Subscription   Feedback   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Articles Highlights TMI Notes SMS News Newsletters Calendar Imp. Links Database Experts Contact us More....
Extracts
Home List
← Previous Next →

Gulf Energy Maritime Services Pvt. Ltd. Versus Income Tax Officer, Ward 8 (1) (4) , Mumbai

2016 (3) TMI 216 - ITAT MUMBAI

Transfer pricing adjustment - determining ALP - whether hypothetical price which would have been charged under comparable uncontrolled conditions can be taken into account for computing the arm’s length price? - Held that:- In this view of the matter, it would indeed seem that a bonafide quotation, as referred to and relied upon by the assessee in this case- and particularly bearing in mind limited scale of operations of the assessee and the smallness of amount involved, could indeed be a valid .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n resorting to an unscientific and unrecognized method ascertaining the arm’s length price of the services rendered by the assessee but also in rejecting bonafide quotations as a valid input for ascertaining the arm’s length price by the assessee.

In view of the above we uphold the grievance of the assessee and direct the Assessing Officer to delete the impugned arm’s length price addition - Decided in favour of assessee - I.T.A. No.3812/Mum/2015 - Dated:- 29-2-2016 - Pramod Kumar AM .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ice adjustment of ₹ 12,71,378 on the facts and in the circumstances of this case. 2. The appeal is time barred by 7 days. The assessee has moved a condonation petition, duly supported by an affidavit, praying that the delay be condoned. Having perused the petition, and having heard the learned Departmental Representative on the same, we are inclined to condone the delay and proceed to decide the matter on merits 3. None appeared for the assessee but, having regard to the narrow compass of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

h January 2016 to seek the clarification of the learned Departmental Representative. It is in this background that the matter is being disposed of ex-parte qua the assessee. 4. The relevant material facts of the case are like this. The assessee is engaged in the business of providing ship management services to its parent company, namely Gulf Energy Maritime PJSC, United Arab Emirates. The assessee has received US $ 40,000 per month, from its parent company, for the services so rendered. The ser .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

roduced by the assessee. The Assessing Officer required the assessee show cause that since the comparables considered by the assessee are merely quotations, wherein no real transactions have taken place , why the ALP should not be rejected and recomputed as it has not properly benchmarked the transactions with its AEs . It was also noted by the Assessing Officer that the fees for managing the crew has been charged on lump sum basis while the number of crew members have not remained the same. The .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

3.15 per crew member done by the Assessing Officer, the assessee submitted that there are three broad categories of crew members- namely officers, ratings and trainees who are paid, on an average, US$ 248.78, US $ 100.00 and nil remuneration respectively. The assessee computed that, even on this basis, the total amount works out to US $ 3,30,285 whereas the assessee has received US $ 4,80,000. None of these submissions, however, impressed the Assessing Officer. He rejected the same and proceeded .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ht to the notice, it has simply furnished the computation without any supporting documents. As per the provisions of the Act, when an entity carries out certain international transactions, it has to keep the relevant documents to justify its ALP reported in the 3CEB report, which the assessee failed to do so. By merely relying the quotations it has benchmarked the receipts, which is over and above the receipts from the AE in respect of such services is not acceptable. In the notice the revenue h .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the assessee providing the man power at US$ 40,000 per month since inception of the company i.e, from 2009 without considering the inflation and hence it has reported substantial losses in the accounts. Thus, the assessee has not properly benchmarked the said receipt. Accordingly, the actual receivables by considering the minimal rate per crew work's out to $ 507880.70. However, the assessee has billed it AE at $ 480000. Thus, the assessee has billed its AE below the actual to the tune of $ .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ee carried the matter in appeal before the CIT(A) but without any success. Learned CIT(A), in a brief operative portion of the order, dismissed the grievances of the assessee rather summarily and noted that the authorised representative of the assessee has failed to rebut the categorical findings of the Assessing Officer . The assessee is not satisfied and is in further appeal before us. 6. We have noted that even as the Assessing Officer has rejected the determination of arm s length price by t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rm s length price, the Assessing Officer can only decide as to what is the arm s length price for services rendered but he has to do so on the basis of a legally recognized method. The arm s length price so determined has not been decided on the basis of a recognized method. Even if one is to proceed on the basis that determination of ALP by the assessee is incorrect, the Assessing Officer cannot ascertain the ALP on an adhoc basis or make adhoc disallowances. The determination of the ALP, under .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

se quotations and did not dispute the bonafides of these quotations. The rejection by the Assessing Officer is only on the basis of his observation that no actual transactions have taken place on the basis of these quotations, and, therefore, these quotations cannot be valid inputs for the CUP method. Undoubtedly, under rule 10B(1)(a), the valid inputs for CUP method can only be the price charged or paid for property transferred or services provided in a comparable uncontrolled transaction, or a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ax Rules, is effective from 1st April 2012. However, as held by a coordinate bench of this Tribunal in the case of Toll Global India Forwarding Pvt Ltd Vs DCIT [(2014) 37 ITR (Trib) 391 (Del)], rule 10AB, which provides that "………………any method which takes into account the price which has been charged or paid, or would have been charged or paid, for the same or similar uncontrolled transaction, with or between non-associated (i.e. independent) enterpr .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

price so paid can be said to be arm s length price. As we have noted earlier in this order, the price need not be in terms of an amount but can also be in terms of a formulae, including interest rate, for computing the amount. In any case, when the expression price which….would have been charged on paid is used in rule 10BA, dealing with this method, in this method the place of price charged or paid , as is used in rule 10B(1)(a), dealing with CUP method, such an expression not only cove .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ness model said to have been adopted by the assessee, in principle, meets the test of arm s length price determination under rule 10AB as well. (Emphasis, by underlining, supplied by us now) 7. The views so expressed by the coordinate bench have been upheld by Hon ble Delhi High Court, in the case of PCIT Vs Toll Global Forwarding India Pvt Ltd [(2016) 66 taxman.com 53 (Del)], by observing as follows: ……… the Court finds the impugned order of the ITAT to be well reasoned and .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ith rule 10B(1)(a). In our considered view, in the light of insertion rule 10AB, the rigour of rule 10B(1)(a) stands relaxed to the extent that not only the actual price of transactions under comparable uncontrolled conditions but also hypothetical price which would have been charged under comparable uncontrolled conditions can be taken into account for computing the arm s length price. The Assessing Officer was thus in error not only in resorting to an unscientific and unrecognized method ascer .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

what is new what is new
  ↓     bird's eye view     ↓  


|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version