DISALLOWING DEPRECIATION OF INR 64,09,577 ON THE ASSETS INSTALLED AT THE PREMISES OF THE APPELLANT'S CUSTOMERS, BY HOLDING THAT THE SAME WERE NOT USED FOR THE PURPOSE OF ITS OWN BUSINESS. CORPORATE TAXATION 2 . ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND ON THE LAW PREVAILING ON THE SUBJECT, THE LEARNED AO / TPO PURSUANT TO THE DIRECTIONS OF THE DRP HAS ERRED IN HOLDING THAT THE AMOUNT OF INR 65,19,47,000 RECEIVED BY THE APPELLANT DURING THE YEAR UNDER CONSIDERATION AS SUBVENTION MONEY IS A 'REVENUE R ECE I PT' EXIGIBLE TO TAX. 3 . ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND ON THE LAW PREVAIL ING ON THE SUBJECT, LEARNED AO PURSUANT TO THE DIRECTIONS OF THE DRP ERRED IN DISALLOWING DEPRECIATION OF INR 64,09,577 ON PLANT AND MACHINERY ON THE GROUND THAT THE PLANT AND MACHINERY WERE INSTALLED AT CUSTOMER'S PREMISES AND HENCE WERE NOT 'PUT TO USE' IN THE BUSINESS OF THE APPELLANT. TRANSFER PRICING CONSIDERING THE VALUE OF MANAGEMENT CHARGES PAID TO ASSOCIATED ENTERPRISES AT RS. N IL: 4 . ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND ON THE LAW PREVAILING ON THE SUBJECT, THE LEARNED AO/ TPO, PU RSUANT TO THE DIRECTIONS OF THE HON'BLE DRP, HAS ERRED IN REJECTING THE METHODOLOGY ADOPTED BY THE APPELLANT FOR BENCHMARKING THE INTERNATIONAL TRANSACTIONS OF PAYMENT OF HEADQUARTER COMMON EXPENSES AND ALLOCATION OF MANAGEMENT ASSISTANCE RELATED FEES. 5 . ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND ON THE LAW PREVAILING ON THE SUBJECT, THE LEARNED AO/ TPO, PURSUANT TO THE DIRECTIONS OF THE HON'BLE DRP, HAS ERRED IN DETERMINING THE ARM'S LENGTH PRICE OF THE INTERNATIONAL TRANSACTIONS OF PAYMENT OF HE ADQUARTER COMMON EXPENSES AND ALLOCATION OF REGIONAL MANAGEMENT ASSISTANCE FEES, BY THE APPELLANT TO ITS ASSOCIATED ENTERPRISES, AS 'NIL', WITHOUT APPLYING ANY SPECIFIC METHOD AS PRESCRIBED BY LAW AND WITHOUT CARRYING OUT ANY COMPARABILITY ANALYSIS. 6 . ON TH E FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND ON THE LAW PREVAILING ON THE SUBJECT, THE LEARNED AO/ TPO PURSUANT TO THE DIRECTIONS OF THE HON'BLE DRP, HAS ERRED IN HOLDING THAT THE APPELLANT HAS NOT DEMONSTRATED THE NEED AND THE RECEIPT OF SERVICES UNDE R THE HEADQUARTER COMMON EXPENSES AND THE ALLOCATION OF REGIONAL MANAGEMENT ASSISTANCE, IGNORING SUBSTANTIVE DOCUMENTARY EVIDENCES SUBMITTED BY THE APPELLANT BEFORE THE LEARNED TPO/ADDITIONAL EVIDENCES SUBMITTED BEFORE THE HON'BLE DRP, ITA NO. 742 /P U N/20 1 7 NALCO WATER INDIA LTD. 3 DEMONSTRATING THE NE ED, ACTUAL RECEIPT OF THE SERVICES AND BENEFITS THEREFROM. REJECTING THE COMPARABLE UNCONTROLLED PRICE AS THE MOST APPROPRIATE METHOD FOR BENCHMARKING THE INTERNATIONAL TRANSACTIONS PERTAINING TO 'ROYALTY' AND DETERMINING ITS ALP BY AGGREGATING IT WITH OT HER INTERNATIONAL TRANSACTIONS OF THE 'MANUFACTURING SEGMENT' 7 . ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AND ON THE LAW PREVAILING ON THE SUBJECT, THE LEARNED AO/TPO, PURSUANT TO THE DIRECTIONS OF THE HON'BLE DRP, HAS ERRED IN REJECTING THE BENCHMARKIN G ANALYSIS CONDUCTED BY THE APPELLANT PERTAINING TO THE INTERNATIONAL TRANSACTION OF PAYMENT OF ROYALTY TO ITS ASSOCIATED ENTERPRISE ('AE'), WHEREIN THE ASSESSEE HAD CONSIDERED COMPARABLE UNCONTROLLED PRICE AS THE MOST APPROPRIATE METHOD, FOR DETERMINING T HE ARM'S LENGTH NATURE OF THE SAID TRANSACTION. ERRONEOUS CONSIDERATION OF AGGREGATE OF SPECIALTY CHEMICALS AND EQUIPMENT SEGMENTS FOR COMPUTATION OF ARM'S LENGTH PRICE OF THE INTERNATIONAL TRANSACTIONS PERTAINING TO THE MANUFACTURING SEGMENT. 8 . ON THE FAC TS AND IN THE CIRCUMSTANCES OF THE CASE AND ON THE LAW PREVAILING ON THE SUBJECT, THE LEARNED AO, PURSUANT TO THE DIRECTIONS OF THE HON'BLE DRP, HAS ERRED, IN CONSIDERING THE AGGREGATE OF SPECIALTY CHEMICALS AND EQUIPMENT SEGMENTS FOR THE PURPOSES OF COMPU TATION OF THE PROFIT LEVEL INDICATOR ('PLI') FOR THE PURPOSES OF COMPUTATION OF THE ARM'S LENGTH PRICE FOR THE INTERNATIONAL TRANSACTIONS OF THE APPELLANT PERTAINING TO THE MANUFACTURING SEGMENT. 9 . ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND ON TH E LAW PREVAILING ON THE SUBJECT, THE LEARNED AO/ TPO, PURSUANT TO THE DIRECTIONS OF THE HON'BLE DRP, HAS ERRED IN MODIFYING THE BENCHMARKING ANALYSIS, AS CONDUCTED BY THE APPELLANT, USING TRANSACTIONAL NET MARGIN METHOD FOR BENCHMARKING ITS INTERNATIONAL T RANSACTIONS PERTAINING TO MANUFACTURING SEGMENT AND THEREBY MODIFYING THE SET OF COMPARABLES. IN DOING SO, THE LEARNED AO / TPO / DRP HAS ERRED IN: I . ADDING / REJECTING CERTAIN COMPANIES IN THE FINAL SET OF COMPARABLES WHICH WERE FUNCTIONALLY NOT SIMILAR TO THE APPELLANT'S MANUFACTURING SEGMENT, AND II . REJECTING THE FRESH SEARCH SUBMITTED AS ADDITIONAL EVIDENCE. NOT RESTRICTING THE TRANSFER PRICING ADJUSTMENT TO THE VALUE OF 'INTERNATIONAL TRANSACTIONS': 10 . ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AND ON T HE LAW PREVAILING ON THE SUBJECT, THE LEARNED AO/ TPO, PURSUANT TO THE DIRECTIONS OF THE HON'BLE DRP, HAS ERRED BY NOT RESTRICTING THE TRANSFER PRICING ADJUSTMENT IN PROPORTION TO THE QUANTUM OF THE INTERNATIONAL TRANSACTIONS. SUBSIDY RECEIVED 11 . WITHOUT PR EJUDICE TO GROUND NO.2, ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND ON THE LAW PREVAILING ON THE SUBJECT, THE LEARNED AO/ TPO, PURSUANT TO THE DIRECTIONS OF THE HON'BLE DRP, HAS ERRED IN TREATING THE AMOUNT OF SUBSIDY RECEIVED FROM ITS AE AS 'NON - OPE RATING INCOME'. ITA NO. 742 /P U N/20 1 7 NALCO WATER INDIA LTD. 4 USE OF MULTIPLE YEAR DATA 12 . ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AND ON THE LAW PREVAILING ON THE SUBJECT, THE LEARNED AO/ TPO, PURSUANT TO THE DIRECTIONS OF THE HON'BLE DRP, HAS ERRED IN CONSIDERING THE SINGLE YEAR DATA FOR THE C OMPARABLES I.E. DATA FOR FY 2011 - 12 ONLY AND IN DISREGARDING MULTIPLE YEAR DATA, WHICH WAS CONSIDERED BY THE ASSESSEE IN ACCORDANCE WITH THE PROVISIONS OF RULE 10B(4) OF THE INCOME - TAX RULE, 1962. NON - GRANTING OF BENEFIT OF +/ - 5 % 13 . THE LEARNED AO/TPO ERRE D IN NOT GRANTING THE BENEFIT OF +/ - 5 % RANGE AS PER THE PROVISO TO SECTION 92C(2) OF THE INCOME TAX ACT, 1961. LEVYING OF INTEREST THE LEARNED AO, HAS ERRED ON THE FACTS AND IN LAW BY LEVYING INTEREST UNDER SECTION 234B OF THE ACT, ON ACCOUNT OF THE UNA NTICIPATED TRANSFER PRICING ADJUSTMENT MADE BY THE LEARNED TPO. INITIATION OF PENALTY PROCEEDINGS 14 . THE LEARNED AO, ERRED ON THE FACTS AND IN LAW IN PROPOSING TO INITIATE PENALTY PROCEEDINGS UNDER SECTION 271(1) (C) OF THE ACT. 3. FURTHER, THE ASSESSEE H AD FILED ADDITIONAL GROUNDS OF APPEAL WHICH READ AS UNDER: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND ON THE LAW PREVAILING ON THE SUBJECT, THE LEARNED ASSESSING OFFICER ('AO') / TRANSFER PRICING OFFICER ('TPO'), PURSUANT TO THE DIRECTIONS O F THE HON'BLE DISPUTE RESOLUTION PANEL ('DRP'), HAS ERRED IN MODIFYING THE BENCHMARKING ANALYSIS, AS CONDUCTED BY THE APPELLANT, USING TRANSACTIONAL NET MARGIN METHOD FOR BENCHMARKING ITS INTERNATIONAL TRANSACTIONS RELATING TO CONTRACT RESEARCH AND DEVELOP MENT ('CONTRACT R&D') SEGMENT AND THEREBY MODIFYING THE SET OF COMPARABLES. IN DOING SO, THE LEARNED AO / TPO / DRP HAS ERRED IN ADDING / REJECTING CERTAIN COMPANIES IN THE FINAL SET OF COMPARABLES WHICH WERE FUNCTIONALLY NOT SIMILAR TO THE APPELLANT'S R&D SEGMENT. 2. THE APPELLANT SUBMITS THAT THE AO / TPO / DRP, HAVING TESTED THE ARM'S LENGTH PRICE OF THE INTERNATIONAL TRANSACTION PERTAINING TO PAYMENT OF HEADQUARTER COMMON EXPENSES AND THE ALLOCATION OF REGIONAL MANAGEMENT ASSISTANCE SEPARATELY, OUGHT N OT TO CONSIDER THE SAME WHILE DETERMINING THE OPERATING MARGIN OF THE MANUFACTURING AND CONTRACT R&D SEGMENT. IN THE ALTERNATIVE, WHILE COMPUTING THE PROPORTIONATE ADJUSTMENT FOR THE SEGMENTS, IF ANY, THE HEADQUARTER COMMON EXPENSES AND THE ALLOCATION OF R EGIONAL MANAGEMENT ASSISTANCE AMOUNT SHOULD NOT BE CONSIDERED, SINCE THE HEADQUARTER COMMON EXPENSES AND THE ALLOCATION OF REGIONAL MANAGEMENT ASSISTANCE AMOUNT IS TESTED SEPARATELY. 4. THE ASSESSEE ON A LATER DATE FILED CORRECTED ADDITIONAL GROUND OF APP EAL NO.2, WHICH READS AS UNDER: - ITA NO. 742 /P U N/20 1 7 NALCO WATER INDIA LTD. 5 1. THE APPELLANT SUBMITS THAT THE AO / TPO / DRP, HAVING TESTED THE ARM'S LENGTH PRICE OF THE INTERNATIONAL TRANSACTION PERTAINING TO PAYMENT OF HEADQUARTER CO MMON EXPENSES AND THE ALLOCATION OF REGIONAL MANAGEMENT ASSISTAN CE AS WELL AS ROYA LTY SEPARATELY, OUGHT NOT TO CONSIDER THE SAME WHILE DETERMINING THE OPERATING MARGIN OF THE MANUFACTURING AND CONTRACT R&D SEGMENT. IN THE ALTERNATIVE, WHILE COMPUTING THE PROPORTIONATE ADJUSTMENT FOR THE SEGMENTS, IF ANY, THE HEADQUARTE R COMMON EXPENSES AND THE ALLOCATION OF REGIONAL MANAGEMENT ASSISTANCE AS WELL AS ROYALTY AMOUNT SHOULD NOT BE CONSIDERED, SINCE THE HEADQUARTER COMMON EXPENSES AND THE ALLOCATION OF REGIONAL MANAGEMENT ASSISTANCE AS WELL AS ROYALTY AMOUNT ARE TESTED SEPAR ATELY 5. VARIOUS ISSUES HAVE BEEN RAISED IN THE PRESENT APPEAL AND THE PARTIES WERE HEARD AT LENGTH ON EACH OF THEM AND WE WOULD REFER TO THE FACTS, ARGUMENTS AND RELIANCES PLACED UPON BY THE ASSESSEE IN RESPECT OF EACH OF THE SAID GROUNDS OF APPEAL , AS W E DECIDE THE SAID ISSUES. 6. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE COMPANY WAS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING IN WATER TREATMENT CHEMICALS, OILFIELD CHEMICALS AND INDUSTRIAL ADDITIVES AND EQUIPMENTS. FOR THE YEAR UNDER CON SIDERATION, THE ASSESSEE HAD FURNISHED RETURN OF INCOME DECLARING TOTAL INCOME AT NIL. THE CASE OF ASSESSEE WAS PICKED UP FOR SCRUTINY. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD ENTERED INTO VARIOUS INTERNATIONAL TRANSACTIONS WITH ITS ASSOCIATED ENTERPRISES AND HENCE, THE CASE WAS REFERRED TO THE TRANSFER PRICING OFFICER (TPO) FOR DETERMINING ARM'S LENGTH PRICE OF INTERNATIONAL TRANSACTIONS. THE TPO PROPOSED CERTAIN UPWARD ADJUSTMENT S , AGAINST WHICH THE ASSESSEE FILED OBJECTIONS BEFORE THE DISPUT E RESOLUTION PANEL (DRP) AND CONSEQUENT TO THE ORDER OF DRP, AN ADJUSTMENT OF 7,95,78,453/ - WAS MADE TO THE VALUE OF INTERNATIONAL TRANSACTIONS OF ASSESSEE. FURTHER, THE ASSESSING OFFICER HAD ALSO TAKEN UP THE CLAIM OF DEPRECIATION WITH RESPECT TO PLANT & MACHINERY INSTALLED AT CUSTOMERS PREMISES AND THE SAME WAS DENIED TO THE ASSESSEE. ITA NO. 742 /P U N/20 1 7 NALCO WATER INDIA LTD. 6 7. THE ASSESSEE IS IN APPEAL AGAINST FINAL ASSESSMENT ORDER PASSED AND AS POINTED OUT TO EARLIER, H AS RAISED VARIOUS ISSUES BEFORE US. 8. WE PROCEED TO DEAL WITH THE M IN THE PARAS BELOW. THE GROUND OF APPEAL NO.1 RAISED BY ASSESSEE IS GENERAL IN NATURE AND THE SAME DOES NOT REQUIRE ANY ADJUDICATION. THE GROUND OF APPEAL NO.2 RAISED BY ASSESSEE IS AGAINST ORDERS OF AUTHORITIES BELOW IN HOLDING THAT SUM OF 65,19,47, 000/ - RECEIVED BY ASSESSEE AS SUBVENTION MONEY WAS REVENUE RECEIPT EXIGIBLE TO TAX. THE ASSESSEE HAS ALSO RAISED GROUND OF APPEAL NO.11 ON WITHOUT PREJUDICE BASIS TO GROUND OF APPEAL NO.2 THAT THE ASSESSING OFFICER / TPO, PURSUANT TO DIRECTIONS OF DRP HAD ERRED IN TREATING THE SAID SUBVENTION AMOUNT RECEIVED FROM ITS ASSOCIATED ENTERPRISES AS NON - OPERATING INCOME. 9. BRIEF FACTS RELATING TO THE ISSUE ARE THAT THE ASSESSEE WAS PART OF NALCO GROUP HEADQUARTERED IN USA. NALCO US WAS A LEADING GLOBAL PROVI DER OF WATER TREATMENT AND PROCESS IMPROVEMENT SERVICES, CHEMICALS AND EQUIPMENT PROGRAMS FOR INDUSTRIAL AND INSTITUTIONAL APPLICATIONS. NALCO US WAS THE PARENT COMPANY OF NALCO GROUP OF COMPANIES OPERATING THROUGH OUT THE WORLD. THE ASSESSEE WAS A SUBSID IARY OF NALCO IN INDIA AND WAS PRIMARILY ENGAGED IN THE BUSINESS OF MANUFACTURING AND SELLING SPECIALTY CHEMICALS SUCH AS WATER TREATMENT CHEMICALS, INDUSTRIAL ADDITIVES, OILFIELD CHEMICALS AND DE - MINERALIZED WATER. THE REGISTERED OFFICE OF NALCO INDIA WA S SITUATED AT KOLKATA (WEST BENGAL) AND THE MANUFACTURING PLANTS WERE SITUATED AT VARIOUS PARTS IN INDIA. THE ASSESSEE RELOCATED ITS OPERATIONS FROM KOLKATA TO PUNE. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE RECEIVED AN OPERATIONAL SUBSIDY / SUBV ENTION FEES OF 65.19 CRORES BASED ON AN ARRANGEMENT BETWEEN IT AND NALCO, USA. THE SUBSIDY WAS PROVIDED FOR LIMITED PURPOSE SO AS TO ENSURE THAT THE ITA NO. 742 /P U N/20 1 7 NALCO WATER INDIA LTD. 7 ASSESSEE DOES NOT BECOME SICK COMPANY. THE ASSESSEE HAD OFFERED THE SAID SUBSIDY AS TAXABLE IN ITS HAND S AND THERE IS NO DISPUTE ABOUT THE SAME. FURTHER, REVENUE EXPENSES RELATING TO RELOCATION WERE DEBITED TO PROFIT AND LOSS ACCOUNT. THE ASSESSEE CLAIMS THAT THE SUBSIDY WHICH WAS RECEIVED BY IT WAS FOR EXPENSES INCURRED IN THE NORMAL COURSE OF CARRYING O N OF ITS BUSINESS AND HENCE, THE SAME IS TO BE CONSIDERED AS OPERATING IN NATURE, IN THE ABSENCE OF ANY EXTRAORDINARY NATURE OF THE SAME. ON THE OTHER HAND, THE ASSESSEE ALSO POINTED OUT THAT EXPENDITURE ON RELOCATION WAS OPERATING IN NATURE FOR CALCULATI ON OF OPERATING MARGINS. THE TRANSFER PRICING OFFICER (TPO) ON THE OTHER HAND, HELD THAT THE SUBSIDY RECEIVED BY IT COULD NOT BE CONSIDERED AS OPERATING IN NATURE AS IT WAS NOT AN AMOUNT EARNED DURING THE COURSE OF BUSINESS OF SELLING PRODUCTS / SERVICES AND IT WAS ALSO HELD THAT IT HAD NO DIRECT NEXUS WITH THE BUSINESS ACTIVITIES OF ASSESSEE, WHICH WERE RECURRING IN NATURE. THE TPO WAS OF THE VIEW THAT ONETIME SUBSIDY WAS AN EXCEPTIONAL ITEM AND SAME COULD NOT BE TREATED AS OPERATING IN NATURE. ACCORDIN GLY, THE TPO DID NOT INCLUDE THE APPORTIONED AMOUNT OF SUBSIDY / SUBVENTION AMOUNT OF 57.06 CRORES IN OPERATING REVENUE OF THE MANUFACTURING SEGMENT, WHILE COMPUTING THE PLI OF SAID SEGMENT. SIMILARLY, THE TPO DID NOT INCLUDE THE APPORTIONED AMOUNT OF S UBSIDY OF 6.51 CRORES IN THE OPERATING REVENUE OF R&D SERVICES WHILE COMPUTING PLI OF THAT SEGMENT. THE ASSESSEE HAD ALSO INCLUDED PRORATA 1.63 CRORES IN THE OPERATING INCOME OF TECHNICAL AND CONSULTANCY SERVICES SEGMENT. THE ASSESSEES PLEA BEFORE THE DISPUTE RESOLUTION PANEL (DRP) WAS THAT FIRST OF ALL, SUBVENTION AMOUNT RECEIVED BY IT BY WAY OF SUBSIDY WAS COMPENSATION FOR THE REVENUE EXPENSES BOOKED BY IT AND SHOULD BE TREATED AS OPERATING IN NATURE. IT WAS FURTHER POINTED OUT THAT THE AMOUNT OF SUBSIDY HAD ALREADY BEEN OFFERED TO TAX BY THE ASSESSEE AND IN CASE THE VIEW OF TPO IS UPHELD, THEN IT WOULD RESULT IN DOUBLE TAXATION OF SUBSIDY AMOUNT IN THE HANDS OF ITA NO. 742 /P U N/20 1 7 NALCO WATER INDIA LTD. 8 ASSESSEE. ANOTHER PLEA WHICH WAS RAISED WAS THAT WHILE COMPUTING OPERATING INCOME, ON LY EXTRAORDINARY INCOME NEEDED TO BE EXCLUDED; WHEREAS EXCEPTIONAL ITEMS OF INCOME SUCH AS SUBSIDY RECEIVED FROM ASSOCIATED ENTERPRISES WERE NOT REQUIRED TO BE EXCLUDED AS PER THE SAID RULES. THE DRP NOTED THAT IN THE INTERNAL MEMO DATED 07.03.2012, THE T ERMS USED FOR THE PAYMENT WAS ONETIME PROMOTIONAL ALLOWANCE. IN THE PROFIT AND LOSS ACCOUNT, THE ASSESSEE HAD SHOWN SUBSIDY OF 65.19 CRORES AS AN EXCEPTIONAL ITEM OF INCOME. IT WAS FURTHER NOTED BY DRP THAT THE ASSESSEE HAD INCURRED LOSS OF 63.16 CRORES BEFORE THIS EXCEPT IONAL ITEM OF INCOME AND HAD SHOWN NET PROFIT OF 2.03 CRORES , A FTER CONSIDERING THIS EXCEPTIONAL ITEM OF INCOME . T HE DRP AGREED WITH THE CONTENTION OF ASSESSEE THAT SUBSIDY INCOME OF 65.19 CRORES WAS THUS OFFERED TO TAX BY ASSESSEE IN RETURN OF INCOME . HOWEVER, THE DRP DID NOT ACCEPT THE CONTENTION OF ASSESSEE THAT SUBSIDY WAS GRANTED FOR ADDITIONAL REVENUE EXPENSES INCURRED FOR RELOCATION OF OPERATIONS FROM KOLKATA TO PUNE, IN THE ABSENCE OF ANY EVIDENCE IN THIS REGARD. THOUGH THE INTERNAL MEMO STAT ED THAT THE AMOUNT WAS PAID FOR PREVENTING THE ASSESSEE FROM BECOMING SICK COMPANY, BUT THERE WAS NO REFERENCE TO ANY SPECIFIC ITEM OF REVENUE EXPENSES. HENCE, THE ARGUMENTS OF ASSESSEE IN THIS REGARD WERE NOT ACCEPTED. THE DRP UPHELD THE ORDER OF TPO IN HOLDING THAT SUBSIDY RECEIVED FROM ASSOCIATED ENTERPRISES COULD NOT BE TREATED AS ITEM OF OPERATING INCOME AS IT WAS AN EXCEPTIONAL ITEM WHICH COULD NOT BE CONSIDERED AS HAVING ARISEN DURING THE COURSE OF NORMAL BUSINESS OPERATIONS. THE APPROACH OF TPO I N THIS REGARD WAS THUS, UPHELD. 10. COMING TO NEXT PLEA OF ASSESSEE THAT THE OBJECT OF GRANTING SUBSIDY WAS TOWARDS COMPENSATING THE LOWER PROFITS DERIVED BY ASSESSEE ON ACCOUNT OF INTERNATIONAL TRANSACTIONS CARRIED OUT WITH ITS ASSOCIATED ENTERPRISES, TH E DRP ITA NO. 742 /P U N/20 1 7 NALCO WATER INDIA LTD. 9 REFERRED TO DECISION OF MUMBAI BENCH OF TRIBUNAL IN THE CASE OF UPS JETAIR EXPRESS PVT. LTD. IN ITA NO.1166/MUM/2014, RELATING TO ASSESSMENT YEAR 2009 - 10, ORDER DATED 28.08.2015. THE TRIBUNAL IN THE SAID DECISION HAD HELD THAT WHILE SUBVENTION INCOM E WAS NOT IN THE NATURE OF OPERATING INCOME BUT IT HAD TO BE CONSIDERED THAT LOWER PROFIT AS PER TRANSFER PRICING HAD BEEN MADE UP TO THE EXTENT SUCH SUBVENTION INCOME HAS BEEN OFFERED TO TAX. THE TRIBUNAL FURTHER HELD THAT ADDITIONAL INCOME OFFERED TO TA X BY WAY OF SUBVENTION INCOME WOULD BE AVAILABLE TO THE ASSESSEE AS SET OFF AGAINST TP ADJUSTMENTS PROPOSED BY TPO. FOLLOWING THE SAME, THE DRP DIRECTED THE TPO TO SET OFF THE SAID SUBSIDY AGAINST AGGREGATE TP ADJUSTMENT COMPUTED BY TPO AND THE TP ADJUSTM ENT SHOULD BE RESTRICTED ONLY TO THE EXTENT IT WAS AN EXCESS OF SUBSIDY. 11. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE AFTER TAKING US THROUGH THE FACTS AND ORDER OF DRP, POINTED OUT THAT MEMO UNDER WHICH THE SAID SUBSIDY WAS PAID TO ASSESSEE IS PLACED AT PAGE 139 OF PAPER BOOK, WHEREIN IT IS VERY CLEARLY MENTIONED THAT IT WAS PROMOTIONAL ALLOWANCE TO PREVENT NALCO INDIA FROM BECOMING SICK COMPANY. THEN, REFERENCE WAS MADE TO DOCUMENT AT PAGES 140 AND 141 OF PAPER BOOK, UNDER WHICH US COMPANY HAD APPROVED THE SAID PROPOSAL. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE ASSESSEE HAD INITIALLY OFFERED THE SAID AMOUNT TO TAX BUT BEFORE THE DRP, IT HAD POINTED OUT THAT THE SAME WAS NOT TAXABLE, BY WAY OF ADDITIONAL G ROUND OF APPEAL RAISED IN THIS REGARD. THE DRP VIDE PARA 13.4 HAS HELD THE SAME TO BE INFRUCTUOUS. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE HERE POINTED OUT THAT FIRST ISSUE WHICH ARISES IS WHETHER THE SAID AMOUNT IS TAXABLE IN THE HANDS OF ASSESSEE. IN THIS REGARD, THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE STATED THAT THE ISSUE STANDS COVERED BY THE DECISION OF HON'BLE SUPREME COURT IN SIEMENS PUBLIC ITA NO. 742 /P U N/20 1 7 NALCO WATER INDIA LTD. 10 COMMUNICATION NETWORK (P.) LTD. VS. CIT (2017) 390 ITR 1 (SC), WHEREIN IT HAS BEEN HELD THAT SUBVENTION RECEIVED BY ASSESSEE WAS CAPITAL RECEIPT. HE FURTHER PLACED RELIANCE ON THE DECISION OF HONBLE HIGH COURT OF CALCUTTA IN PR.CIT VS. STATE FISHERIES DEVELOPMENT CORPORATION LTD. (2018) 94 TAXMANN.COM 466 (CAL) AND ON THE DECISIO N OF HONBLE HIGH COURT OF DELHI IN CIT VS. HANDICRAFTS AND HANDLOOMS EXPORT CORPORATION OF INDIA LTD. (2014) 360 ITR 130 (DEL). THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THUS STRESSED THAT WHERE THE SAID AMOUNT IS TO BE TREATED AS CAPITAL RE CEIPT, REFERRING TO DECISION IN THE CASE OF UPS JETAIR EXPRESS PVT. LTD. (SUPRA), THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT RATIONALE OF THE SAID DECISION WAS THAT WHERE PROFITABILITY GAP WAS FILLED UP, THEN WHE THER IT WAS FIL LED UP BY THE TAXABLE RECEIPT OR NON TAXABLE RECEIPT IS QUESTIONABLE. HE STRESSED THAT FIRST STEP WAS THE TP ADJUSTMENT TO BE MADE AND SECONDLY, HAVING MADE TP ADJUSTMENT, THEN NO FURTHER ADJUSTMENT NEEDS TO BE MADE. HE STRESSED THAT SUBVENTION INCOME HA D FILLED UP THE WHOLE OF PROFITS OF BUSINESS OF ASSESSEE, THEN THE TP ADJUSTMENT MUST BE MADE, WHETHER FILLED UP AMOUNT WAS TAXABLE OR NOT WOULD NOT MATTER. THE SECOND ISSUE WHICH NEEDS TO BE ADDRESSED IS WHETHER SUBVENTION INCOME WAS NOT OPERATING OVERAL L IT WAS CAPITAL RECEIPT, THEN THE SECOND STEP TO BE DECIDED IS WHAT MUST FOLLOW IN SO FAR AS TP ADJUSTMENT WAS CONCERNED . HE STRESSED THAT SAME SHOULD BE TREATED AS OPERATING INCOME OF ASSESSEE AND IN CASE IT IS HELD SO, THEN NOTHING MORE SURVIVES. HE S TRESSED THAT AS A MATTER OF LAW, THIS MUST BE ADJUSTED TO TP ADJUSTMENT EVEN IF IT IS HELD THAT SUBVENTION WAS CAPITAL RECEIPT. 12. ON THE NEXT DATE OF HEARING, THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE ASSESSEE COMPANY I N EARLIER YEARS WAS IN LOSSES AND THE PARENT COMPANY G AVE SUBVENTION, WHICH WA S TO BE TREATED AS ITA NO. 742 /P U N/20 1 7 NALCO WATER INDIA LTD. 11 OPERATING INCOME. HOWEVER, THE ASSESSING OFFICER/TPO/DRP DOES NOT ACCEPT IT AS OPERATING IN NATURE. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE ST RESSED THAT THE NEXT ISSUE OF TREATMENT OF SAID ISSUE AS CAPITAL OR NOT STANDS COVERED BY THE DECISION OF HONBLE APEX COURT IN SIEMENS PUBLIC COMMUNICATION NETWORK (P.) LTD. VS. CIT (SUPRA), BUT THE SECOND PART WHICH NEEDS TO BE DECIDED IS IF CAPITAL IN N ATURE, THEN IT IS OPERATING OR NON OPERATING. HE FURTHER POINTED OUT THAT WHEN TESTING THE LEVEL OF PROFITABILITY, THEN THE SAME BE TREATED AS OPERATING INCOME. 13. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE STRESSED THAT TWO ISSUES HAVE ARI SEN IN RESPECT OF SUBVENTION RECEIPTS THAT FIRST WHETHER IT IS TAXABLE IN THE HANDS OF ASSESSEE AND WHETHER IT IS OPERATING INCOME. HE REFERRED TO OBSERVATIONS OF DRP IN PARA 4.6 AT PAGE 9 OF ORDER OF DRP. HE FURTHER POINTED OUT THAT IN CASE IT IS HELD T HAT THE SAID RECEIPTS WERE NOT REVENUE IN NATURE, THEN CONSEQUENTLY IT WAS NON OPERATING, SINCE IT WAS ONETIME PAYMENT AND WAS NOT RECURRING PAYMENT. 14. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE IN REJOINDER POINTED OUT THAT THE TPO MAY SEE THE AMOUNTS WHICH ARE RELATABLE TO THIS YEAR AS THE SUBVENTION WAS PAID FOR TWO YEARS. 15. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE ARISING BY WAY OF GROUND OF APPEAL NO.2 IS AGAINST TREATMENT OF SUBVENTION / SUBSIDY RECEIVE D BY ASSESSEE FROM ITS PARENT COMPANY NALCO, USA. THE SECOND ISSUE WHICH IS RAISED ON WITHOUT PREJUDICE BASIS VIDE GROUND OF APPEAL NO.11 IS WHETHER THE SAID SUBVENTION AMOUNT IS OPERATING IN NATURE AND THE SAME HAS TO BE INCLUDABLE AS RECEIPT IN THE HAND S OF ASSESSEE WHILE COMPUTING ITA NO. 742 /P U N/20 1 7 NALCO WATER INDIA LTD. 12 PLI FOR THE YEAR UNDER CONSIDERATION. THE ASSESSEE WAS A SUBSIDIARY OF NALCO, USA AND SINCE IT WAS INCURRING LOSSES, THE PARENT COMPANY ALLOWED PROMOTIONAL ALLOWANCE TO PREVENT THE ASSESSEE FROM BECOMING SICK COMPANY. THIS I S EVIDENT FROM THE MEMO PLACED AT PAGE 139 OF PAPER BOOK AND ALSO FROM CONSEQUENTIAL MEMO FOR APPROVAL OF SUBVENTION AND RELEVANT E - MAILS AND RELEVANT DOCUMENTS THERETO. THE ASSESSEE RECEIVED SUM OF 65,19,47,000/ - TOWARDS SUBVENTION. THE ASSESSEE HAD OFFERED THE SAID AMOUNT AS TAXABLE IN ITS HANDS INITIALLY BUT BEFORE TH E DRP, IT WAS PLEADED THAT THE SAME WAS NOT TAXABLE IN ITS HANDS. THE ISSUE VIS - - VIS ITS TAXABILITY I.E. RECEIPT OF SUBVENTION FROM PARENT COMPANY NOW STANDS SETTLED BY RECENT DECISION OF HON'BLE SUPREME COURT IN SIEMENS PUBLIC COMMUNICATION NETWORK (P.) LTD. VS. CIT (SUPRA). THE HON'BLE SUPREME COURT HAD HELD THAT VOLUNTARY PAYMENTS MADE BY PARENT COMPANY TO ITS LOSS MAKING INDIAN COMPANY CAN ALSO BE UNDERSTOOD TO BE PAYMENTS MADE IN ORDER TO PROTECT THE CAPITAL INVESTMENT OF ASSESSEE COMPANY. IT WAS F URTHER HELD THAT IF THAT IS SO, THEN THE PAYMENT IN QUESTION COULD NOT BE HELD TO BE REVENUE RECEIPTS, HENCE THEY WERE CAPITAL RECEIPTS IN THE HANDS OF ASSESSEE. SIMILAR PROPOSITION HAS BEEN LAID DOWN BY THE HONBLE HIGH COURT OF KOLKATA AND HONBLE DELHI HIGH COURT IN DIFFERENT DECISIONS. 16. APPLYING THE SAID PROPOSITION TO THE FACTS OF PRESENT CASE, WHERE THE ASSESSEE HAD RECEIVED THE ALLEGED SUBVENTION AMOUNT OR THE SUBSIDY AS REFERRED TO BY THE ASSESSING OFFICER / TPO / DRP, THE AMOUNT RECEIVED BY ASSESSEE FROM ITS PARENT COMPANY NALCO, USA WAS A CAPITAL RECEIPT IN THE HANDS OF ASSESSEE AND HENCE, WAS NOT TAXABLE IN ITS HANDS. 17. COMING TO THE NEXT ASPECT OF TREATMENT OF SAID AMOUNT WHILE DETERMINING THE PLI OF ASSESSEE, THE ASSESSEE CLAIMS THAT T HE AMOUNT IS TO BE TAKEN AS ITA NO. 742 /P U N/20 1 7 NALCO WATER INDIA LTD. 13 OPERATING INCOME SINCE THE SAID RECEIPT WAS TO MAKE GOOD LO S SES INCURRED BY ASSESSEE IN EARLIER YEARS AND ALSO CURRENT YEAR . THE ASSESSEE HAS TIME AND AGAIN STRESSED THAT TAXABILITY OF RECEIPT UNDER THE INCOME TAX ACT CANNOT AF FECT THE CALCULATION OF OPERATING MARGINS OF ASSESSEE, AS THE AMOUNT WHICH HA D BEEN RECEIVED WA S DURING THE COURSE OF ITS BUSINESS I.E. PREVENTING THE ASSESSEE FROM GOING INTO LOSSES, HENCE THE RE - COMPUTATION OF PLI IN THE HANDS OF ASSESSEE. 18. THE FIRST QUESTION WHICH ARISES IS WHETHER THE CAPITAL RECEIPT IN THE HANDS OF ASSESSEE CAN BE HELD TO BE OPERATING IN NATURE. WHILE DECIDING THE SAID ASPECT AS TO WHETHER NALCO, USA HAD GRANTED THE ASSESSEE A ONETIME PROMOTIONAL ALLOWANCE IN ORDER TO SAVE IT FROM BECOMING SICK, THIS ASPECT IS TO BE SEEN FROM THE FACT THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAD BOOKED LOSS ES OF 63.16 CRORES IN ITS PROFIT AND LOSS ACCOUNT. ONCE THE SUBSIDY OF 65.19 CRORES WAS CREDITED, THERE WAS PROFIT OF 2.03 C RORES. IN OTHER WORDS, PROFIT DURING THE YEAR WA S ATTRIBUTABLE TO SUBVENTION AMOUNT OF 65.19 CRORES AND HENCE, IT CANNOT BE HELD THAT THE AMOUNT WA S NOT OPERATIONAL IN NATURE. THE ITEM OF RECEIPT WA S UNDOUBTEDLY, AN EXCEPTIONAL ITEM OF INCOME BUT WA S N OT AN EXTRAORDINARY ITEM OF INCOME. THE ASSESSEE WAS ALSO COMPENSATED FOR ADDITIONAL REVENUE EXPENSES INCURRED BY IT FOR TRANSFERRING ITS ESTABLISHMENT FROM KOLKATA TO PUNE AND THEN RUNNING THE SAME AT PUNE . SUCH O NETIME PAYMENT RECEIVED BY ASSESSEE IS T HUS, OPERATING IN NATURE. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE HAD POINTED OUT THAT THE SUBVENTION AMOUNT RELATED TO TWO YEARS . WE HOLD THAT AMOUNT RELATABLE TO THE YEAR, NEED TO BE CONSIDERED FOR COMPUTING PLI OF THE ASSESSEE. WE DIRE CT THE ASSESSING OFFICER TO CARRY OUT THE SAID EXERCISE. AS FAR AS RELIANCE ON THE DECISION OF MUMBAI BENCH OF TRIBUNAL IN THE CASE OF UPS JETAIR EXPRESS PVT. ITA NO. 742 /P U N/20 1 7 NALCO WATER INDIA LTD. 14 LTD. (SUPRA) IS CONCERNED, WHEREIN THE PROPOSITION LAID DOWN WAS SINCE THE SUBVENTION INCOME HA D BEEN OFFERED TO TAX, THEN THE SAME WOULD BE AVAILABLE TO THE ASSESSEE FOR SET OFF AGAINST TP ADJUSTMENT PROPOSED BY TPO. THE SAID PROPOSITION WILL NOT BE APPLICABLE TO THE ISSUE RAISED BEFORE US SINCE THE HONBLE APEX COURT HAS DECIDED THE TAXABILITY OF SUBVENTION INCOME TO BE CAPITAL IN NATURE AND HENCE, THE SAID INCOME IS NOT TAXABLE IN THE HANDS OF ASSESSEE AND SAME WOULD NOT BE AVAILABLE AS SET OFF AS AGAINST TP ADJUSTMENT MADE BY ASSESSING OFFICER/TPO. ACCORDINGLY, THERE IS NO MERIT IN THE DIRECTION S OF DRP IN THIS REGARD. WE IN THE FINAL ANALYSIS HOLD THAT SUBVENTION INCOME IS CAPITAL RECEIPT IN THE HANDS OF ASSESSEE, HENCE NOT TAXABLE. FURTHER, WE HOLD THAT THE SAID SUBVENTION AMOUNT IS OPERATING IN NATURE AND HAS TO BE INCLUDED AS OPERATING INCO ME WHILE COMPUTING PLI IN THE HANDS OF ASSESSEE RESTRICTED TO THE AMOUNT RELATABLE TO THE INSTANT ASSESSMENT YEAR . THUS, GROUND OF APPEAL NO.2 RAISED BY ASSESSEE AGAINST TAXABILITY OF SUBVENTION INCOME IS ALLOWED AND GROUND OF APPEAL NO.11 ALSO STANDS ALL OWED IN FAVOUR OF ASSESSEE. 19. NOW COMING TO GROUND OF APPEAL NO.3, THE ISSUE WHICH IS RAISED IS THE DEPRECIATION ON ASSETS INSTALLED AT THE CUSTOMERS PREMISES. 20. THE ISSUE STANDS COVERED IN FAVOUR OF ASSESSEE BY THE DECISION OF KOLKATA BENCH OF TR IBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2008 - 09 IN ITA NO.2111/KOL/2013, VIDE PARA 9 OF ORDER DATED 05.04.2017. FOLLOWING THE SAME PARITY OF REASONING, WE ALLOW THIS CLAIM OF ASSESSEE. HOWEVER, FOR THE SAKE OF BREVITY, THE SAID PARA 9 IS NOT BE ING REPRODUCED. THE GROUND OF APPEAL NO.3 RAISED BY ASSESSEE IS THUS, ALLOWED. ITA NO. 742 /P U N/20 1 7 NALCO WATER INDIA LTD. 15 21. NOW, COMING TO THE NEXT ISSUE RAISED VIDE GROUNDS OF APPEAL NO.4 TO 6, WHICH IS AGAINST TRANSFER PRICING ADJUSTMENT TO THE VALUE OF MANAGEMENT CHARGES PAID TO ASSOCIATED E NTERPRISES. 22. BRIEF FACTS RELATING TO THE ISSUE ARE THAT THE ASSESSEE HAD MADE PAYMENT OF 25,70,30,000/ - TO NALCO SINGAPORE ON ACCOUNT OF ALLOCATION OF REGIONAL MANAGEMENT ASSISTANCE RELATED COST. IT HAD FURTHER PAID SUM OF 12,73,22,000/ - TO NAL CO US ON ACCOUNT OF HEADQUARTER COMMON EXPENSES. IN OTHER WORDS, THE ASSESSEE HAD MADE PAYMENT OF TWO SETS OF INTRA - GROUP FEES TO ITS ASSOCIATED ENTERPRISES. IT WAS EXPLAINED BY ASSESSEE THAT NALCO SINGAPORE SERVED AS REGIONAL ADVISORY AND COORDINATOR FO R THE ASIA PACIFIC GROUP COMPANIES OF NALCO GROUP AND ASSISTED THE GROUP COMPANIES IN MARKETING, BUSINESS OPERATIONS SUPPORT, IT SUPPORT SERVICES, HR, REGIONAL FINANCE SERVICES, ETC. ON THE OTHER HAND, NALCO US PROVIDED SERVICES SUCH AS INFORMATION TECHNO LOGY PLANNING, SUPPLY CHAIN AND PROCUREMENT SUPPORT, INSURANCE AND RISK MANAGEMENT, TREASURY, ETC. THE ASSESSEE CLAIMS THAT ALLOCATION OF COST TO THE ENTITIES WAS MADE AS PER THE REPORT FROM AN INDEPENDENT ACCOUNTANT AND HENCE, THE SAME WAS AT ARM'S LENGT H PRICE. THE TPO ON THE OTHER HAND, REJECTED THE METHODOLOGY ADOPTED BY ASSESSEE IN RESPECT OF INTERNATIONAL TRANSACTIONS OF PAYMENT OF HEADQUARTER COMMON EXPENSES AND ALLOCATION OF MANAGEMENT ASSISTANCE RELATED FEES AND DETERMINED THE SAME AT NIL. THE A SSESSING OFFICER PASSED DRAFT ASSESSMENT ORDER, AGAINST WHICH THE ASSESSEE FILED OBJECTIONS BEFORE THE DRP. THE DRP UPHELD THE SAME, AGAINST WHICH THE ASSESSING OFFICER PASSED FINAL ASSESSMENT ORDER, AGAINST WHICH THE ASSESSEE IS IN APPEAL BEFORE US AND R AISED GROUNDS OF APPEAL NO.4 TO 6 IN THIS REGARD. THE ASSESSEE IS AGGRIEVED BY ORDERS OF AUTHORITIES BELOW IN HOLDING THAT THE ASSESSEE HAD NOT DEMONSTRATED THE NEED ITA NO. 742 /P U N/20 1 7 NALCO WATER INDIA LTD. 16 AND RECEIPT OF SERVICES UNDER HEADQUARTER COMMON EXPENSES AND THE ALLOCATION OF REGIONA L MANAGEMENT ASSISTANCE. 23. THE CASE OF ASSESSEE BEFORE US IS THAT IT HAD PROVIDED SUBSTANTIVE DOCUMENTARY EVIDENCES BEFORE THE TPO AND ALSO SUBMITTED ADDITIONAL EVIDENCES BEFORE THE DRP DEMONSTRATING THE NEED, ACTUAL RECEIPT OF SERVICES AND BENEFIT TH EREON. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE FURTHER POINTS OUT THAT THE TPO HAD NOT APPLIED ANY PROPER METHOD TO BENCHMARK THE AFORESAID TRANSACTIONS AND HAD ERRED IN HOLDING THAT EVIDENCES WERE NOT SUFFICIENT TO SUPPORT THE CASE OF ASSE SSEE THAT SERVICES WERE RENDERED. IN THIS REGARD, THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE PLACED RELIANCE ON THE RATIO LAID DOWN BY PUNE BENCH OF TRIBUNAL IN EMERSON CLIMATE TECHNOLOGIES (INDIA) P. LTD. VS. DCIT (2018) 100 TAXMANN.COM 478 ( PUNE - TRIB.) AND EATON FLUID POWER LTD. VS. ACIT (2018) 92 TAXMANN.COM 158 (PUNE - TRIB.). THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE FURTHER POINTED OUT THAT THE ISSUE VIS - - VIS PAYMENT OF REGIONAL MANAGEMENT AND ASSISTANCE FEES TO NALCO SINGAPO RE HAS BEEN HELD TO BE AT ARM'S LENGTH PRICE BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEARS 2003 - 04 AND 2004 - 05 REPORTED IN (2016) 71 TAXMANN.COM 57 (KOL). THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE FURTHER POINTED OUT THAT NO ADJ USTMENT WAS MADE VIS - - VIS MANAGEMENT FEES PAID TO NALCO SINGAPORE FOR ASSESSMENT YEARS 2005 - 06 TO 2008 - 09. HE THUS, STRESSED THAT PAYMENT OF REGIONAL MANAGEMENT AND ASSISTANCE FEES PAID TO NALCO SINGAPORE DOES NOT REQUIRE ANY ADJUSTMENT IN THE YEAR UNDER CONSIDERATION. 24. COMING TO NEXT INTRA - GROUP SERVICE CHARGES PAID BY ASSESSEE TO NALCO US, IT WAS POINTED OUT THAT THE PAYMENT HA D BEEN MADE ON ACCOUNT OF COMMON ITA NO. 742 /P U N/20 1 7 NALCO WATER INDIA LTD. 17 EXPENSES OF HEADQUARTER, DETAILS OF WHICH ARE AVAILABLE AT PAGE 263 OF PAPER BOOK. THE S AID PAYMENTS WE RE IN RESPECT OF DIFFERENT TYPES OF SERVICES PROVIDED BY NALCO US TO THE GROUP ENTITIES AND THEN SAME WE RE ALLOCATED ENTITY - WISE. THE SAID PAYMENTS WERE ALSO MADE AS PER AGREEMENT BETWEEN ASSESSEE AND NALCO US, COPY OF WHICH IS PLACED AT PA GES 1132 TO 1136 OF PAPER BOOK AND WERE PAID AT COST WITHOUT ANY MARKUP. HE ALSO EXPLAINED THE NATURE OF SERVICES AND EVIDENCES FILED IN THIS REGARD. IT WAS ALSO POINTED OUT THAT COST ALLOCATION WAS CERTIFIED BY AN INDEPENDENT ACCOUNTANT. 25. ANOTHER ASPECT WHICH WAS STRESSED BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE WAS THAT AS FAR AS ASSESSMENT FOR ASSESSMENT YEAR 2012 - 13 IN THE HANDS OF NALCO US IS CONCERNED, THE RECEIPTS HAVE BEEN HELD TO BE TAXABLE BY THE ASSESSING OFFICER AS FEES FOR TECHNICAL SERVICES @ 10% IN TERMS OF ARTICLE 12 OF INDIA - US DTAA HOLDING THEREIN THAT SERVICES RENDERED BY NALCO US MAKE AVAILABLE TECHNICAL KNOWLEDGE TO THE PAYER. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT NALCO US HAS FILED OBJECTIONS BEFORE THE DRP, WHICH WERE PENDING ADJUDICATION. IN THIS BACKGROUND, IT WAS STATED THAT ONCE RECEIPTS OF MANAGEMENT SUPPORT SERVICE CHARGES WERE ACCEPTED AS FEES FOR TECHNICAL SERVICES OR ROYALTY IN THE HANDS OF ASSOCIATED ENTERPRISE, TH EN IT WAS INCORRECT ON THE PART OF TPO THAT THE NATURE OF PAYMENT WAS DIFFERENT IN THE HANDS OF ASSESSEE BY PLACING RELIANCE ON THE BENEFIT TEST. IT WAS ALSO STRESSED THAT THERE IS NO MERIT IN THE CASE OF TPO THAT NO DETAILS WERE FILED OF VISITS OF PERSON S. OUR ATTENTION WAS DRAWN TO WRITTEN SUBMISSIONS PLACED AT PAGE 1036 ONWARDS OF PAPER BOOK AND ALSO EVIDENCES FILED AT PAGES 1027 TO 1037, 1062 TO 1063 AND 1079 TO 1081 OF PAPER BOOK. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE HERE STRESSED THAT THE ASSESSING OFFICER/TPO/DRP HAD NO JURISDICTION TO DETERMINE THE BENEFIT TEST. IT ITA NO. 742 /P U N/20 1 7 NALCO WATER INDIA LTD. 18 WAS ALSO POINTED OUT THAT WHERE DRP DOES NOT DOUBT THE SERVICES RENDERED ESPECIALLY WHERE THE INDIAN COMPANY HAD ONLY 700 EMPLOYEES AND ALL IT SUPPORT SERVICES WERE G IVEN BY NALCO US, THEN THERE WA S NO MERIT IN TREATING THE ARM'S LENGTH PRICE OF SAID SERVICES AT NIL. FURTHER, RELIANCE WAS PLACED ON THE RATIO LAID DOWN BY KOLKATA BENCH OF TRIBUNAL IN THE CASE OF PHILIPS INDIA LTD. VS. ACIT (2018) 90 TAXMANN.COM 357. 2 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE REFERRED TO THE ORDER OF DRP WITH SPECIAL REFERENCE TO PARA 6.3 AT PAGE 21 AND PARA 6.8 AT PAGE 22 OF THE ORDER. HE FURTHER STATED THAT FIRST OF ALL, THERE SHOULD BE NEED FOR AVAILING THE SERVICES AND SECOND AND THIRD ISSUE WAS WHETHER CONTEMPORANEOUS DOCUMENTS WERE AVAILABLE AND FOURTH PART OF THE ISSUE WAS WHETHER THERE WAS TANGIBLE AND DIRECT BENEFIT TO THE ASSESSEE. HE STATED THAT BEFORE THE DRP ADDITIONAL EVIDENCES WERE FILED WITH REGARD TO S ERVICES MADE AVAILABLE. HE THEN REFERRED TO THE REMAND REPORT OF ASSESSING OFFICER AT PARA 6.10 ITEMS (I) TO (VI) AND PARA 6.13 OF DRP ORDER AT PAGES 26 AND 27 AND STATED THAT THERE WAS NO REQUEST BY THE ASSESSEE FOR THE SAID SERVICES, HENCE IT WAS CASE O F NO NEED OF SERVICES. FURTHER, NO DETAILS OF REPRESENTATIVES VISITING INDIA AND OTHER REGIONS WERE FILED BY ASSESSEE. HE STRESSED THAT NO EVIDENCE OF SERVICES AVAILED WAS AVAILABLE ON RECORD. IT WAS FURTHER POINTED OUT BY THE LEARNED DEPARTMENTAL REPRE SENTATIVE FOR THE REVENUE THAT RELIANCE OF LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE ON EMERSON CLIMATE TECHNOLOGIES (INDIA) P. LTD. VS. DCIT (SUPRA) WAS MISPLACED AS THE FACTS WERE DIFFERENT, WHEREIN BEFORE THE AUTHORITIES BELOW CONTEMPORANEOUS E VIDENCES WERE FILED; BUT IN ASSESSEES OWN CASE, NO SUCH EVIDENCES WERE FILED. HE ALSO POINTED OUT THAT RELIANCE OF LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE ON ASSESSEES OWN CASE WAS INCORRECT AS THE FACTS WERE DIFFERENT; ESPECIALLY IN ITA NO. 742 /P U N/20 1 7 NALCO WATER INDIA LTD. 19 CASE WHE RE DETAILED INVESTIGATION WAS MADE BY ASSESSING OFFICER / DRP AND THE CONCLUSION WAS THAT NO SERVICES WERE RENDERED. 27. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE ARISING VIDE GROUNDS OF APPEAL NO.4 TO 6 IS VIS - - VIS ADJUSTM ENT MADE ON ACCOUNT OF CHARGES FOR INTRA - GROUP SERVICES PAID BY ASSESSEE TO ITS ASSOCIATED ENTERPRISES. THE ASSESSEE CLAIMS THAT IT WA S ONLY HAVING MANUFACTURING FACILITY IN INDIA AND ALL THE OTHER SERVICES WERE PROVIDED BY ASSOCIATED ENTERPRISES, FOR WHI CH ASSESSEE HAD ENTERED INTO SEPARATE AGREEMENTS WITH TWO ENTITIES I.E. NALCO SINGAPORE AND NALCO US. THE SERVICES WHICH WE RE RECEIVED UNDER THE REGIONAL MANAGEMENT AND ASSISTANCE SERVICES WE RE AS PER AGREEMENT ENTERED INTO BY ASSESSEE WITH NALCO SINGAPOR E, COPY OF WHICH IS PLACED AT PAGES 1123 TO 1131 OF PAPER BOOK. THE SAID SERVICES WERE AVAILED IN THE FIELD OF MARKETING, SALES , BUSINESS AND MARKET DEVELOPMENT, INFORMATION SYSTEMS SERVICES, LOGISTIC SUPPORT, HUMAN RESOURCES SERVICES, REGIONAL FINANCE SE RVICES, REGIONAL PROCUREMENT SERVICES, RESEARCH AND DEVELOPMENT SERVICES, ETC. THE APPROPRIATION WAS MADE UNDER THE ASIA PACIFIC PROCUREMENT POLICY, COPY OF WHICH IS PLACED AT PAGES 167 TO 176 OF PAPER BOOK. FURTHER, THE ASSESSEE HAD ALSO RECEIVED SUPPOR T SERVICES FROM THE ASIA PACIFIC IT TEAM IN SETTING UP OF IT FACILITY OF NEW OFFICE AT PUNE AND EVIDENCE IN THIS REGARD IS PLACED AT PAGES 357 TO 362 OF PAPER BOOK. FURTHER SUPPORT WAS ALSO RECEIVED FROM GLOBAL TEAM IN ERRORS FACED IN ACCOUNTING IN VENDOR ACCOUNT IN SAP AND TRACKING PAYMENTS AND THE EVIDENCES ARE PLACED AT PAGES 591 AND 592 OF PAPER BOOK. FURTHER, THE ASSESSEE HAS ALSO RECEIVED HR SUPPORT BY WAY OF E - MAILS BETWEEN GLOBAL HR AND INDIAN HR ON ACCOUNT OF INCREMENTS, SALARY HIKES AND ALSO TEC HNICAL TRAINING CONDUCTED IN DUBAI, EVIDENCES IN THIS REGARD ARE PLACED AT PAGES 496 TO 504 OF PAPER BOOK. THE ASSOCIATED ENTERPRISE WAS PROVIDING SUCH SUPPORT ITA NO. 742 /P U N/20 1 7 NALCO WATER INDIA LTD. 20 SERVICES TO ALL ENTITIES IN THE ASIA PACIFIC REGION AND METHODOLOGY WAS ADOPTED FOR ALLOCATING THE COST ENTITY - WISE AND ALLOCATION OF COSTS WERE FURTHER CERTIFIED BY AN INDEPENDENT ACCOUNTANT. THE SAID CERTIFICATE IS PLACED AT PAGES 798 TO 802 OF PAPER BOOK. IN RESPECT OF SERVICES AVAILED FROM NALCO SINGAPORE, THE ASSESSEE HAD PAID SUM OF 25.70 CRORES TO NALCO SINGAPORE AND HAD CLAIMED THAT THE SAID INTRA - GROUP SERVICES PROVIDED TO IT ALONG WITH OTHER GROUP COMPANIES OF NALCO IN ASIA PACIFIC REGION WERE AT ARM'S LENGTH. THE ASSESSEE BEFORE US HAS FILED EVIDENCES IN SUPPORT OF SERVICES WHICH IN T URN, WERE FILED BEFORE THE ASSESSING OFFICER/TPO/DRP AT PAGES 145 TO 783 OF PAPER BOOK. THE TPO ON THE OTHER HAND, HAD DETERMINED THE ARM'S LENGTH PRICE OF INTRA - GROUP FEES A T NIL ON THE GROUND OF LACK OF EVIDENCES. WE FIND NO MERIT IN THE PLEA OF AUTHOR ITIES BELOW IN THIS BEHALF ESPECIALLY WHERE THE ASSESSEE HA D DEMONSTRATED THE AVAILMENT OF INTRA - GROUP SERVICES AND IN SUPPORT FILED COPY OF AGREEMENT, UNDER WHICH IT HAD AVAILED THE SAID SERVICES AND HAD FURTHER FURNISHED E - MAILS EXCHANGED AND OTHER DOCUM ENTS TO ESTABLISH ITS CASE OF AVAILMENT OF SERVICES FROM ITS ASSOCIATED ENTERPRISES AND ALSO THE BENEFITS ARISING THEREFROM. IN SUPPORT THE ALLOCATION KEY ADOPTED HAS BEEN CONSISTENTLY FOLLOWED. IT IS NOT THE CASE THAT SUCH SERVICES WERE PROVIDED BY NALC O SINGAPORE ONLY TO THE ASSESSEE BUT SIMILAR SERVICES WERE PROVIDED TO GROUP ENTITIES OF NALCO GROUP AND IN SUCH CIRCUMSTANCES, IT C OULD NOT BE SAID THAT THE ASSESSEE HAD NOT AVAILED ANY SERVICES AND BENCHMARK THE ARM'S LENGTH PRICE OF INTERNATIONAL TRANSA CTIONS AT NIL. THE ASSESSING OFFICER IS NOT TO SIT IN THE ARMCHAIR OF BUSINESSMAN IN ORDER TO DETERMINE THE NATURE OF SERVICES AVAILED. WHERE THE ASSESSEE HAS FILED VOLUMINOUS EVIDENCE OF SERVICES RECEIVED, THEN THE SAME CANNOT BE BRUSHED ASIDE ON THE GR OUND THAT NO EVIDENCES HAVE BEEN FILED AS TO HOW THE ASSESSEE ASKED FOR THE SAID SERVICES. THE NEED IS OF THE BUSINESSMAN AND THE SAME CANNOT BE QUESTIONED ON FLIMSY GROUNDS. ITA NO. 742 /P U N/20 1 7 NALCO WATER INDIA LTD. 21 28. WE FIND THAT PUNE BENCH OF TRIBUNAL IN EMERSON CLIMATE TECHNOLOGIES (INDIA) P. LTD. VS. DCIT (SUPRA) HAS DELIBERATED ON SIMILAR ISSUE OF AVAIL MENT OF SERVICES FROM THE ASSOCIATED ENTERPRISES AND OBSERVED AS UNDER: - 19. THE ASSESSEE THUS, FILED DOCUMENTARY EVIDENCE TO DEMONSTRATE THAT IT HAD AVAILED SERVICES IN THE FIELD OF HUMAN RESOURCES, MARKING AND PRODUCT, FINANCE, BUSINESS DEVELOPMENT AND MANAGEMENT AND OTHER SERVICES I.E. SUPPORT FOR NEW PRODUCT, MARKETING MATERIAL, TRAINING MATERIAL AND TECHNICAL SUPPORT. THE ASSESSEE HAS ALSO EXPLAINED THE NEED FOR SERVICES BEING IN FIEL D OF OPERATIONAL, STRATEGIC AND ADVISORY SUPPORT SERVICES. THE FIRST ASPECT WHICH ARISES IN THE PRESENT APPEAL IS WHETHER THE TPO WHILE ASCERTAINING WHETHER PRICE PAID FOR THE SERVICES IS AT ARM'S LENGTH PRICE OR NOT, CAN ENTER THE FIELD OF BUSINESSMAN, W HO IS THE BEST JUDGE AS TO WHETHER IT NEEDS TO AVAIL THE SAID SERVICES. THE ANSWER TO THE SAME IS NO. EACH BUSINESSMAN IS THE BEST JUDGE TO COME TO DECISION AS TO WHETHER IT NEEDS THE SAID SUPPORT SERVICES OR NOT. SECONDLY, ONCE SUCH A DECISION HAS BE EN TAKEN BY THE BUSINESSMAN AND IT PROVIDES THE EVIDENCE OF SERVICES RECEIVED BY IT FROM ITS ASSOCIATED ENTERPRISES, THEN THE TPO CANNOT QUESTION THE SAME BY COMMENTING UPON THE NATURE OF SERVICES PROVIDED, WHERE IN ANY CASE, INFORMATION IS HYPER TECHNICAL . FIRST OF ALL, WHERE THE TPO HAS REFERRED TO THE SERVICES PROVIDED AND POINTED OUT DEFECTS IN THE SERVICES PROVIDED, THE FIRST STEP THAT SERVICES HAVE BEEN PROVIDED STANDS ESTABLISHED. ONCE THE SAME IS ESTABLISHED BY WAY OF ASSESSEE PRODUCING SEVERAL EV IDENCES BEFORE THE TPO, WHICH WERE IN THE FORM OF CONTEMPORANEOUS DATA, THEN THE TPO IS PRECLUDED FROM COMMENTING UPON THE SAME AND HOLDING THAT THE ASSESSEE HAD NOT RECEIVED ANY SERVICES AND ALSO THERE WAS NO NEED FOR MAKING ANY PAYMENTS FOR SUCH SERVICES , AS THE SERVICES PROVIDED WERE NOT UPTO THE MARK. IN ANY CASE, THE PERUSAL OF VARIOUS EVIDENCES FILED BY THE ASSESSEE I.E. CONTEMPORANEOUS DATA AVAILABLE ON RECORD SHOWS THAT IT IS HIGHLY TECHNICAL AND THE SAME HAS BEEN USED BY THE ASSESSEE FOR CARRYING ON ITS BUSINESS ACTIVITIES, SUCH EVIDENCE CANNOT BE BRUSHED ASIDE BEING NOT UPTO THE MARK. THE TPO HAD REFERRED TO PART OF THE DATA AND DREW CONCLUSION, WHICH IS NOT WARRANTED IN ANY CASE. 20. ANOTHER ASPECT OF THE ISSUE WHICH NEEDS TO BE KEPT IN MIN D IS THE DEVELOPING SCENARIO OF CARRYING ON THE BUSINESS IN THE COUNTRY. THE SAID BUSINESS IS CARRIED ON BY THE ENTITIES WHICH HAVE PRESENCE OUTSIDE INDIA AND HAVE CERTAIN STANDARDS, WHICH ARE ATTACHED TO ITS BRAND NAME. IN ORDER TO MAINTAIN ITS BRAND VA LUE, ARRANGEMENTS ARE MADE WITH DIFFERENT ENTITIES ACROSS THE GLOBE BY HOLDING COMPANIES, SO THAT DIFFERENT ENTITIES OPERATING IN DIFFERENT PARTS OF THE WORLD ADHERE TO SPECIFIC RULES AND REGULATIONS WHILE CARRYING ON BUSINESS UNDER THE SAID BRAND. THE AS SESSEE IS 100% SUBSIDIARY OF COPELAND CORPORATION, WHICH ADMITTEDLY, HAS PRESENCE IN VARIOUS COUNTRIES. THE ASSESSEE HAS PLACED ON RECORD THAT BESIDES THE ASSESSEE ENTERING INTO AGREEMENT WITH EMERSON HK, EMERSON TH, VARIOUS ENTITIES OF OTHER COUNTRIES HA D ENTERED INTO SUCH AGREEMENTS. THE TERMS OF THE AGREEMENT ARE SIMILAR FOR PROVIDING SERVICES, WHEREIN A PARTICULAR FORMULA IS DESIGNED BY THE PERSON PROVIDING THE SERVICES I.E. THE BASIS FOR REMUNERATION IS THE COST INCURRED BY WAY OF MAN HOURS CHARGED T O THE ENTITY WITH MARK UP OF 5.8%. SUCH METHOD OF CHARGING AND REMUNERATING WAS IDENTICAL IN THE CASE OF ALL THE ENTITIES WHICH WERE AVAILING THE SERVICES FROM COPELAND CORPORATION THROUGH EMERSON HK AND EMERSON TH. THE ASSESSEE HAD ALSO FURNISHED ON REC ORD THE BASIS FOR CHARGING COST BY THE TWO ENTITIES FROM THE ASSESSEE. NO DOUBT, THE COMPLETE DETAILS OF OPERATIONS OF THE SAID CONCERNS WORLDWIDE HAD NOT BEEN FILED, BUT THAT HAD NO RELEVANCE TO THE ACTIVITIES OR SERVICES AVAILED BY THE ASSESSEE. THERE IS ITA NO. 742 /P U N/20 1 7 NALCO WATER INDIA LTD. 22 NO MERIT IN THE ORDER OF TPO IN REJECTING THE SEGMENTAL DETAILS OF AES FILED BY THE ASSESSEE VIS - - VIS SERVICES AVAILED BY IT. WHAT IS TO BE CONSIDERED IN THE HANDS OF ASSESSEE IS THE SERVICES IT HAD AVAILED FROM EMERSON HK AND EMERSON TH AND NOT THE W HOLE ACTIVITIES UNDERTAKEN BY THE SAID TWO CONCERNS WORLDWIDE. THE ASSESSEE HAD PUT ON RECORD THAT NOT ONLY THE ASSESSEE BUT MANY OTHER CONCERNS WERE AVAILING SAME SERVICES FROM THE TWO ENTITIES AND EVEN THE BASIS FOR REMUNERATION TO THE SAID CONCERNS WAS THE SAME IN RESPECT OF ALL THE COUNTRIES. IN SUCH CIRCUMSTANCES, THERE IS NO MERIT IN THE ORDER OF TPO IN HOLDING THAT AS TO WHETHER THE SAID CONCERNS HAVE GIVEN SERVICES OR WHETHER THEY ARE QUALIFIED TO GIVE THE SERVICES AND THE COST INCURRED BY AES. F IRST OF ALL, THIS IS OUTSIDE THE DOMAIN OF TPO. UNDER THE TRANSFER PRICING REGULATIONS WHAT THE TPO HAS TO DETERMINE IS WHETHER THE SERVICES WHICH HAVE BEEN PROVIDED BY ASSOCIATED ENTERPRISES ARE AT ARM'S LENGTH PRICE. ACCORDINGLY, WE FIND NO MERIT IN TH IS PART OF THE ORDER OF TPO. 21. IN THIS REGARD, WE FIND SUPPORT FROM THE RATIO LAID DOWN BY THE HONBLE HIGH COURT OF DELHI IN HIVE COMMUNICATION PVT. LTD. IN INCOME TAX APPEAL NO.306/2011, WHEREIN IT HAS BEEN HELD THAT THE LEGITIMATE BUSINESS NEEDS OF THE COMPANY MUST BE JUDGED FROM THE VIEW POINT OF THE COMPANY ITSELF AND MUST BE VIEWED FROM THE POINT OF VIEW OF A PRUDENT BUSINESSMAN. IT WAS FURTHER HELD BY THE HONBLE HIGH COURT THAT IT WAS NOT FOR THE ASSESSING OFFICER TO DICTATE WHAT THE BUSINESS NEEDS OF THE COMPANY SHOULD BE; IT IS BUSINESSMAN WHO CAN ONLY JUDGE THE LEGITIMACY OF THE BUSINESS NEEDS OF THE COMPANY FROM THE POINT OF VIEW OF PRUDENT BUSINESSMAN. HENCE, THE BENEFIT DERIVED AND ACCRUING TO THE COMPANY MUST ALSO BE CONSIDERED FROM THE ANGLE OF PRUDENT BUSINESSMAN. THE HONBLE HIGH COURT CLEARLY HELD THAT THE TERM BENEFIT TO A COMPANY IN RELATION TO ITS BUSINESS HAS A VERY WIDE CONNOTATION AND IT WAS DIFFICULT TO ACCURATELY MEASURE THESE BENEFITS IN TERMS OF MONEY SEPARATELY. THE SA ID PRINCIPLE LAID DOWN BY THE HONBLE HIGH COURT HAS BEEN APPLIED BY THE DELHI BENCH OF TRIBUNAL IN MCCANN ERICKSON INDIA P. LTD. VS. ADDL.CIT (SUPRA) TO HOLD WHETHER THE BENEFITS DERIVED BY THE ASSESSEE, IN VIEW OF THE EVIDENCES IN RESPECT OF MANAGEMENT S ERVICE CHARGES AND CLIENT COORDINATION FEES, CANNOT BE FOUND FAULT WITH. 29. THE TRIBUNAL ALSO ADJUDICATED THE ARGUMENTS OF ASSESSING OFFICER AS TO WHAT BENEFITS HAD BEEN RECEIVED BY ASSESSEE AGAINST THE SAID SUPPORT SERVICES AND ALSO THE VALUE OF SERVI CES GIVEN BY ASSOCIATED ENTERPRISE. THE TRIBUNAL HELD THAT THE SAID ASPECT WAS NOT LINKED TO THE ISSUE OF WHETHER THERE WAS ANY NEED FOR SERVICES AND IN THE ABSENCE OF ESTABLISHING THE SAME, WHETHER THE ASSESSING OFFICER/TPO WAS CORRECT IN DETERMINING THE ARM'S LENGTH PRICE OF TRANSACTIONS AT NIL. IN THIS REGARD, THE TRIBUNAL HELD AS UNDER: - 25. ACCORDINGLY, WE HOLD THAT THE TPO WHILE BENCHMARKING THE TRANSACTIONS HAS TO DETERMINE WHETHER THE PRICE PAID BY THE ASSESSEE FOR THE SERVICES AVAILED IS WHAT AN INDEPENDENT ENTERPRISE WOULD HAVE PAID FOR THE SAME SERVICES. THE ANALYSIS DONE BY THE TPO OF THE NATURE OF SERVICES AND BENEFITS ARISING TO THE ASSESSEE ON AVAILING SUCH SERVICES WAS BEYOND THE SCOPE OF TRANSFER PRICING PROVISIONS AND HENCE, WE FIND NO MERIT IN THE SAME. ITA NO. 742 /P U N/20 1 7 NALCO WATER INDIA LTD. 23 30. ANOTHER ASPECT WHICH IS SIMILAR TO THAT OF ASSESSEE AND WHICH WAS NOTED BY THE TRIBUNAL IN EMERSON CLIMATE TECHNOLOGIES (INDIA) P. LTD. VS. DCIT (SUPRA) WAS THE AVAILMENT OF SERVICES NOT ONLY BY THE ASSESSEE BUT OTHER ENTITIES IN DIFFERENT PARTS OF THE WORLD AND IT WAS HELD AS UNDER: - 26. ANOTHER ASPECT WHICH NEEDS TO BE KEPT IN MIND IS THAT IT WAS NOT ONLY THE ASSESSEE BUT OTHER ENTITIES IN DIFFERENT PARTS OF THE WORLD WHICH WERE AVAILING SIMILAR SERVICES FROM THE SAID TWO ENTIT IES. THE ASSESSEE HAD FILED ON RECORD THE COPIES OF AGREEMENT WITH THE SAID CONCERNS AND WHEN COMPARED WITH TERMS OF AGREEMENT WITH THE ASSESSEE, THE SAME WERE AT PAR. IN SUCH SCENARIO, WHERE THE BENEFIT OF SERVICES WAS AVAILED BY DIFFERENT ENTITIES WHIC H IN TURN, WERE REMUNERATED BY DIFFERENT ENTITIES ON THE BASIS OF COST WORKED OUT ON MAN HOURS BASIS PLUS MARK UP, WHICH WAS AT SAME LEVEL, THEN THE SAME CANNOT BE QUESTIONED. THE ALLOCATION KEY APPLIED BY AE TO ALLOCATE COST OF SERVICES PROVIDED TO DIFFE RENT ENTITIES I.E. ON MAN HOUR BASIS IS ONE OF THE ACCEPTED METHODS AND THE SAME COULD NOT BE BRUSHED ASIDE WITHOUT BRINGING ON RECORD ANY ADVERSE EVIDENCE. NOW COMING TO THE ISSUE OF BENCH WORKING THE SAID TRANSACTION. THE ASSESSEE IN THE PRESENT CASE H AD TAKEN THE ASSOCIATED ENTERPRISE AS TESTED PARTY AND HAD POINTED OUT THAT THE REMUNERATION OF SUPPORT SERVICES WAS AT ARM'S LENGTH PRICE BY APPLYING THE TNMM METHOD, WHERE THE CONCERNS PROVIDING SIMILAR SERVICES, WERE TAKEN AS COMPARABLE. UNDER THE TRAN SFER PRICING PROVISIONS, IT IS INCUMBENT UPON BOTH THE ASSESSEE AND THE AUTHORITIES TO SELECT THE MOST APPROPRIATE METHOD TO BENCHMARK THE INTERNATIONAL TRANSACTIONS. THE INDIAN TAX PROVISIONS PROVIDED VARIOUS METHODS FOR BENCHMARKING THE INTERNATIONAL TR ANSACTIONS BUT IT IS THE MOST APPROPRIATE METHOD, WHICH HAS TO BE SELECTED FOR BENCHMARKING INTERNATIONAL TRANSACTIONS. THE ASSESSEE HAD PICKED UP THE TNMM METHOD AS MOST APPROPRIATE METHOD SINCE IN THE PRESENT CASE, THE FOREIGN ASSOCIATED ENTERPRISE WAS PROVIDING SIMILAR SERVICES TO DIFFERENT ENTITIES AND WAS TAKEN AS TESTED PARTY. THE SAID ASSOCIATED ENTERPRISE WAS ALLOCATING COST TO ALL ENTITIES TO WHICH IT WAS RENDERING SERVICES. THE ROLE OF ASSESSEE IN SUCH SCENARIO WAS TO SHOW WHETHER THE MARGINAL SUPPORT SERVICES PROVIDED TO IT WERE AT ARM'S LENGTH PRICE. THE ROLE OF THE TPO IN THIS REGARD WAS ALSO TO DETERMINE THAT THE PRICE PAID BY THE ASSESSEE FOR AVAILING SUPPORT SERVICES WAS AT ARM'S LENGTH PRICE. SECONDLY, THE ASSESSEE HAS REFERRED TO THE I NFORMATION FILED BEFORE THE TPO/ASSESSING OFFICER UNDER WHICH THE ALLOCATION OF COST ON THE BASIS OF TIME SPENT ON A PARTICULAR PROJECT HAD BEEN WORKED OUT AND COST ALLOCATED TO DIFFERENT COUNTRIES. THE SAID DETAILS FOR EMERSON HK CONCERN ARE AT PAGE 941 AND FOR EMERSON TH AT PAGE 1017 OF THE PAPER BOOK. THE SAID DETAILS WERE FILED BY THE ASSESSEE BEFORE THE TPO. HOWEVER, HE REJECTED THE SAME AS COMPLETE FINANCIALS OF TOTAL OPERATIONS OF SAID ENTITIES WERE NOT FILED. THE ASSESSEE POINTED OUT THAT CERTIF IED DETAILS OF RELEVANT SERVICES RENDERED WERE GIVEN, WHEREIN BOTH THE ENTITIES WERE ENGAGED IN OTHER BUSINESS OPERATIONS, WHICH WERE NOT RELEVANT FOR DECIDING THE ISSUE OF SUPPORT SERVICES RECEIVED BY THE ASSESSEE, HENCE COMPLETE DETAILS WERE NOT RELEVANT . HOWEVER, THE TPO BRUSHED ASIDE THE SAME ON THE GROUND THAT COMPLETE DETAILS HAD NOT BEEN GIVEN. 31. FURTHER, THE TRIBUNAL IN EATON FLUID POWER LTD. VS. ACIT (SUPRA) HAD ON SIMILAR ISSUE HELD AS UNDER: - ITA NO. 742 /P U N/20 1 7 NALCO WATER INDIA LTD. 24 29. NOW, COMING TO THE ISSUE OF TRANSFER PRIC ING ADJUSTMENT MADE BY TPO ON ACCOUNT OF SERVICES AVAILED BY THE ASSESSEE FROM ITS ASSOCIATED ENTERPRISES AND TAKING THE VALUE OF SAID INTERNATIONAL TRANSACTIONS AT NIL. IN THE FIRST INSTANCE, WE HOLD THAT TPO CANNOT SIT IN THE JUDGMENT OF BUSINESS MODULE OF ASSESSEE AND ITS INTENTION TO AVAIL OR NOT TO AVAIL ANY SERVICES FROM ITS ASSOCIATED ENTERPRISES. THE ROLE OF TPO IS TO DETERMINE THE ARM'S LENGTH PRICE OF INTERNATIONAL TRANSACTIONS UNDERTAKEN BY THE ASSESSEE AND WHETHER THE SAME IS AT ARM'S LENGTH P RICE WHEN COMPARED WITH SIMILAR TRANSACTIONS UNDERTAKEN BY EXTERNAL ENTITIES OR INTERNAL COMPARABLES. 32. IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE BEFORE US, WHICH ARE SIMILAR TO THE FACTS AND CIRCUMSTANCES IN THE CASE OF EMERSON CLIMATE TECHNO LOGIES (INDIA) P. LTD. VS. DCIT (SUPRA) AND EATON FLUID POWER LTD. VS. ACIT (SUPRA), WE HOLD THAT THERE IS NO MERIT IN THE OBSERVATIONS OF TPO IN HOLDING THAT THE ASSESSEE HAD NOT AVAILED ANY SERVICES, HENCE THE ARM'S LENGTH PRICE OF TRANSACTIONS WAS TO BE ADOPTED AT NIL. WE REVERSE THE FINDINGS OF AUTHORITIES BELOW IN THIS REGARD. 33. ANOTHER ASPECT WHICH NEEDS TO BE ALSO CONSIDERED IN THE CASE OF ASSESSEE IS THAT THE TRIBUNAL IN ASSESSEES OWN CASE IN ASSESSMENT YEARS 2005 - 06 TO 2008 - 09 (SUPRA) HAS HELD THAT NO ADJUSTMENT IS TO BE MADE VIS - - VIS MANAGEMENT FEES PAID TO NALCO SINGAPORE. 34. NOW, COMING TO SECOND PART OF INTRA - GROUP FEES PAID BY ASSESSEE TO NALCO US FOR PROVIDING SERVICES SUCH AS INFORMATION TECHNOLOGY, ENGINEERING SUPPORT SERVICES, BUS INESS DEVELOPMENT SERVICES, SUPPLY CHAIN SERVICES. THE ASSESSEE HAD GROUPED THE SAID SERVICES UNDER THE HEAD HEADQUARTER COMMON EXPENSES . A S IN THE CASE OF NALCO SINGAPORE , S IMILARLY, IN THE CASE OF NALCO US ALSO, THE SERVICES WERE PROVIDED BY ASSOCIAT ED ENTERPRISES NOT ONLY TO THE ASSESSEE BUT ALSO TO ALL OTHER ENTITIES IN ASIA PACIFIC GROUP OF NALCO GROUP. THE ASSESSEE HAS PLACED THE EVIDENCES OF AVAILMENT OF SERVICES BOTH BEFORE THE TPO AND DRP AND ALSO BEFORE US. THE ASSESSEE HAS FILED THE DETAILS OF ITA NO. 742 /P U N/20 1 7 NALCO WATER INDIA LTD. 25 EXPATS VISITED INDIA FOR PROVIDING VARIOUS SERVICES AT PAGES 1014 AND 1027 TO 1037 OF PAPER BOOK. FURTHER COMMUNICATION VIA E - MAILS CONTAINING DETAILS OF NALCO US EMPLOYEES ASSISTING NALCO INDIA ARE PLACED AT PAGES 1062 AND 1063 OF PAPER BOOK , WHICH W ERE BY WAY OF ENGINEERING SUPPORT SERVICES. 35. COMING TO THE NEXT LIMB OF SERVICES I.E. BUSINESS DEVELOPMENT, THE ASSESSEE HAD FURNISHED VARIOUS DOCUMENTS AT PAGES 1072 ONWARDS AND AT PAGES 709 TO 711, 768 TO 773 OF PAPER BOOK. IN THE IT SUPPORT SEGME NT, THE ASSESSEE HAD RECEIVED PRESENTATIONS ON HOW TO USE MICROSOFT, WHICH ARE PLACED AT PAGES 195 TO 225 OF PAPER BOOK. ALL THESE SERVICES WERE AVAILED NOT ONLY BY THE ASSESSEE BUT OTHER ENTITIES OF NALCO GROUP AND THE COST WAS ALLOCATED ENTITY - WISE BY F OLLOWING PARTICULAR METHODOLOGY, DETAILS OF WHICH ARE AVAILABLE AT PAGE 1343 OF PAPER BOOK. IN SUPPORT, THE ASSESSEE HAS ALSO FURNISHED CERTIFICATE FROM AN INDEPENDENT ACCOUNTANT VIS - - VIS ALLOCATION OF COST AT PAGES 784 TO 798 OF PAPER BOOK. THE DETAILS OF COSTS ARE AVAILABLE AT PAGE 1410 OF PAPER BOOK. THE TPO IN ASSESSEES CASE HAS DOUBTED NOT ONLY THE AVAILMENT OF SERVICES BUT ALSO THE EVIDENCES FILED IN THIS REGARD. FIRST OF ALL, THE AVAILMENT OF SERVICES WAS CONSEQUENT TO AGREEMENT BETWEEN THE PAR TIES, COPY OF WHICH IS PLACED AT PAGES 1132 TO 1136 OF PAPER BOOK. AS PER TERMS OF SAID AGREEMENT, THE COST OF SERVICES WERE ALLOCATED WITHOUT ANY MARKUP. IN OTHER WORDS, IT IS CASE OF PURE REIMBURSEMENT OF EXPENSES, WHICH WERE INCURRED BY US ENTITY TO I TS GROUP COMPANIES AND THE QUESTION WHICH ARISES IS WHETHER ARM'S LENGTH PRICE OF SUCH ALLOCATION OF COSTS AND ITS RECOVERY COULD BE TAKEN AT NIL IN THE HANDS OF ASSESSEE. IN THIS REGARD, WE MAY ALSO REFER TO THE ORDER OF TPO, IN CASE OF NALCO US WHEREIN HE HAS TREATED THE RECEIPTS FROM THE ASSESSEE AND OTHER ENTITIES AS FEES FOR INCLUDED SERVICES AND ASSESSMENT ORDER HAD BEEN PASSED AFTER THE ORDER PASSED UNDER SECTION 263 OF THE ACT, WHEREIN ITA NO. 742 /P U N/20 1 7 NALCO WATER INDIA LTD. 26 VIDE PARA 5.4 IT WAS HELD THAT THE SAID FEES FOR INCLUDED SERVI CES WERE TAXABLE IN THE HANDS OF US ENTITY. THE SAID US ENTITY IS IN APPEAL BEFORE THE AUTHORITIES BUT THE QUESTION WHICH ARISES IS THAT WHETHER IN SUCH CIRCUMSTANCES ALSO CAN THE PAYMENT MADE BY ASSESSEE FOR AVAILING INTRA - GROUP SERVICES, WHILE BENCHMARK ING THE INTERNATIONAL TRANSACTIONS CAN BE TAKEN AT NIL. THE ANSWER TO THE SAME IS NO. FIRST OF ALL, WE FIND SUPPORT FROM THE RATIO LAID DOWN BY PUNE BENCH OF TRIBUNAL IN THE CASE OF EMERSON CLIMATE TECHNOLOGIES (INDIA) P. LTD. VS. DCIT (SUPRA) AND EATO N FLUID POWER LTD. VS. ACIT (SUPRA) AND HOLD THAT TPO CANNOT BENCHMARK THE SAID TRANSACTION OF AVAILMENT OF INTRA - GROUP SERVICES AT NIL ON THE GROUND OF DOUBTING WHETHER ANY SERVICES WERE AVAILED OR NOT. IN THE PRESENT CASE, THE AFORESAID SERVICES WERE AV AILED, PAYMENT FOR WHICH WAS MADE AT COST WITHOUT ANY MARKUP AND SUCH COST WA S ATTRIBUTED TO THE ASSESSEE ON THE BASIS OF PARTICULAR METHODOLOGY ADOPTED BY US COMPANY FOR RECOVERING THE EXPENDITURE FROM ALL ENTITIES UNDER NALCO GROUP AND THE SAME CANNOT BE DISTURBED IN THE HANDS OF ASSESSEE. THE PAYMENT MADE BY ASSESSEE WA S THUS, AT ARM'S LENGTH PRICE AND NO ADJUSTMENT NEEDS TO BE MADE ON THIS ACCOUNT. FURTHER, IN ANY CASE, WHERE WHEN IN THE HANDS OF NALCO US THE SERVICES HAVE BEEN TAXED AS FEES FOR INCLU DED SERVICES, THEN COROLLARY WHICH FOLLOWS IS THAT THE ARM'S LENGTH PRICE OF PAYMENT MADE FOR SUCH SERVICES CANNOT BE DETERMINED AT NIL. ACCORDINGLY, WE REVERSE THE ORDER OF ASSESSING OFFICER/TPO/DRP AND THE GROUNDS OF APPEAL NO.4 TO 6 ARE THUS, ALLOWED. 36. THE ISSUE RAISED VIDE GROUND OF APPEAL NO.7 IS AGAINST ADJUSTMENT MADE VIS - - VIS INTERNATIONAL TRANSACTIONS PERTAINING TO ROYALTY. 37. BRIEF FACTS RELATING TO THE ISSUE ARE THAT THE ASSESSEE HAD APPLIED CUP METHOD FOR BENCHMARKING PAYMENT OF ROYALTY OF 12,79,33,000/ - TO NALCO IP ITA NO. 742 /P U N/20 1 7 NALCO WATER INDIA LTD. 27 HOLDER LLC IN ITS TRANSFER PRICING REPORT. THE ASSESSEE HAD ENTERED INTO TECHNOLOGY AND LICENSE AGREEMENT WITH NALCO US AND ROYALTY WAS PAID UNDER THE SAID AGREEMENT TO NALCO IP HOLDER LLC, WHICH WAS THE INTELLECTUAL PROPER TY HOLDING COMPANY OF NALCO US. THE ROYALTY WAS PAID @ 6% FOR THE PERIOD 01.04.2011 TO 31.12.2011 AND 4.5% FOR THE PERIOD 01.01.2012 TO 31.03.2012 BY THE ASSESSEE TO ASSOCIATED ENTERPRISES. THE ASSESSEE HAD APPLIED CUP METHOD AND COMPARED THE RATES OF RO YALTY PAYMENTS WITH RATES OF COMMISSION PAID TO OTHER CONCERNS. THE ARITHMETIC MEAN OF COMPARABLE COMPANIES WAS 6.96% AND HENCE, IT WAS PROPOSED THAT THE TRANSACTION WAS AT ARM'S LENGTH PRICE. IN SUPPORT, THE ASSESSEE HAD FURNISHED COMPARABLES ROYALTY AG REEMENT BEFORE THE TPO/DRP. THE ASSESSING OFFICER AND DRP REJECTED THE BENCHMARKING METHODOLOGY ADOPTED BY ASSESSEE IN THE ABSENCE OF ANY INFORMATION BEING SUBMITTED REGARDING RENEWAL OF LICENSE AGREEMENT CONSIDERED AS COMPARABLE AGREEMENT AND PARTICULARL Y WHETHER THEY CONTINUED TO BE IN FORCE IN THE YEAR UNDER APPEAL. THE TPO HAD AGGREGATED THE PAYMENT OF ROYALTY WITH OTHER TRANSACTIONS AND HAD APPLIED TNMM METHOD, WHICH WAS UPHELD BY THE DRP. 38. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE B EFORE US POINTED OUT THAT THE TRIBUNAL IN ASSESSMENT YEARS 2003 - 04 AND 2004 - 05 HAD ALLOWED THE CLAIM OF ASSESSEE. IN ASSESSMENT YEARS 2005 - 06 TO 2010 - 11, NO TRANSFER PRICING ADJUSTMENT WAS MADE BY THE TPO ON THIS GROUND. FURTHER, IN ASSESSMENT YEAR 2011 - 12, THOUGH THE ADJUSTMENT WAS MADE BY TPO, BUT THE CIT(A) DELETED THE SAME AND NO APPEAL WAS FILED BY REVENUE TO THE TRIBUNAL AGAINST THE SAME. IT WAS FURTHER STRESSED BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THAT IN SUCH CIRCUMSTANCES, T HE ROYALTY BENCHMARKING METHODOLOGY UNDER CUP METHOD WITH THE SAME SET OF ITA NO. 742 /P U N/20 1 7 NALCO WATER INDIA LTD. 28 COMPARABLE AGREEMENT BE ADOPTED. IT WAS FURTHER POINTED OUT THAT PAYMENT OF ROYALTY AT 6% HAD BEEN APPROVED BY THE GOVERNMENT OF INDIA FOR THE PERIOD 01.01.2009 TO 31.12.2011. FURT HER, RELIANCE WAS PLACED ON THE DECISION OF PUNE BENCH OF TRIBUNAL IN SPICER INDIA LTD. VS. ACIT IN ITA NO.251/PUN/2014 AND ITA NO.1327/PUN/2014, RELATING TO ASSESSMENT YEAR 2009 - 10, ORDER DATED 10.0.2017, WHICH PRINCIPLE HAS BEEN APPLIED BY THE TRIBUNAL I N ASSESSMENT YEARS 2010 - 11 AND 2011 - 12. IN SUCH FACTS AND CIRCUMSTANCES AND FOLLOWING THE RULE OF CONSISTENCY AND WHERE THE ROYALTY RATES HAD BEEN APPROVED BY RBI, THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE STATED THAT CUP METHOD WAS THE APPRO PRIATE METHOD TO BENCHMARK THE ARM'S LENGTH PRICE. 39. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE POINTED OUT THAT THE ISSUE RAISED VIDE GROUND OF APPEAL NO.7 WAS AGAINST REJECTION OF CUP METHOD FOR DETERMINING THE ARM'S LENGTH PRICE OF ROYAL TY PAYMENTS. IN THIS REGARD, RELIANCE WAS PLACED ON THE ORDER OF DRP. 40. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE WHICH ARISES VIDE GROUND OF APPEAL NO.7 IS FOR DETERMINING THE ARM'S LENGTH PRICE OF PAYMENT OF ROYALTY TO NA LCO US OF 12.79 CRORES. THE ASSESSEE FOR BENCHMARKING ITS TRANSACTIONS OF PAYMENT OF ROYALTY HAD APPLIED CUP METHOD. THE AFORESAID PAYMENT WAS MADE TO NALCO IP HOLDER LLC IN TERMS OF TECHNOLOGY AND LICENSE AGREEMENT ENTERED INTO BY THE ASSESSEE WITH NALCO US. N ALCO IP HOLDER LLC WAS THE INTELLECTUAL PROPERTY HOLDING COMPANY OF NALCO US. THE RATE OF PAYMENT OF ROYALTY WAS 6% FOR THE PERIOD 01.04.2011 TO 31.12.2011 WHICH WAS APPROVED BY THE GOVERNMENT OF INDIA FOR THE PERIOD STARTING 01.01.2009 ENDING 31.12.2011 ; FOR THE BALANCE PERIOD I.E. 01.01.2012 TO 31.03.2012, THE RATE OF PAYMENT OF ROYALTY WAS 4%. THE ASSESSEE HAD APPLIED ITA NO. 742 /P U N/20 1 7 NALCO WATER INDIA LTD. 29 CUP METHOD AND COMPARED THE TRANSACTIONS WITH THE RATE OF COMMISSION PAID TO OTHER CONCERNS AND THE ARITHMETIC MEAN OF THE SAID WORKED OU T TO 6.96% AS AGAINST COMMISSION RATE OF 6% / 4% PAID BY ASSESSEE. THE BENCHMARKING APPLIED BY ASSESSEE WAS REJECTED BY AUTHORITIES BELOW AND THE PAYMENT OF ROYALTY WAS AGGREGATED AND TNMM METHOD WAS APPLIED. THE ASSESSEE IS AGGRIEVED BY THE SAID EXERCIS E CARRIED ON BY THE AUTHORITIES BELOW ON THE GROUND THAT SIMILAR BENCHMARKING METHODOLOGY OF APPLYING CUP METHOD WITH SAME SET OF COMPARABLE AGREEMENTS HAD BEEN ACCEPTED BY THE TPO IN ASSESSMENT YEARS 2008 - 09 TO 2010 - 11 AND BY THE CIT(A) IN ASSESSMENT YEAR 2011 - 12, AGAINST WHICH NO APPEAL HAS BEEN FILED TO THE TRIBUNAL. 41. THE QUESTION WHICH ARISES IS WHETHER CUP METHOD WAS THE MOST APPROPRIATE METHOD TO BENCHMARK THE AFORESAID TRANSACTION OF PAYMENT OF ROYALTY. FIRST OF ALL, APPLYING THE RULE OF CONSI STENCY WHICH HAS BEEN APPLIED BY THE TPO HIMSELF IN EARLIER YEARS AND ALSO WHERE THE RATE OF PAYMENT OF ROYALTY AT 6% HAD BEEN APPROVED BY RBI FOR THE EARLIER YEARS AND ALSO FOR THE PART OF YEAR, THEN THE SAME SHOULD NOT HAVE BEEN DISTURBED. 42. THE SEC OND ASPECT OF ISSUE IS WHETHER THE RATE OF PAYMENT OF ROYALTY WHICH HAS BEEN APPROVED BY THE GOVERNMENT OF INDIA I.E. RBI WOULD CONSTITUTE CUP DATA AND THE SAME COULD BE APPLIED FOR HOLDING THE TRANSACTIONS TO BE AT ARM'S LENGTH. THIS PROPOSITION HAS BEEN APPLIED BY THE HONBLE BOMBAY HIGH COURT IN CIT VS. SGS INDIA (P.) LTD. IN INCOME TAX APPEAL NO.1807/2013, JUDGMENT DATED 18.11.2015 . IN CASE THE SAID DICTATE IS APPLIED, THEN WE HOLD THAT THE PAYMENT OF ROYALTY BY ASSESSEE TO ITS ASSOCIATED ENTERPRISE @ 6% / 4% IS TO BE CONSIDERED AT ARM'S LENGTH RATE AND NO ADJUSTMENT IS WARRANTED IN THE HANDS OF ASSESSEE. ITA NO. 742 /P U N/20 1 7 NALCO WATER INDIA LTD. 30 43. THE SAID PROPOSITION HAS ALSO BEEN LAID DOWN BY PUNE BENCH OF TRIBUNAL IN SPICER INDIA LTD. VS. ACIT, ORDER DATED 10.02.2017 (SUPRA), WHEREIN IT HAS FURTHER BEEN HELD THAT IN ANY CASE THE JURISDICTION AND POWER OF TPO IS TO DETERMINE ARM'S LENGTH PRICE OF ROYALTY AND THE ORDER OF TPO HOLDING THAT THE ASSESSEE HAD NOT DERIVED ANY BENEFIT UNDER THE SAID AGREEMENT WA S BEYOND THE SCOPE OF TPO WHILE BEN CHMARKING THE INTERNATIONAL TRANSACTION FOR THE PURPOSE OF DETERMINING ARM'S LENGTH PRICE. ACCORDINGLY, WE REVERSE THE ORDER OF ASSESSING OFFICER / TPO / DRP AND HOLD THAT IN THE PRESENT SET OF FACTS WHERE THE ROYALTY RATES WERE APPROVED BY RBI, CUP METHO D WAS THE MOST APPROPRIATE METHOD TO BE APPLIED TO DETERMINE ARM'S LENGTH PRICE OF ROYALTY PAYMENTS MADE DURING THE YEAR. ACCORDINGLY, WE REVERSE THE ORDER OF ASSESSING OFFICER IN HOLDING THAT ROYALTY PAYMENT IS TO BE BENCHMARKED WITH THAT OF PAYMENT OF R AW MATERIAL AND OTHER GOODS BOUGHT. THE SAID TRANSACTION OF ROYALTY PAYMENT IS TO BE BENCHMARKED INDEPENDENTLY BY APPLYING CUP METHOD AND SINCE THE RATES OF COMMISSION PAID TO OTHER CONCERNS IS AT ARM'S LENGTH, NO ADJUSTMENT ON THIS ACCOUNT IS WARRANTED I N THE HANDS OF ASSESSEE. ACCORDINGLY, THE TPO IS DIRECTED TO RE - CALCULATE THE PLI OF ASSESSEE BY EXCLUDING THE PAYMENT OF ROYALTY OUT OF PLI DETERMINED FOR THE SEGMENT OF PAYMENT FOR RAW MATERIALS AND OTHER GOODS BOUGHT. CONSEQUENTLY, GROUND OF APPEAL NO .7 RAISED BY ASSESSEE IS ALLOWED. 44. THE GROUND OF APPEAL NO.8 RAISED BY ASSESSEE IS NOT PRESSED AND HENCE, THE SAME IS DISMISSED AS NOT PRESSED. 45. NOW, COMING TO GROUND OF APPEAL NO.9, THE ASSESSEE IS AGGRIEVED BY BENCHMARKING ANALYSIS APPLIED BY AUT HORITIES BELOW WHILE USING TNMM METHOD FOR BENCHMARKING THE INTERNATIONAL TRANSACTIONS PERTAINING TO MANUFACTURING ITA NO. 742 /P U N/20 1 7 NALCO WATER INDIA LTD. 31 SEGMENT. THE ASSESSEE IS ALSO AGGRIEVED BY THE SET OF COMPARABLES WHICH ARE FINALLY SELECTED BY THE ASSESSING OFFICER / TPO. 46. BRIEF FACT S RELATING TO THE ISSUE ARE THAT THE TPO HAD DETERMINED THE ARM'S LENGTH PRICE OF PURCHASE OF RAW MATERIAL AND SALE OF PRODUCTS. THE TPO IN THE FIRST INSTANCE HAD AGGREGATED CERTAIN TRANSACTIONS AND DETERMINED THE PLI OF ASSESSEE FOR BENCHMARKING THE AFOR ESAID TRANSACTIONS. THE ASSESSEE HAD APPLIED AGGREGATED TRANSACTIONS OF PURCHASE OF RAW MATERIAL, SALE OF PRODUCTS AND PURCHASE OF CAPITAL ASSETS AND BENCHMARKED THE SAME WITH THE MARGINS OF COMPARABLES WHICH WERE ENGAGED IN THE PRODUCTION OF SPECIALTY CH EMICALS. THE ROYALTY TRANSACTION WAS NOT BENCHMARKED ALONG WITH THE AFORESAID TRANSACTIONS. FURTHER, FOR R&D SERVICES PROVIDED W ERE BENCHMARKED USING TNMM METHOD WITH NPM ON COST AS THE PLI OF THE COMPANIES WHICH WERE ENGAGED IN RESEARCH ACTIVITY. 47. T HE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE ISSUE RAISED VIDE GROUND OF APPEAL NO.9 IS IN RELATION TO TRANSFER PRICING ADJUSTMENT IN THE MANUFACTURING SEGMENT, WHEREIN THE ASSESSEE HAD APPLIED TNMM METHOD AND COMPARED ITS MAR GINS WITH MARGINS OF FINALLY SELECTED COMPANIES AS COMPARABLES. HE HERE POINTED OUT THAT WHILE DECIDING THIS ISSUE TWO ASPECTS HAVE TO BE KEPT IN MIND; FIRST ASPECT IS WHETHER SUBVENTION PAYMENT IS TO BE REDUCED FROM INCOME AND OR TO BE INCLUDED IN THE OP ERATING MARGINS. HERE, HE AGAIN STRESSED THAT THE SAID RECEIPT WAS NOT TAXABLE FOLLOWING THE RATIO LAID DOWN BY THE HONBLE APEX COURT IN SIEMENS PUBLIC COMMUNICATION NETWORK (P.) LTD. VS. CIT (SUPRA) BUT THE QUESTION WAS WHERE THE ASSESSEE HAD KEPT ITS M ARGINS AT LOW, TO BE MARKET EFFECTIVE AND IN SUCH SCENARIO, WHERE NALCO US HAD GIVEN SUBVENTION AMOUNT, THEN THE ADDITIONAL ITA NO. 742 /P U N/20 1 7 NALCO WATER INDIA LTD. 32 AMOUNT RECEIVED FROM HOLDING COMPANY WAS PART OF OPERATING MARGINS. HE POINTED OUT THAT THE ASSESSEE INITIALLY HAD T AKEN THE SAID R ECEIPT AS TAXABLE AND OPERATING IN NATURE. THE DRP HOWEVER, DECIDED THE CHARGEABILITY TO TAX BUT REDUCED IT FROM TP ADJUSTMENT APPLYING THE RATIO LAID DOWN IN THE CASE OF UPS JETAIR EXPRESS PVT. LTD. (SUPRA). HENCE, HE DID NOT DECIDE THE TAXABILITY OF SA ID AMOUNT BEING INFRUCTUOUS. HE THEN, REFERRED TO THE SECOND ASPECT OF THE CASE AND POINTED OUT THAT THE MARGINS OF ASSESSEE DECLARED BY IT WERE 1.54% AND THE MEAN MARGINS OF COMPARABLES WERE 3.44%, AS PER TRANSFER PRICING REPORT. HOWEVER, AS PER THE ORD ER OF TPO, WHEREIN HE HAD FINALLY SELECTED DIFFERENT SET OF COMPARABLES, THE MEAN MARGINS WORKED OUT TO 14.01%. THE ASSESSEES MARGINS WERE ALSO RE - COMPUTED AT ( - ) 1.37%. HOWEVER, BEFORE THE DRP, THE ASSESSEE FILED LIST OF ADDITIONAL COMPARABLE COMPANIES AND AFTER THE DIRECTIONS OF DRP, FINALLY SELECTED COMPARABLES TOTALED 18 AND THE MEAN MARGINS OF COMPARABLES WORKS OUT TO 8.92%. THE MARGINS OF ASSESSEE WERE RE - COMPUTED AT ( - ) 3.52% EXCLUDING INTRA - GROUP SERVICE CHARGES. IN THIS REGARD, HE POINTED OUT THAT (A) MARGINS OF ASSESSEE WOULD DEPEND ON WHETHER SUBVENTION AMOUNT IS OPERATING OR NOT ; (B) WHETHER INTRA - GROUP SERVICES ARE TO BE ALLOWED OUT OF OPERATING MARGINS, IF AT ARM'S LENGTH; (C) WHETHER ROYALTY TO BE REDUCED IN CASE NO ADJUSTMENT AND ALL THI S WOULD HAVE BEARING ON OPERATING MARGINS. 48. COMING TO SECOND STEP, THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE FILED TABULATED DETAILS BEFORE US AND POINTED OUT THAT IN RESPECT OF 9 COMPARABLES, THERE WAS NO DISPUTE AND THE SAME MAY BE SELE CTED FOR FINAL BENCHMARKING. HOWEVER, IN RESPECT OF BALANCE CONCERNS, THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT BECAUSE OF EXTRAORDINARY EVENTS AND CERTAIN CONCERNS HOLDING INTANGIBLES OR ENGAGED IN ACTIVITIES OTHER THAN THE ONE CARRIED ON BY THE ASSESSEE OR DEALING IN DIFFERENT ITA NO. 742 /P U N/20 1 7 NALCO WATER INDIA LTD. 33 PRODUCTS, THEN THEIR INCLUSION IS IN QUESTION AND THE SAME ARE TO BE EXCLUDED. HE FURTHER FILED A LIST OF OTHER CONCERNS WHICH AS PER HIM, NEED TO BE INCLUDED . I N RESPECT OF SOME OF THE CONCERNS , H E POINTED OUT THAT THEY WERE ACCEPTED AS COMPARABLES LAST YEAR AND SINCE THERE WAS NO CHANGE IN THEIR FUNCTIONS, THEN THE SAME AGAIN BE ACCEPTED AS COMPARABLE TO THE ASSESSEE. 49. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ON THE OTHER HAND, P LACED STRONG RELIANCE ON THE ORDER OF ASSESSING OFFICER / TPO / DRP. 50. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. BEFORE GOING INTO MERITS AND DE MERITS OF EXCLUSION / INCLUSION OF COMPARABLES, THE FIRST ASPECT NEEDS TO BE DECIDED I.E. THE DETERMINATION OF PLI IN THE CASE OF ASSESSEE. WE HAVE IN THE PARAS ABOVE ALREADY HELD THAT THE SUBVENTION AMOUNT IS OPERATING IN NATURE AND HAVE ALSO HELD THAT INTRA - GROUP SERVICES AVAILED BY ASSESSEE FOR WHICH PAYMENT HAS BEEN MADE TO ASSOCIATED ENTE RPRISES ARE AT ARM'S LENGTH PRICE AND ALSO DECIDED THE ISSUE OF PAYMENT OF ROYALTY TO BE AT ARM'S LENGTH PRICE AND NO ADJUSTMENT TO BE MADE EITHER ON ACCOUNT OF PAYMENT FOR INTRA - GROUP SERVICES OR PAYMENT FOR ROYALTY. IN SUCH SCENARIO, FIRST OF ALL, PLI O F ASSESSEE WOULD HAVE TO BE RE - DETERMINED. ONCE THE SAME IS RE - DETERMINED, THEN THE MARGINS OF ASSESSEE WOULD BE RE - WORKED AND IN SUCH SCENARIO, THE COMPARISON HAS TO BE MADE OR RE - WORK MARGINS OF ASSESSEE WITH THE MEAN MARGINS OF COMPARABLES FINALLY SELECTED. THOUGH THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE HAS TAKEN US THROUGH THE LIST OF COMPARABLES, WHICH HAVE BEEN FINALLY SELECTED AND ALSO COMPARABLES WHICH HAVE NOT BEEN SELECTED, WHICH AS PER THE ASSESSEE NEEDS TO BE SELECTED , W E ARE OF THE VIEW THAT AT THIS JUNCTURE, THE SAID EXERCISE WOULD BE A FUTILE EXERCISE. IT IS ONLY AFTER THE PLI / MARGINS OF ASSESSEE ARE RE - WORKED IN ITA NO. 742 /P U N/20 1 7 NALCO WATER INDIA LTD. 34 LINE WITH OUR DECISION IN RESPECT OF VARIOUS ISSUES RAISED WHICH AFFECT THE OPERATING MARGINS OF ASSESSEE, THE NEED WOULD COME TO LOOK AT THE MARGINS OF COMPARABLES. OUR DECISION ON THE INCLUSION / EXCLUSION OF COMPARABLES AT THIS STAGE WOULD BE AN ACADEMIC EXERCISE . IN SUCH FACTS AND CIRCUMSTANCES OF THE CASE, WE FIRST DIRE CT THE ASSESSING OFFICER TO RE - WORK THE OPERATING MARGINS OF ASSESSEE AND THEREAFTER TO LOOK INTO THE OBJECTIONS RAISED BY ASSESSEE VIS - - VIS THE COMPARABLES FINALLY SELECTED AND ALSO THE COMPARABLES WHICH HAVE NOT BEEN FINALLY SELECTED. THE ASSESSEE SHAL L FURNISH COMPLETE DETAILS IN THIS REGARD AND THE ASSESSING OFFICER SHALL DECIDE THE ISSUE OF FINAL SELECTION OF COMPARABLES AFTER TAKING INTO CONSIDERATION THE SETTLED POSITION ON THE ISSUES AFTER APPRECIATING THE FACTS RELATING TO EACH OF THE COMPARABLES AND IN ACCORDANCE WITH LAW. HENCE, THE GROUND OF APPEAL NO.9 RAISED BY ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 51. THE NEXT ISSUE WHICH WAS ARGUED WAS GROUND OF APPEAL NO.10 AND CORRECTED ADDITIONAL GROUND OF APPEAL NO.2 I.E. IN RESPECT OF SECOND SEGMENT OF IMPORT OF RAW MATERIALS AND COMPONENTS OF MANUFACTURING SEGMENTS. THE FIRST PLEA RAISED BY ASSESSEE VIDE GROUND OF APPEAL NO.10 IS AGAINST THE ORDER OF ASSESSING OFFICER / DRP IN NOT RESTRICTING TP ADJUSTMENT TO THE VALUE OF INTERNATIONAL TRANS ACTIONS. 52. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE ISSUE STANDS COVERED BY THE DECISION OF HON'BLE SUPREME COURT IN CIT VS. HINDUSTAN UNILEVER LTD. (2018) 99 TAXMANN.COM 135 (SC) . FURTHER, RELIANCE WAS ALSO PLACED ON THE RATIO LAID DOWN BY HONBLE BOMBAY HIGH COURT IN CIT VS. FIRESTONE INTERNATIONAL P. LTD. (2015) 378 ITR 558 (BOM). THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE HAS ALSO FURNISHED COMPUTATION OF ITA NO. 742 /P U N/20 1 7 NALCO WATER INDIA LTD. 35 PROPORTIONATE ADJUSTMENT IN THE HANDS OF ASSE SSEE WITH REGARD TO ONLY ASSOCIATED ENTERPRISE TRANSACTIONS. 53. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE FAIRLY STATED THAT DIRECTIONS MAY BE GIVEN TO THE ASSESSING OFFICER TO FOLLOW THE DICTATE OF THE HON'BLE SUPREME COURT. 54. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE OF TRANSFER PRICING ADJUSTMENT VIS - - VIS IN PROPORTION WITH THE VALUE OF INTERNATIONAL TRANSACTIONS NOW STANDS SETTLED BY THE HON'BLE SUPREME COURT IN CIT VS. HINDUSTAN UNILEVER LTD. (SUPRA) AN D THE HONBLE BOMBAY HIGH COURT IN CIT VS. FIRESTONE INTERNATIONAL P. LTD. (SUPRA). THE BENCHMARKING ON ACCOUNT OF TRANSFER PRICING ADJUSTMENT, IF ANY, HAS TO BE DONE FOR ASSOCIATED ENTERPRISES TRANSACTIONS ONLY AND NOT THE ENTIRE TURNOVER. ACCORDINGL Y, WE DIRECT THE ASSESSING OFFICER TO CARRY OUT THE SAID EXERCISE AFTER VERIFYING THE COMPUTATION OF PROPORTIONATE ADJUSTMENT FILED BY ASSESSEE BEFORE US AND ALSO AFTER CALCULATING THE MARGINS OF ASSESSEE IN LINE WITH OUR DIRECTIONS IN THE PARAS ABOVE. T HIS TAKES CARE OF GROUND OF APPEAL NO.10 AND CORRECTED ADDITIONAL GROUND OF APPEAL NO.2. THE ASSESSING OFFICER / TPO SHALL GIVE EFFECT TO OUR DIRECTIONS WITH REGARD TO SUBVENTION AMOUNT, ALSO OUR DECISION ON THE PAYMENT OF INTRA - GROUP SERVICES AND ROYALTY TO BE AT ARM'S LENGTH PRICE AND NO ADJUSTMENT TO BE MADE ON THAT ACCOUNT AND ALSO PROPORTIONATE ADJUSTMENT TO ASSOCIATED ENTERPRISES TRANSACTIONS. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE ALSO POINTED OUT THAT WHILE MAKING PROPORTIONATE A DJUSTMENT, ROYALTY AND INTRA - GROUP FEES HAVING BEEN HELD TO BE AT ARM'S LENGTH, COULD NOT FORM PART OF OPERATING COST, ALSO REQUIRES PROPORTIONATE ADJUSTMENT. SIMILAR ADJUSTMENT IS TO BE MADE IN RESPECT OF R&D SEGMENT, THOUGH AT PRESENT ITA NO. 742 /P U N/20 1 7 NALCO WATER INDIA LTD. 36 NO R&D ADJU STMENT HAS BEEN MADE. THIS TAKES CARE OF ADDITIONAL GROUND OF APPEAL NO.1 RAISED BY ASSESSEE. 55. THE GROUND OF APPEAL NO.12 RAISED BY ASSESSEE IS AGAINST USE OF MULTIPLE YEAR DATA STANDS DECIDED AGAINST THE ASSESSEE, HENCE THE SAME IS DISMISSED. 56. THE GROUND OF APPEAL NO.13 IS AGAINST NON - GRANTING OF BENEFIT OF +/ - 5% RANGE, WHICH ALSO STANDS DECIDED AGAINST THE ASSESSEE AND HENCE, THE SAME IS DISMISSED. IN GROUND OF APPEAL NO.13, THE ASSESSEE HAS ALSO RAISED THE ISSUE OF CHARGING OF INTEREST UNDER SECTION 234B OF THE ACT, WHICH IS CONSEQUENTIAL, HENCE THE SAME IS ALSO DISMISSED. 57. THE GROUND OF APPEAL NO.14 RAISED BY ASSESSEE IS AGAINST INITIATION OF PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT, WHICH IS PREMATURE, HENCE, THE SAME IS D ISMISSED. 58 . IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 6 TH DAY OF SEPTEMBER , 201 9 . SD/ - SD/ - (ANIL CHATURVEDI) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 6 TH SEPTEMBER , 201 9 . GCVSR ITA NO. 742 /P U N/20 1 7 NALCO WATER INDIA LTD. 37 / COPY OF THE ORDER IS FORWARDED TO : 1. THE A PPELLANT ; 2. THE RESPONDENT; 3. THE DRP - 3, MUMBAI ; 4. THE CONCERNED CIT, PUNE ; 5. THE DR A , ITAT, PUNE; 6. GUARD FILE. / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE