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