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2020 (3) TMI 425 - AT - Income TaxTP Adjustment - advances received by the assessee company from Sovereign Ship Management Ltd, UK - relationship between the assessee and Sovereign Ship Management Ltd, UK said to be that of the associated enterprises - AEs of the assessee company within the meaning of section 92A(2)( c) - HELD THAT:- Language of section 92A(2)(c ) of the Act is unambiguous and clear that in order to fall within the ambit of deeming fiction of of becoming AEs, either Sovereign Ship Management Ltd, UK or Premier Ship Management Ltd, UK should have independently advanced loan to the assessee company which more than 51% of book value of total assets of the assessee company. In the instant case, only if the loans advanced by both Sovereign Ship Management Ltd, UK and Premier Ship Management Ltd, UK are combined, the said provision is satisfied. Advances received by the assessee company from Sovereign Ship Management Ltd, UK are in the nature of business advances for rendering ship management and consultancy services by the assessee company to the said party and hence the same cannot be construed as loan advanced to the assessee company. Once the same is excluded and the loans given by the aforesaid two entities are considered independently, we find that none of the aforesaid parties had advanced loans more than 51% of book value of total assets of the assessee company. Hence it could be safely concluded that the aforesaid two entities cannot be construed as AEs of the assessee company within the meaning of section 92A(2)( c) of the Act which is the case of the ld DRP. In this regard, the ld DR vehemently argued that the assessee itself had reported these two parties to be AEs in its Form 3CEB. We are unable to persuade ourselves to accept to this argument of the ld DR for more than one reason that the facts of the assessee company are staring on us from its financial statements; moreover the plain language of the statute is unambiguous and it is very well settled that there is no estoppel against the statute. See M/S VEER GEMS [2018 (7) TMI 382 - SC ORDER] Thus we hold that Sovereign Ship Management Ltd, UK and Premier Ship Management Ltd, UK cannot be deemed to be AEs of the assessee company within the meaning of section 92A(2)( c) of the Act and hence no adjustment to ALP in respect of transactions carried out , need to be done. Decided in favour of assessee.
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