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2014 (7) TMI 866 - AT - Income TaxTransfer pricing adjustment Determination of lease rentals u/s 92C r.w. Rule 10A - Whether the lease rental paid by the assessee to its AE in respect of various dredging equipments taken on lease can be recorded as closely linked or continuous transactions which cannot be evaluated separately on individual basis Held that:- The Assessee has taken a number of dredging equipments from more than one associate enterprises - the transactions carried out with different associate enterprises cannot be clubbed or aggregated because they cannot be termed as closely linked or continuous so as to influence the price in aggregate or the profit of the parties arising from these transactions - various dredging equipments hired from the associate enterprises can be aggregated for the purpose of determination of ALP in terms of Rule 10A(d) - the aggregation of the various transactions is possible only with respect to the transactions which are carried out between the Assessee and each associate enterprise - the Assessee has hired these equipments and dredgers from more than one associate enterprise, therefore, the aggregation of the transaction is permitted only in respect of those which are between the Assessee and one enterprise separately - AO/TPO is directed to determine the ALP by aggregating the various transactions between the Assessee and each associate enterprise separately and not by clubbing the transactions with all associate enterprises. Lease rentals paid beyond period of project disallowed Held that:- The Assessee was required to pay lease rentals even after the project till the vessel was redelivered at the determined port - the Assessee was to pay lease rentals for the period of time spent on demobilization and transportation of dredger and vessel to the port of redelivery - neither assessee has produced any record to show that the payment of rental for the period which was spent for re-delivery of the dredger/equipment is a standard practice in this field of business not the TPO has brought on record any material or transaction entered between the independent parties to show that the rent paid by the Assessee over and above the project period is in excess of the comparable case - both the Assessee as well as TPO failed to discharge their respective onus and duties to determine the ALP in respect of lease rentals paid beyond the period of project - payment is to be compared with the independent and uncontrolled transactions of a similar nature wherein either the payment of rentals for the time period spent on demobilization and transportation for re-delivery of the equipments are accepted as a normal practice or otherwise it is not accepted beyond the period of project the matter is remitted back to the AO/TPO for re-consideration Decided partly in favour of Assessee.
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