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(iv) Commission received 15,315,067 TNMM
(v) Payment of interest on ECB 10,784,304 Other Method loan
(vi) Payment for Software 104,655,437 Other method charges (S3 and IS charges)
(vii) Recovery of expenses 11,680,908 Other method
(viii) Reimbursement of 6,129,335 Other method Expenses
(ix) Dividend paid 77,457,379 Other method Total 1,42,15,38,501 10 Purchase of raw materials 122,057,695 TNMM 11 Payment of Rent 2,820,000 Other Method 12 Payment of managerial 21,146,231 Other Method remuneration / professional fee Total 146,023,926 ITA 6081/Mum/2018 
Sr.No.       Adjustment on account of                    Amount (in INR)
a.           Sale of finished goods                                   3,18,81,702
b.           Payments for Technical Knowhow                           3,96,90,306
c.           Payment for interest on ECB loan                           51,74,209
d.           Payment for software charges                             2,21,62,308
             Total                                                    9,89,08,525

4. The Ld. AO has passed draft assessment order u/s 143(3) r.w.s. 144C(1) of the I.T. Act, 1961 on 30-11-2017 and made TP adjustment as suggested by the ITA 6081/Mum/2018 TPO in his order dated 20-10-2017 in respect of sale of finished goods, payment for technical know how, payment for interest on ECB loan and payment for software charges. Further, the AO has also made disallowance of a sum of Rs.14,98,505 towards d employees contribution to PF u/s 36(1)(viia) of the Act, for delayed payment of employees provident fund contribution to the respective fund. Similarly, the AO has also made addition on account of disallowance of other miscellaneous expenses to the tune of Rs.2,15,229.

The Assessing Officer is directed to carry out the adjustment accordingly. This ground is partly allowed."

20. In this view of the matter and consistent with the view taken by the co- ordinate bench, we direct the AO / TPO to delete TP adjustment of ITA 6081/Mum/2018 Rs.51,74,209 made in relation to payment of interest on external commercial borrowing loan.

21. The next issue that came up for our consideration from ground 4 is TP adjustment ofRs.2,21,62,308 in relation to availing of information systems (IS) services. The brief facts of the impugned dispute are that during the course of TP proceedings, the TPO rejected TP study conducted by the assessee to benchmark its international transactions in relation to information system services by applying TNMM as most appropriate method. The TPO further observed that the assessee has failed to prove with supporting evidences, the fact that the AE has provided services to the assessee. Therefore, he proceeded to determine the arm's length price of the software usage charges paid to the AE on estimate basis by applying man hour rate of Rs.8,500 per hour for two man hour a day. Accordingly, he determined the arm's length price on IT services rendered by the AE for maintaining software at Rs.8,24,93,129. Since the assessee has paid an amount of Rs.10,46,55,347, the differential amount of Rs.2,21,62,308 has been adjusted in relation to availing of information system services.

"21. We have considered rival submissions and perused materials on record in the light of decisions relied upon. Though, the Transfer Pricing Officer has alleged that the assessee failed to furnish any evidence to substantiate its claim that the payment made to the AE for availing Information System Services, however, the material on record reveal that the assessee has not only undertaken a bench marking process for determining the arm's length price of the transaction in the transfer pricing study report which was filed before the Transfer Pricing Officer, but, other relevant and necessary documents like copy of the agreement, invoices raised, certificate from independent Chartered Accountant Firm, KPMG, details of users were also furnished before the Transfer Pricing Officer. Therefore, the allegation of the Transfer Pricing Officer that the assessee has not furnished the necessary details is not totally correct. In any case of the matter, non-furnishing of certain documentary evidences, as alleged by the Transfer Pricing Officer, does not empower him to embark upon determining the arm's length price of the international transaction on estimation basis. Further, a reading of the Transfer Pricing Officer's order makes it clear that his finding on the issue is contradictory. On the one hand, he has observed that the assessee has failed all the three tests, including, whether the services have actually been provided, on the other hand, he has accepted that the AE has provided the software. Thus, ultimately, what the Transfer Pricing Officer disbelieves is the quantum of payment. Accordingly, he has proceeded to estimate the price of the services rendered by the AE at ` 1,62,05,000. Though, the Transfer Pricing Officer has observed that he has applied CUP method for determining the arm's length price, however, he has not brought on record even a single comparable to support the arm's length price determined by him even on estimate basis. The estimation of service charges on so called man hour basis is without any supporting material. Similarly, the estimation of cost ITA 6081/Mum/2018 of software at `. 1 crore is without any basis. Thus, it is very much clear that the determination of arm's length price by the Transfer Pricing Officer is not as per any one of the methods prescribed under section 92C of the Act r/w rule 10B. As discussed elsewhere in this order, such determination of arm's length price on ad-hoc / estimation basis is not permissible under the scheme of the Act as the Transfer Pricing Officer is duty bound to determine the arm's length price by following any one of the most appropriate method prescribed under the statute. It is relevant to observe, the DRP has approved the determination of the arm's length price by the Transfer Pricing Officer without properly appreciating the implication of the relevant statutory provisions. As regards the observations of the DRP regarding the report of the KPMG, it is necessary to observe that the KPMG report is not an audit report but was furnished by the assessee to support the attribution of cost. Therefore, it cannot be said that it is a qualified report. It is further relevant to observe, the material submitted before us, which also forms part of the Transfer Pricing Officer's record, indicates that the cost of the software has been allocated to 40 group companies across the globe who are using the software and related services and assessee's share in cost allocation works out to 2.3%. Moreover, when the Transfer Pricing Officer himself agrees that the AE has provided software and certain services, there is no reason for not accepting the payment made to the AE to be at arm's length in the absence of any contrary evidence brought on record and by simply applying the benefit test. If the Transfer Pricing Officer did not agree to the arm's length price shown by the assessee it was open for him to determine the arm's length price by applying one of the most appropriate methods being backed by supporting material. Without complying to the statutory provisions, the Transfer Pricing Officer certainly cannot determine the arm's length price on ad-hoc / estimation basis. Our reasoning in paragraph 11 to 15 will equally apply to this issue also. Accordingly, we delete the adjustment made to the arm's length price of payment made towards availing information system services from AE. This ground is allowed."