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d) in alleging this as a brand promotion, advertising, and marketing services transaction and thereby considering a markup at the rate of 11.74% along with reimbursement of AMP expenses.

The Appellant therefore prays that the action of the learned AO be held as bad in law and is liable to be quashed.

Ground No.2: Disallowance of payment towards cost of infrastructure development 2.1 On the facts and in the circumstances of the case and in law, the learned AO, under the directions issued by the Hon'ble DRP, erred in characterizing the payment of Rs 8,20,00,000 towards the cost of infrastructure development at Sri City as an upfront lease charge and thereby, allowing the same as deductible business expenditure over the period of lease.

Ground No.2: Disallowance of cost of infrastructure development 5.1 Facts to the issue are that during the year under consideration, the assessee obtained lease of a plot of land for a period of 99 years from Sri City Private Limited ('Lessor'/ 'Developer' / SCPL) for setting up a manufacturing facility. Further, the assessee also entered into an Infrastructure Development agreement on 06/06/2012 for the purpose of availing certain services to be provided by the Developer as common facilities. Under the terms of development agreement, in consideration for payment of Rs.820 Lacs (as assessee's contribution), the Developer agreed to develop certain common infrastructure facilities such as (i) Roads

(ii) Water supply systems, pipeline, pumping stations (iii) Drainage, sewerage lines, sewerage treatment plants (iv) Electricity lines (v) Water treatment facilities, garbage disposal, telecommunication connectivity etc. outside and up to the plot of land as leased to the assessee. Such infrastructure facilities were stated to be owned by the lessor and the assessee did not have any ownership or similar rights over the same. The said facilities were stated to be essential for the functioning of the Kellogg India Private Limited Assessment Year-2013-14 assessee's factory on the leasehold land. The assessee paid one-time consideration of Rs.820 Lacs to SCPL towards infrastructure development. The infrastructure agreement was stated to be co-existed and co-terminus to the lease deed dated 06/06/2012 entered into by the assessee with M/s SCPL for lease of land.

6.1 We have carefully considered the rival submissions and perused relevant material on record. We have gone through the terms of infrastructure development agreement dated 06/06/2012 entered into by the assessee with M/s SCPL, as placed before us. As per the recitals of the agreement, the developer has given on lease 20 acres of land to the assessee in certain DTZ out of large parcel of land situated in the state of Andhra Pradesh. The lease deed is stated to be co-existent, co-terminus and integral part and parcel of infrastructure development agreement. The agreement obligates the developer to create /provide certain infrastructure facility for and on behalf of the assessee against certain consideration. These facilities are enumerated in clause-3 of the agreement and would, inter-alia, include construction of access road, creation of power infrastructure, water & sewage facilities etc. The cost of the said facilities was to be borne by the assessee. In case of default by the developer to Kellogg India Private Limited Assessment Year-2013-14 carry out the stated obligations, the assessee had the option to negotiate with developer for completion of infrastructure facilities or terminate the agreement along with lease agreement and the developer was to refund the entire amounts paid under this agreement as well as under lease agreement.