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2013 (7) TMI 223 - ITAT MUMBAIAddition on Arm's Length Price u/s.92C - sale of ship to wholly owned Subsidiary - CIT(A) considered the sale price of SHIP at US$11.32 million as against US$9.50 million dollar - CIT(A) rejected the Valuation report of M/s. J.B. BODA SURVEYORS & ADJUSTERS PVT. LTD. certifying the value of ship at US$9.60 million only on the ground that valuation report was submitted at the fag end of the assessment proceedings - CIT (A) also not considered the 5% of the difference allowable - Held that:- Sale of ship is an international transaction between associate enterprises and therefore, transfer pricing provisions are applicable. The findings of the CIT (A) on this issue are therefore, upheld. The sale has taken place in November, 2002, therefore, the CIT (A) findings that the adoption of value of February, 2003 by AO is not correct has to be upheld. Adjustment of prices based on the capacity in DWT - Held that:- As verifying the records relating to the vessel and it is confirmed that both the figures are correct, i.e. 43,595 and 42,430, respectively, as they relate to summer and winter dwts of mv Prabhu Puni. Typically, when a vessel is described for sale/purchase purposes, the same is described in terms of its summer dwt enclosing extracts of information from independent sources, viz. Wikipedia, MarineTraffic.com, Clarkson Research Services Ltd. and Shippingdatabase.com. The extracts would show that the vessel, mv Prabhu Punis' dwt is 43,595. We are not in a position to approve the value of the CIT (A) on the basis of average prices of different category of ships adopted, as he has relied on prices quoted in a magazine and adopted an average method which is not prescribed. As noticed that the JB Boda certificate which was relied upon by assessee before the CIT (A) was issued in connection with the insurance of the Ship by M/s United India Insurance Co. Ltd as on 1.7.2002. The ship was insured for a sum of Rs.50.00 crores. In that the United India Insurance Company Ltd has stated that the Hull and Machinery insured value at Rs.50.00 crores. This Insurance was valid w.e.f. 1.7.02 to 30.06.03. In view of the above document available, this value accepted by the Insurance Company for the ship can be taken as reasonable value to arrive at ALP rather than going by the estimation on the basis of the quoted figures in a monthly magazine as was done by the CIT (A). M/s Simpson Spence and Young London certificate will not be acceptable as it is not based on inspection of the vessel, condition of the vessel and further they have furnished a revised certificate as stated in the note with reference to the dead weight of the ship. Even though the JB Boda certificate dated 11.06.2002 was for internal purposes, may be for the purpose of insurance, the insurance value as accepted by the insurer can be considered as reasonable valuation for the purpose of arriving at the ALP. Therefore, AO directed to adopt the value of Rs.50.00 crores for the purpose of arriving at the ALP. 5% standard deduction can not be allowed in view of change in law as well as there is only one price determined - appeal filed by assessee is partly allowed.
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