TMI Blog2018 (4) TMI 1811X X X X Extracts X X X X X X X X Extracts X X X X ..... ication in not considering them while computing the arm‟s length price. Plea of the Revenue before us, 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. W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (TPO) on the basis of material on record found that in assessment year 2002 03, the assessee s case was compared with M/s. Confidence Shipping Co. Pvt. Ltd. for determining the arm's length price of the fees charged for manning services. The TPO referring to the said comparability analysis done in assessment year 2002 03 also observed that there is no material change in facts and circumstances in the impugned assessment year, hence, he considered the fees charged by M/s. Confidence Shipping Co Pvt. Ltd. for manning services as comparable. Further, relying upon the information obtained under section 133(6) Income Tax Act, 1961 (for short the Act ) from M/s. Confidence Shipping Co. Pvt. Ltd. in assessment year 2002 03, the TPO found that as per the said information M/s. Confidence Shipping Co. Pvt. Ltd. was receiving compensation of U.S. $ 120 per person per month from July 2002 onwards towards rendering the manning services. The Transfer Pricing Officer adopted the said rate as the arm's length rate and proceeded to determine the arm's length price of the manning services provided by the assessee to its A.E. which worked out to ₹ 8,58,21,750. As the assessee has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submissions in order to assail the tradition. Such submissions, inter-alia, include the in-appropriateness of considering the data provided by Confidence Shipping Company on account of it being irrelevant, such data being unsubstantiated etc., so however, another pertinent point which has been consistently been pursued by the Appellant is that even if the data provided by Confidence Shipping company of US$ 150 is taken as a valid CUP data, even then the actual charges recovered by the assessee from its associate enterprise works out to be at an arm‟s length price. This has been argued by the assessee, based on the fact, that it has been reimbursed by its associate enterprise of expenses amounting to ₹ 6,38,78,901, which has not been factored in the benchmarking analysis by the TPO. In other words, as per the assessee, if the reimbursement of expenses of ₹ 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 draw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate as per TPO 48.80 Therefore, charge per man month in US$ as per BSMI 152.94 Charge per man month as per TPO in US$ 150.00 Excess received by BSMI in US$ 2.94 Thus, the TPO/ITO overlooked the fact that the sum charged/realised by your appellants are more by US$ 0.28 per manmonth under the billed method and more by US$ 2.94 per man-month under the receipt method (which was in fact the method considered by the ITO in making the addition of INR 1,583,688/-.) On this basis, it is sought to be canvassed even if one has to go by the manner in which benchmarking has been carried out by the TPO, even then the transactions of the assessee are at an arm‟s length price taking into consideration the amount of expenses reimbursed by the associated enterprise over and above the fixed rate of payment. 6. On the aforesaid alternate plea of the appellant, the stand of the Revenue is manifested in paras 7 to 7.2 of the order of the CIT(A). The Learned CIT-DR appearing for the Revenue, referre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenses etc. In fact, in Para (ii) at page 12 of his order, the TPO further records that the amount of ₹ 6,38,78,901 ...... are the expenses incurred by the company for rendering the services and should have been shown in the profit loss account . The aforesaid 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. 10. The plea of the Revenue before us, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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