9911796707
TMI Blog2020 (7) TMI 468X X X X Extracts X X X X X X X X Extracts X X X X ..... maintenance. 3.1. We have heard rival submissions and perused the materials available on record. We find the assessee has let out an area of 100 sq.ft for a period of five months. During the previous year relevant to A.Y.2003-04 out of their total office area of 10,000 sq.ft and derived rental income of Rs. 57,500/-. This rental income was offered to tax by the assessee under the head 'income from business'. The ld. AO sought to treat the said rental income under the head 'income from house property' and granted flat 30% deduction towards repairs thereof. We find that the assessee though, had raised a ground disputing the shifting of head of income from 'income from business' to 'income from house property' with regard to rental income, the ld. AR before us stated that he is not pressing the said ground as stated supra. 3.2. We find that since, the rental income was taxed by the ld. AO under the head 'income from house property' and 30% deduction towards repairs were given under the head 'income from house property', the regular repairs and maintenance of Rs. 12,23,559/- debited by the assessee and claimed as deduction under the head 'income from business' was disallowed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s are, the assessee, a resident company, carrying on business of sourcing, screening and selecting Indian seafarers and also providing assistance in completing their pre-joining formalities so as to enable them to join the vessels managed by the assessee's overseas Associated Enterprises (AE) viz. Barber Ship Management Ltd., Hong Kong. During the previous year relevant to the assessment year under dispute, the assessee had provided manning services to its AE in Hong Kong and as per the scope of work, the assessee recruits seafarers of the vessels owned or managed by the AE. In the year under consideration, the assessee credited an amount of Rs. 3,75,14,882, in its Profit & Loss account towards fees received from the AE on account of manning services. The Transfer Pricing Officer while examining the arm's length nature of the aforesaid transaction was not satisfied with the price charged to the AE. Accordingly, he issued notice under section 133(6) of the Act to another party i.e., Confidence Shipping Ltd. seeking information regarding rate charged by them. On the basis of information received from the said party, the Transfer Pricing Officer found that the concerned party was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A bare reading of the order passed by the Transfer Pricing Officer would make it clear that completely relying upon the decision taken by him in assessee's own case for the assessment year 2002-03, he has proceeded to determine the arm's length price of the manning service by obtaining information from a third party Confidence Shipping Co. Pvt. Ltd..It is a fact on record that on the basis of information obtained from the very same party, the Transfer Pricing Officer has determined the arm's length price of manning services in assessment year 2002-03 as well. Further, from the reply filed before the Transfer Pricing Officer which were brought to our notice by the learned Counsel for the assessee during the course of hearing, we find that the method of computation of arm's length price by the assessee as well as by the Transfer Pricing Officer, is more or less identical to such computation in assessment year 2002-03 and 2005-06. Thus, it leaves no room for doubt that facts involved in the impugned assessment year relating to the disputed issue are identical to the facts involved in the assessment years 2002-03 and 2005-06. It is relevant to observe, while deciding the issue in asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r words, as per the assessee, if the reimbursement of expenses of Rs. 6,38,78,901 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. In this context, our attention has been drawn to para 10(xiv) of the Statement of Facts, filed before the CIT(A) which we find appropriate to reproduce as under:- xiv) The TPO/ITO have also ignored the fact that had the amounts of expenses billed on their principals and the amounts received from their principals by your appellants been considered by the said TPO/ITO properly, they would have observed the bare truth that the amount received/realised by your appellants from their principals was US$ 152.94 as against the US$ 150/- considered by the TPO/ITO, as set out hereunder:- TABLE Sl. No. Particulars Rupees Rupees 1 On Billed basis : Manning fee included in P&L A/c 21,697,822 Add : Exp. Incurred under current a/c 63,878,901 85,576,723 Add : Project exp. Incurred/billed 3,988,466 Total 89,5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regard to the fact that the compensation earned by the assessee for providing Manning services is not based on a cost plus mark-up model but is instead based on a negotiated rate of Rs. 2000 per crew per month, as is evident by page 8 of the Paper Book wherein is placed the relevant annexure to the Technical Management and Consultancy Agreement with the associate enterprise. Be that that it may, we have considered the said alternate plea of the assessee and find that the same is potent. The relevant details which we have extracted above, clearly suggest that assessee incurred expenses for providing manning services to the extent of Rs. 6,38,78,901 which were reimbursed by its associate enterprise. At the time of the hearing, our attention has also been drawn to the payments terms and conditions annexed to the Technical Management and Consultancy Agreement, which inter-alia, included clause 5 which reads as under:- "5. First Party shall provide free of cost following facilities to the personnel deputed by Second Party and for that purpose reimburse expenses incurred by the Second Party on behalf of First Party. Salaries and perquisites of personnel. Approriate lodging and b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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. We hold so." 8. There being no material difference in facts relating to the disputed issue in the impugned assessment year, the aforesaid reasoning of the Co-ordinate Bench will apply in full force to the issue raised in the present appeal as well. Therefore, respectfully following the decision of the Co-ordinate Bench in assessee's own case as referred to above, we delete the addition made on account of transfer pricing adjustment of manning services as made by the Assessing Officer and sustained by the learned Commissioner (Appeals). The grounds raised are allowed to the extent indicated above. 2. Facts relating to the disputed issue being identical in the impugned assessment year, in our considered opinion, the decisions taken by the Tribunal in assessee's own case for the assessment years 2002-03 and 2005-06 on identical issue, as referred to above, would squarely apply to the issue raised in the present appeal also. That being the case, respectfully following the aforesaid deci ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
