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2018 (2) TMI 1986 - ITAT MUMBAITP Adjustment - international transactions entered by the assessee with its overseas associated enterprise - validity of the reference made u/s 92CA(1) to the Transfer Pricing Officer - as per the assessee, if the reimbursement of expenses is considered while determining the arm’s length price of the international transaction, then the rate charged by the assessee for the manning services comes to US$ 152, which is in excess of the arm’s length rate of US$ 150 adopted by the TPO - HELD THAT:- TPO has reproduced the details of expenses reimbursed by the associate enterprise which are on various heads, viz., fish vessel expenses, travelling expenses, port expenses, licence and certification expenses, uniform expenses, training expenses, repair team expenses etc. - finding of the Assessing Officer clearly supports the assertion of the assessee to the effect that the said expenses have been incurred by it in the course of providing the manning service to the associate enterprise, and the same have been recovered from the associate enterprise as reimbursements. We are only trying to highlight the fact that the said expenses are in relation to the ‘tested transaction’ and therefore there is no justification in not considering them while computing the arm’s length price. The plea of the Revenue based on the observation of the CIT(A) that the expenses have not been shown in the Profit & Loss Account, and therefore, it cannot be taken into consideration, is to say the least, avoiding the obvious. Ostensibly, if such expenses were to be debited to the Profit & Loss Account, it would require simultaneous equivalent credit to the Profit & Loss Account on account of reimbursements. Ostensibly, if one is to determine the rate charged by the assessee from its associate enterprise per crew per month, it would entail taking into consideration the recoveries by way of reimbursements also; and, as the Tabulation reproduced by us earlier shows that once such recoveries are also factored into the rate charged from the associated enterprise, the rate comes to US$ 150.28 per crew per month and upon comparison with the rate of US$ 150 adopted by the TPO, the amount recovered by the assessee from the associate enterprise compares favourably, and, thus it would obviate the need for any further adjustment to the stated values in order to arrive at the arm’s length price. Therefore, on this short point, the adjustment sustained by the CIT(A) is found to untenable - Decided in favour of assessee.
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