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2016 (5) TMI 764 - ITAT KOLKATA

2016 (5) TMI 764 - ITAT KOLKATA - TMI - Disallowance on account of delayed deposit of ‘Employees ‘contribution towards PF - Held that:- After examining these provisions, the Hon'ble Supreme Court and High Court have held that if the contribution is deposited y the appellant before the due date of submission of its Return, it will be entitled to deduction - vide the Apex Court decision in CIT vs Vinay Cement Ltd. (2007 (3) TMI 346 - Supreme Court of India ) and CIT vs Alom Extrusions Ltd. (2009 ( .....

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the said section that the contribution was made by the assessee-company to a fund required to be set up by or under any other law for the time being in force. Besides, there was no dispute that the fund was constituted bona fidely for the welfare of its employees in the smooth running of the business and, hence, the said contribution was to be allowed under section 37(1). - Decided in favour of assessee.

Disallowance on account of payment of technical collaboration fees paid to a comp .....

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e transaction was to be regarded as having been undertaken at arms length price? - Held that:- Assessee in its Transfer Pricing Documentation, for the purpose of benchmarking, applied Comparable Uncontrolled Price ("CUP") method as the most appropriate method. For application of CUP, the assessee identified following four comparable companies from the Secretariat for Industrial Assistance (SIA) database engaged in providing similar services paying an average rate of royalty of 3.95% and 3.5% on .....

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ALP chosen by the Assessee viz., CUP method and comparability of the companies set out in the TP study of the Assessee with the Assessee. The arithmetic mean of the comparables chosen by the Assessee in its TP study was average rate of royalty of 3.95% and 3.5% on domestic sales and export sales respectively. The claim of the Assessee that the rate of royalty paid by the assessee at 1.5% was lower than the rate of royalty paid by the comparable uncontrolled enterprises in a similar conditions ha .....

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ssee. Both the appeals are directed against the order dated 30.12.2011 of CIT(A)-I, Kolkata, relating to AY 2004-05. ITA No.327/Kol/2012 (Assessee s appeal): 1. Ground No.1 raised by the assessee was not pressed and the same is dismissed as not pressed. 2. Ground No.2 raised by the assessee and ground no.3 raised by the revenue can be conveniently decided together. These grounds read as follows : By the assessee : 2. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in .....

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t is engaged in the business of manufacturing and marketing of footwear and its accessories. In the course of assessment proceedings, the assessee claimed deduction of sums which were paid to Provident Fund (PF) and Employees State Insurance (ESI) authorities as employees share of contribution belatedly i.e., payments of employees share of contribution was paid by the Assessee beyond the due date of payment as prescribed in the respective legislation governing PF and ESI. The assessee claimed be .....

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t PF and ESI laws. 5. On appeal by the assessee CIT(A) agreed with the submissions of the assessee that even employees shares of contribution to PF if the same is paid on or before filing of return the same has to be allowed as deduction. The following are the relevant observations of CIT(A) :- 6.2 From the above observation of the A.O. it appears that he has disallowed the appellant s claim of deduction of ₹ 27,43,614 relying solely on the provisions of Sec. 36(6)(va) of the I.T. Act. But .....

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Electronics Ltd. (313-ITR-161) and CIT vs Dharmendra Sharma (297-ITR-320). 6.3 Keeping in view the judicial decisions referred to above, the A.O. is directed to delete the disallowance of ₹ 27,43,614. It may be mentioned that a similar dispute arose in the appellant's own case in Asstt. Year 2007-08 and the CIT(A) allowed its claim in that year. As can be seen from the above observations of the CIT(A), the CIT(A) has made a reference only to the employees shares of contribution to PF a .....

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The learned DR relied on the order of the AO. 7. We have considered the rival submissions. We are of the view that the reasoning applied by CIT(A) for deleting the disallowance of employees shares of contribution to PF would equally apply to the contribution to ESI even also. Accordingly we direct the AO to delete the disallowance in respect of payment of employees contribution to ESI even also. Ground no.2 raised by the assessee is accordingly allowed. 8. The other grounds are general and do n .....

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s of the case, the Ld. CIT(A) has erred in deleting the disallowance of ₹ 66,96,560/- on account of contribution to Bata Workers Sickness Benefit Society. 12. The assessee contributed a sum of ₹ 66,96,560/- to Bata Workers Sickness Benefit Society (BWSBS) and claimed deduction of the same. The AO made a reference to the provisions of Sec.40A(9) & (10) of the Act which provides as follows: 40A(9): No deduction shall be allowed in respect of any sum paid by the assessee as an emplo .....

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ontained in sub-section (9), where the Assessing Officer is satisfied that the fund, trust, company, association of persons, body of individuals, society or other institution referred to in that sub-section has, before the 1st day of March, 1984, bonafide laid out or expended any expenditure (not being in the nature of capital expenditure) wholly and exclusively for the welfare of the employees of the assessee referred to in sub-section (9) out of the sum referred to in that sub-section, the amo .....

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this expenditure is not allowable u/s 40A(9). The AO also held that no evidence has been produced before him by the Assessee to arrive at a satisfaction as enjoined upon in sub section 10 of section 40A. As such, the said body is neither a trust nor in anyway controlled by the company as such in the circumstances, the sum of ₹ 66,96,560/- was disallowed. 13. On appeal by the assessee the CIT(A) deleted the addition made by AO following the decision of the Tribunal identical issue in assess .....

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A.Y.2005-06 and 2006-07 has been decided by this Tribunal as follows :- 6. In regard to ground no.1 of the revenue s appeal against the action of the ld. CIT(A) in holding that the contribution made by the assessee to Bata Workers Sickness Benefit Society is an allowable expenditure, it was fairly agreed by both the sides that the issue is squarely covered by the decision of the Co-ordinate Bench of this Tribunal in assessee s own case for A.Yrs.1990-91 and 1991-92 in ITA No.329/Cal/1996 and ITA .....

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on 40A(9) of the Act as such an obligation falls within the last part of the said section that the contribution was made by the assesee company to a fund required to be set up by or under any other law for the time being in force. Besides, there is no dispute that the fund was constituted bonafidely for the welfare of its employees in the smooth running of the business and hence the said contribution is to be allowed u/s 37(1) of the Act. 7. As it is noticed that the issue is covered by the deci .....

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ised provident fund or approved superannuation fund as mentioned in section 36(1)(iv), or approved gratuity fund as mentioned in section 36(1)(v), or as required by or under any other law for the time being in force. In the instant case, there was no dispute that the contribution made by the assessee was not towards a recognised fund or approved superannuation fund or approved gratuity fund. Hence, the question was whether the payment made by the assessee to the society was required by or under .....

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nance of hospital and dispensaries, maintenance and payment to the staff including the medical officers, nurses, attendants, etc. The beneficiaries of the fund would be entitled to the payment in accordance with the rules. The said medical benefits to be provided by the assessee to its workers formed a part of the standing orders and rules. The said standing orders and rules had been duly certified under the provisions of the Industrial Employment (Standing Orders) Act, 1946. As per section 5 of .....

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ttlement arrived at in the course of conciliation proceedings and includes a written agreement between the employer and the workmen arrived at otherwise than in the course of a conciliation proceeding and where such agreement has been signed by the parties thereto and a copy thereof has been sent to an Officer authorised in this behalf by the appropriate Government and the Conciliation Officer. As per section 18 of the Industrial Disputes Act, a settlement arrived at by agreement between the emp .....

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erm of any settlement which is binding on the parties under the Industrial Disputes Act and the same shall be punishable with the imprisonment or with fine or both. In view of the above, there was a valid agreement entered into between the parties and enforceable in law against each other. Therefore, it became legal obligation of the assessee-company to make the contribution to the society and as such the contribution to the society was not hit by section 40A(9) as such an obligation fell within .....

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f the Tribunal has since been upheld by the Hon ble Calcutta High Court in the decision referred to by the learned counsel for the Assessee. In the light of the aforesaid judicial pronouncement we are of the view that order of CIT(A) on this issue does not call for any interference. Accordingly ground no.1 raised by the revenue is dismissed. 17. Ground No.2 raised by the revenue reads as follows :- 2. That on the facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the disal .....

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s an Associated Enterprise (AE) within the meaning of Sec.92A of the Act, the A.O. made a reference u/s.92CA to the Transfer Pricing Officer (TPO), to determine whether the said transaction was made at arm's length price(ALP). As we have already seen the assessee is engaged in the business of manufacturing leather, canvas, synthetic and rubber footwear. Bata Ltd., Canada ("associated enterprise") is engaged, inter alia, in the business of providing comprehensive advisory services i .....

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ces (ii) Purchasing services (iii) Construction and architectural services (iv) Research and development services (v) Testing and quality control services (vi) Footwear technology and general technical services (vii) Brand development services (viii) Market research services (ix) Store location, design and layout services (x) Administration and accounting services (xi) Product development, footwear design and construction services (xii) Information system services (xiii) Pension services (xiv) R .....

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y the Arm s Length Price (ALP) criteria laid down in Sec.92 of the Act. In the Transfer Pricing Documentation, for the purpose of benchmarking, the assessee applied Comparable Uncontrolled Price ("CUP") method as the most appropriate method. For application of CUP, the assessee identified following four comparable companies from the Secretariat for Industrial Assistance (SIA) database engaged in providing similar services paying an average rate of royalty of 3.95% and 3.5% on domestic .....

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he comparable uncontrolled enterprises in a similar condition, the Assessee claimed that the price paid in the transaction was to be regarded as having been undertaken at arms length price. 21. Before the TPO, the assessee also submitted detailed replies and explanation with respect to the aforesaid international transaction of payment of royalty to Bata Ltd., Canada, from time to time. 22. The TPO, however, following the Transfer Pricing assessment order for assessment year 2003-04, determined .....

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ques including drawings, tracings, etc.: In respect of the same the appellant submitted that the AE provided regular advice to Bata India on maters relating to manufacturing operations. It also assisted in development and design of new types of footwear by advising on matters connected with product development such as materials, design methods, colour, etc. (b) Brand development services: With respect to this, it was submitted that it had got brand development services to enable it to compete ag .....

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tted details of training programme undertaken by it with the help of Bara Canada. (e) In support of its contention that the transaction with Bata Canada was bona fide and genuine, the appellant also submitted that the Technical Collaboration agreement had the approval of RBI and Ministry of Finance." 24. The CIT(A) accepted the contention of the assessee and deleted the Transfer Pricing adjustment holding as under: "4.11. I have carefully considered the TPO's orders u/s 92CA dt. 0. .....

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disallowance of Royalty payment of ₹ 9,35,85,670 and TDS of ₹ 1,87,17,189 in respect of this transaction of royalty or fee payment. The appellant gets relief on this issue. 25. Aggrieved by the order of the CIT(A), the Revenue has preferred Gr.No.2 before the Tribunal. At the time of hearing it was brought to our notice that in the present AY 04-05, the TPO made the adjustment to ALP by following his own order on identical payment made by the Assessee in AY 03-04. It was further brou .....

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d not controvert the above submission but relied on the order of the TPO. The learned counsel for the assessee drew our attention to the various evidence filed in support of the nature of the services rendered by the AE for which payment of royalty was made by the Assessee. It was further contended that it is the assessee s prerogative to decide whether to incur any expenditure or not for the purpose of business and the revenue authorities cannot sit in judgment over the same. In this regard att .....

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we observe In the case of Dresser Rand India Pvt.Ltd. Vs. ACIT ITA No.8753/Mum/2010 AY 2006-07 order dated 7.9.2011, the Hon ble Mumbai Tribunal had an occasion to examine as to what is the approach that has to be adopted for determining ALP in the case of cost contribution agreement which is akin to the arrangement in the present case between the Assessee and its parent company. The assessee in case of Dresser Rand (supra) entered into a cost contribution agreement with its parent company purs .....

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assessee did not need these services at all, as the assessee had sufficient experts of his own who were competent enough to do this work. For example, the Transfer Pricing Officer had pointed out that the assessee has qualified accounting staff which could have handled the audit work and in any case the assessee has paid audit fees to external firm. Similarly, the Transfer Pricing Officer was of the view that the assessee had management experts on its rolls, and, therefore, global business over .....

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is not for the revenue officers to question assessee s wisdom in doing so. The Transfer Pricing Officer was not only going much beyond his powers in questioning commercial wisdom of assessee s decision to take benefit of expertise of Dresser Rand US, but also beyond the powers of the Assessing Officer. We do not approve this approach of the revenue authorities. We have further noticed that the Transfer Pricing Officer has made several observations to the effect that, as evident from the analysis .....

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ice, it is wholly irrelevant as to whether the assessee benefits from it or not; the real question which is to be determined in such cases is whether the price of this service is what an independent enterprise would have paid for the same. ………… 9……….. 10. In case the Assessing Officer comes to the conclusion that the assessee has indeed received the services from the AE the next question which we have to decide is as to what is the arm s length pr .....

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liances Limited [(2012) 209 Taxman 200] as well as Cushman & Wakefield India Private Limited ITA No.475/2012 dated 23.5.2014 367ITR 730 (Del), rendered similar ruling as was rendered in the case of Dresser Rand (supra). In the case of Cushman & Wakefield (supra), the Hon ble Delhi High Court observed that whether a third party - in an uncontrolled transaction with the Taxpayer would have charged amounts lower, equal to or greater than the amounts claimed by the AEs, has to perforce be te .....

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which they were incurred, and the benefit accruing to the Taxpayer from those activities must all be proved to determine first, whether, and how much, of such expenditure was for the purpose of benefit of the Taxpayer, and secondly, whether that amount meets ALP criterion. In the present case however, the arrangement between the AE and the Assessee is not a cost sharing arrangement but a payment for specific services rendered. To this extent the above observations of the Hon ble High Court may n .....

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mstances an independent enterprise would be willing to pay the price for such services? * An independent third party would be willing and able to provide such services? Whether payment made to AE meets ALP criterion will be determined, keeping in mind all the above factors, as well. 29. Keeping in mind the principles emanating from the aforesaid decisions, we shall now proceed to examine the material on record to see the nature of services received by the Assessee and as to whether the same were .....

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0)/564(2000)PAB-EL dated October 23, 2000. Bata Limited, Canada along with its other subsidiaries (herewith referred to as "AE") is engaged inter-alia in the business of providing comprehensive advisory services relating to production and distribution of footwear and associated products to clients across the world. The said company is stated to possess valuable knowledge expertise and experience and is stated to possess secret and specialized know-how, information and data in the field .....

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advising on matters connected with product development, such as materials, designs, design methods, colours, etc. Further, it reports to Bata India on important developments in the main fashion centres around the world, analyzes fashion trends and makes recommendations to Bata India based on the analysis. Sample copies of sole designs, quality of material, quality of material to be used, etc., provided by the associated enterprise (AE") are at pages 484-697 of the paper book filed by the As .....

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re rendered in the nature of the technical information relating to design method and manufacturing technique, etc., as claimed by the assessee. He was also of the view that forging of global alliance with other footwear companies, might have resulted in some benefit for the assessee, but such measures by the parent company were clearly in the nature of their ownership interests and not specifically directed only towards the assessee. He concluded that there were no services rendered in the natur .....

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the assessee for its benefit. It was submitted that as long as the technology which is owned and provided by the associated enterprise is used by the assessee for manufacture of footwear products, whether such technology was developed exclusively for the assessee is irrelevant. It would be appreciated that without the payment of royalty, the assessee would not have been in a position to use such technical know-how. 32.4. It was further submitted that even under arm's length circumstances a .....

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e AE advised Bata India on the development of the brand, brand marketing plans, brand policies, etc., in accordance with the Indian market conditions. A strategic alliance had also been formed with other major global brands, like, Nike, Reebok, Adidas, Lee Cooper, ID, Warner, etc. for marketing their products from Bata outlets in India. This strategy had given a big boost to Bata India by attracting the new generation of customers in Bata stores, resulting in an enhanced acceptability of Bata pr .....

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e Badminton master, Patapata, North Star and BFirst. On the basis of the advisory services provided by the associated enterprise, the assessee was able to introduce new products in the Indian market and attract the new generation of customers in the Bata store, resulting in an enhanced acceptability of Bata products over the country. Manual of products introduced by the assessee on the basis of the advisory services provided by the associated enterprise were placed on record. [ page 323 - 362 of .....

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gic marketing insights in connection with set up, aesthetics and appearance of the showrooms. It was submitted that in order to meet the requirements of a highly competitive market characterized by the presence of various global players, it was imperative for the assessee to adopt global best practices. The associated enterprise, as a result of its global presence was abreast with prevailing trends and practices. The services provided by the associated enterprise plays a vital role in the surviv .....

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a highly competitive market characterized by the presence of various global players, it was imperative for the assessee to adopt global best practices. The associated enterprise, as a result of its global presence was abreast with prevailing trends and practices. The services provided by the associated enterprise played a vital role in the survival of the assessee in a highly competitive market. The aforesaid services were specifically requisitioned by the assessee and were rendered pursuant to .....

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nd . The manual gives all the characteristics and technical specifications in order to realize the labeling of Bata Non-Footwear lines. The brand book contains sections like corporate identity, logo of Bata how to construct and reproduce the same. There is another section like packaging and product line extensions like, belt holders, pack socks, product labels, packaging of belt, and accessories etc. Copyright in this handbook is held by Global Footwear Services Pte.ltd., (Singapore), which is p .....

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cuments is not known. 36. Similarly there are brand books called Badminton Master Brand Book (Pages 532 to 555 of paper book), Patapata Brand book (Pages 556 to 583 of paper book) North Star Brand Book (pages 584 to 658 of paper book) and B-first Brand Book (pages 659 to 697 of paper book). Copyright in these handbooks are held by Global Footwear Services Pte.ltd., (Singapore), which is part of the Bata Shoe Organization of which group the Assessee is a part. 37. Similarly the Manual at pages 32 .....

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relating to the display and position of footwear, boards, hoardings, window display etc. It cannot be disputed that the material contained in the brand books have in fact been practiced in reality. The Tribunal takes judicial notice of the existence of directions contained in the brand book and holds that they were in fact put in practice in the various Bata stores in India. We therefore hold that services in the form of technical information relating to design methods and manufacturing techniq .....

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velopment, quality control and distribution management, all of which are critical determinants of success in the footwear industry. The AE played an instrument al role in the voluntary retirement scheme taken out by the Bata India in 2004 which was taken by over 1500 employees. It resulted in a total outgo of ₹ 377 million in 2004. However, the resultant savings from the voluntary retirement scheme was around ₹ 180 million per annum. 38.2. During 2004, Bata India restructured pension .....

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s assumed and returns earned at different categories of stores and thus assisting Bata India in deciding which on the most efficient category of retail stores and the category in which new stores should be opened. Based on AEs advice Bata has developed its retail stores in different niche categories in line with the customer profile at each location. AE advised on possible option for reduction of insurance costs. In light of this advise, Bata India management appointed Marsh India Private Limite .....

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ng of new retail stores, reduction in insurance costs etc were cited before the TPO. However, the TPO arbitrarily held that no specific instances in connection with provision of management support services have been provided by the assessee. The aforesaid services were specifically requisitioned by the assessee and were rendered pursuant to the agreement entered into with the associated enterprise. The contention of the TPO that none of the brand related work were specifically directed towards t .....

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Morzaria, Senior Vice-President and Executive Director of Commercial Servoces at Bata World Headquarters, Canda was appointed as Director of the Assessee on 30.8.2001 and is stated to have assisted the Assessee in the aggressive expansion of the retail division of the Assessee. He had continued till March, 2004 and resigned thereafter. One Mr.S.J.Daives was the Managing Director of the Assessee from September, 2002 to January, 2005. Prior to joining the Assessee he was Manging Director and Deput .....

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in our view has thus established that services of the nature of management support were in fact provided by the AE to the Assessee. 39. (iv) Training of Bata India personnel to enhance their competencies: 39.1. It was the contention of the Assessee that the AE has been undertaking regular trainings, seminars, conferences, etc., for the development of Bata India's personnel. Knowledge is the key in manufacturing and operational efficiency. The best practices have been transferred to Bata Indi .....

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wareness of dress code of the employee, training of employee, awareness of code of ethics, etc. Management training guidelines provided by the associated enterprise is placed on record. [page 698 - 787 of the paper book] 39.2. On the above submission of the Assessee, the TPO was of the view that if the courses claimed to have been held by the AE were being paid for separately, then how could these be claimed as technical services rendered under TCA for which another payment was made to the AE in .....

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ver and above the expenses of course fee, etc., which, in any case, were borne by the assessee company whenever its employees attended such trainings /seminars. 39.3. On the above conclusion of the TPO, it was submitted that the services rendered by the associated enterprise in this regard relates to assistance in selection, recruitment and assessment of people for current and future roles within the assessee company and other HR related services. These services are aimed at enabling the assesse .....

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eveloping an effective in-house training programme. Accordingly, the conferences and training programmes referred in the order by the TPO are different from the services rendered by the associated enterprise under the TCA. 40. We have considered the rival contentions. Perusal of the page 698 to 787 of the Assessee s paper book shows that it is a complete guideline on selection recruitment and assessment of the personnel to be appointed by the Assessee. In fact these instructions are universal an .....

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he employee within the organization etc. As has been rightly contended on behalf of the Assessee the organizing of seminars, conferences, meetings etc., for which costs are incurred separately by the Assessee is different and has nothing to do with the training services of the Assessee provided by the AE. 41. (v) Administration and accounting services : 41.1. It was the plea of the Assessee that the AE has been providing administrative and accounting assistance in Bata India by designing various .....

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and has played a" crucial role in determination of Bata India's growth plan, Such actions are undertaken so that the AE can help provide any assistance regarding business strategies to be undertaken in the next year and also analyze the financial performance of Bata India compared to its business plans. The AE has also presented Bata India with its own accounting system in order to ensure that Bata India has the necessary tools for financial planning, control of assets and liabilities a .....

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rformance and provide guidance in formulating future business plans and strategies. In 2003, a study was conducted by AE in order to review Bata India's performance and achievement on capex invested in 2002 as against commitments made to justify investment. Details of the study were placed on record. Support from AE enabled Bata India to obtain a better credit rating in 2004 from CRISIL, enabling the company to obtain WCDL loan of ₹ 500 million at a rate of 5.8% from State Bank of Indi .....

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ue to be raised by Bata India in 2005. AE assisted Bata India in formulating the growth plan for 2004 of Bata India. As part of the growth plan for 2004, Bata India with assistance from AE, worked out several combinations to achieve an optimum mix between in-house production and outsourcing, in an attempt in minimize under recoveries in factories, minimize mark-downs of slow movers, etc. [ page 808- 809 of the paper book] 43. (vii) Information system services: 43.1. AE has developed a diverse ra .....

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eloped a diverse range of information systems for use by different departments for improving business efficiency. These systems have been adopted by the assessee under the guidance of associated enterprise for installation and implementation. Further, these systems have been modified to suit Indian conditions by the associated enterprise. During the financial year 2003-04, the associated enterprise also provided advisory services in relation the hardware and software to be used by the assessee. .....

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nd requirements of the customers. The pas software was designed, developed and written by the associated enterprise through extensive collaboration, taking into account the best of the existing systems in the world. It required internal and external programming, consulting skills from various countries and obtaining various software development licenses. 43.3. Retail Integrated Merchandising System ("RIMS")' RIMS provides meaningful sales and stock information of the store and the .....

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2-818 & 819- 822 of the paper book] 43.4. On the above submission of the Assessee, the TPO was of the view that from the details submitted, it is seen that some of the activities performed by Bata Limited, Canada were continuing from past and no royalty payment was made for the same. One such example is that of accounting manual which were continuing since 1994 as is evident from the manual itself. The further reasoning of the TPO was that the activities related to provision of accounting an .....

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ssee company) owned by it. He also held that no specific or discernible services were rendered by the AE to the assessee company in the nature of "Administration and Accounting Services' of 'Information System Services' or 'Financial Services', which were more than mere owner-shareholder activity. 43.5. The plea of the Assessee with reference to the above conclusion of the TPO was that the fact that no royalty was charged by the associated enterprise in the earlier years .....

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n for such services was paid in the past. Similarly, in the case of Addl CIT vs Nestle India Ltd (2005) 94 TT J 53 (Del) the Hon'ble Tribunal held that it is not relevant that no royalty was paid in the past. Similarly in the case of Dresser Rand India Pvt Ltd vs Addl. CIT (ITA No 8753/Mum/2010) the Hon'ble Mumbai Bench of the Tribunal held that, whether the AE gave the same services to the assessee in the preceding years without any consideration or not is irrelevant. The AE may have gi .....

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t parent company or a regional holding company) solely because Of its ownership interest in one or more other group members, i.e. in its capacity as shareholder." Further attention was drawn to para 7.10 of the OECD Transfer Pricing Guidelines further provides the following examples of shareholder activity: '7.10 The following examples (which were described in the 1984 Report) will constitute shareholder activities, under the standard set forth in paragraph 7.6: a) Costs of activities r .....

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erest in other company i.e. in the capacity of shareholder. It was thus submitted that specific services rendered by the associated enterprises in the domain of IT, Finance and Accounts cannot be regarded as provided by the associated enterprise in the capacity of a shareholder. 44. We have given a careful consideration to the rival contentions. None of the reasons given by the TPO for disregarding the contentions put forth by the Assessee can be sustained. As rightly contended by the learned co .....

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services were in fact provided by the AE to the Assessee. 45. (viii) Store location, design and layout services / construction and architectural services. 45.1. The associated enterprise supports the assessee on location, design and layout of a store. Special focus is on the layout of the store so as to ensure efficient utilization of space. The associated enterprise had provided assistance to the assessee in developing the Bata city store concept which targets to meet the needs of a typical urb .....

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on record. [ Page 363 - 466 of the paper book} Further, the associated enterprise has advised and provided guidelines to the assessee relating to the display and positioning of footwear, boards, hoardings, window display, etc., which were placed on record. [Ref Reply dated 05-12- 2005, page 467 - 483 of the paper book filed in the course of assessment proceedings for AY 2003-04] 46. On the above submission of the Assessee the TPO was of the view that the services were directed towards protecting .....

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ssee for such services, the economic and commercial benefits derived by the Assesseee of intra group services. 48. The next question is as to whether the consideration paid to the AE is at Arm s length. On this aspect we have already seen in para-20 of this order that the Assessee in its Transfer Pricing Documentation, for the purpose of benchmarking, applied Comparable Uncontrolled Price ("CUP") method as the most appropriate method. For application of CUP, the assessee identified fol .....

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