TMI Blog2019 (5) TMI 1978X X X X Extracts X X X X X X X X Extracts X X X X ..... made the valuation as per CIRIA norms. Grounds are allowed. TP Adjustment - arm's length price of management services paid to the AE - HELD THAT:- It is evident from the order of DRP that they have decided the issue relying upon their decision in assessee s own case for the assessment year 2009 10 [ 2016 (11) TMI 1249 - ITAT MUMBAI] Tribunal has held that the amount received is neither in the nature of royalty nor fees for technical services under Article 12 of India Netherland Tax Treaty. That being the case, respectfully following the decision of the Co ordinate Bench referred to above, we delete the addition made by the Assessing Officer. Addition made on account of reimbursement of salary by treating it as fees for technical services - HELD THAT:- Tribunal while deciding the issue in assessment year 2009 10 [ 2016 (11) TMI 1249 - ITAT MUMBAI] held that reimbursement of salary is not in the nature of fees for technical services as per Article 12(5) of India Netherland Tax Treaty. Therefore, respectfully following the aforesaid decision of the Co ordinate Bench, we delete the addition made by the Assessing Officer. These grounds are allowed. Levy of interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment year 2010 11. The assessee benchmarked the charter hire / lease rentals paid to the AE for hiring the dredgers on the basis of a valuation certificate obtained from Van Woerkom, Nobels Ten Veen and claimed the charter hire / lease rentals paid to the AE to be at arm's length. In the course of proceedings before him, the Transfer Pricing Officer called upon the assessee to furnish documentary evidences to justify the benchmarking of charter hire / lease rentals of the dredgers hired by it. After perusing the documents furnished by the assessee, including the bareboat charter agreement for lease of dredgers, the Transfer Pricing Officer was of the view that CUP method cannot be the appropriate method for benchmarking charter hire charges since the CUP method applied by the assessee is not on the basis of actual transaction but on the basis of a valuation report. Further, he observed, the price quoted in the valuation report is on the basis of indicative rate of charter hire and was qualified with a rider that the actual rates of hire would depend on the actual market conditions and on the basis of negotiation. Further, he observed, there is wide variation in the rates g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted the benchmarking done by the assessee under CUP method and proceeded to determine the arm's length price of the international transaction by applying TNMM at entity level which resulted in upward adjustment of ₹ 161,70,50,636, to the arm's length price. On the basis of adjustment proposed by the Transfer Pricing Officer, the Assessing Officer passed the draft assessment order. Against the draft assessment order, the assessee raised objections before learned DRP. 5. Learned DRP, however, rejected the objections of the assessee by upholding the decision of the Transfer Pricing Officer. 6. The learned Authorised Representative submitted, the assessee is in the dredging business in India since the year 1994. He submitted, for executing the dredging contracts in India, assessee charter hires dredgers from its AEs by executing bareboat charter agreement. The assessee charter hires the dredgers on payment of charter hire / rental charges and the charter hire / rental charges is benchmarked following industry practice and norms by getting them valued by an independent valuer. He submitted, the valuation certificate issued is by a reputed valuer having expertise ov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ys benchmarked by using CIRIA norms and the Department has accepted it over the years. He submitted, even, in the impugned assessment year also in case of Van Oord India Pvt. Ltd, the valuation done by the independent valuer as per CIRIA norms has been accepted as a valid CUP by the Transfer Pricing Officer. Thus, he submitted, once the Department has accepted the determination of arm's length price by accepting the valuation of the independent value as a valid CUP in the preceding assessment years, the same cannot be rejected in the impugned assessment year in absence of any material difference in facts. The learned Authorised Representative submitted, though, principle of res judicata do not strictly apply to the income tax proceedings, however, rule of consistency cannot also be ignored. He submitted, since the Department has accepted the determination of arm's length price on the basis of valuation certificate issued by the independent valuer under CUP method, it cannot take a different stand in the impugned assessment year on identical facts. In support of his contention, he relied upon the following decisions: i) Bharat Sanchar Nigam Ltd. v/s Union of India, [200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cord, in the year under consideration, the assessee has paid an amount of ₹ 302,78,03,783, to its AEs towards hire charges / lease rentals for charter hire of 10 dredgers. The assessee has benchmarked the aforesaid transactions with the AEs by selecting CUP method, wherein, the valuation certificate dated. 16th February 2010 obtained from an independent valuer viz. Van Woerkom, Nobels Ten Veen, Netherland was applied as a CUP. On a perusal of the aforesaid valuation certificate, a copy of which is at Page 161 of the paper book, it is noticed that the valuer has valued the charter hire charges of the dredgers as per the norms prescribed by CIRIA with cost inflation indexation of 1st January 2010. The valuer has ultimately determined the value of charter hire charges as per CIRIA cost standard. 12. It is relevant to observe, the assessee has been executing dredging contracts in India since long and it has determined the arm's length price of the hire charges / lease rentals of the dredgers hired from the AEs by applying the aforesaid methodology. As could be seen from the materials placed before us, in the assessment year 2002 03, the Assessing Officer while completin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e valuation report of the independent value as a valid CUP and treated the international transaction relating to payment of charter hire charges to be at arm's length price. It is also relevant to observe, the Transfer Pricing Officer in both the cases is the same. Thus, from the aforesaid facts, it is evident that the valuation done by the independent valuer on the basis of VG Bouw / CIRIA Norms is accepted as valid CUP not only by the dredging industry but by the Department also. 15. It is further relevant to observe, in case of Boskalis International and Dredging International C.V. (supra), the Tribunal has accepted the computation of arm's length price of hire charges of dredgers by using VG Bouw valuation as a valid CUP. In the case of Ballast Nedam Dredging (supra), the Co ordinate Bench has expressed similar view by holding that the valuation done by the valuer on the basis of VG Bouw norms can be accepted as a valid CUP. On a perusal of the valuation certificate issued by the independent valuer, it is noticed that the independent valuer has determined the value of charter hire charges by applying the standard formula prescribed under the CIRIA norms which was ear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the benchmarking of lease rentals paid for charter hire of dredgers by applying CUP method. For the aforesaid reasons, we allow the grounds raised by the assessee with a direction to the Assessing Officer / Transfer Pricing Officer to accept the benchmarking done by the assessee under CUP method after verifying the fact that the independent valuer has made the valuation as per CIRIA norms. Grounds are allowed. 17. Grounds no.6 to 13 are on the issue of transfer pricing adjustment in relation to the sub contract charges paid to Van Oord India Pvt. Ltd. 18. In view of our decision in grounds no.4 and 5, the issue raised in these grounds has become academic, hence, do not require adjudication. 19. In grounds no.14 to 19, the assessee has challenged the addition made on account of transfer pricing adjustment to the arm's length price of management services paid to the AE. 20. Brief facts are, the assessee provides various services to group companies including the assessee, such as, general management, survey and engineering related functions, marketing and public relation, information technology, quality assurance, technical, financial and administrative, human resou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... while deciding the issue in assessment year 2009 10 held that reimbursement of salary is not in the nature of fees for technical services as per Article 12(5) of India Netherland Tax Treaty. Therefore, respectfully following the aforesaid decision of the Co ordinate Bench, we delete the addition made by the Assessing Officer. These grounds are allowed. 29. Ground no.25, the assessee has challenged levy of interest under section 234B of the Act. 30. The learned Authorised Representative appearing for the parties have agreed that this issue is covered by the decision of the Hon'ble Supreme Court in assessee s own case. 31. Having considered rival submissions, we find that in Balash Hamp Dredging B.V., as assessee was known earlier, the Hon'ble Supreme Court following the decision in NGC network LLC, has upheld the decision of the Hon ble High Court and the Tribunal holding that interest under section 234B of the Act cannot be charged as the assessee is not liable to pay advance tax and the liability is on the payer to deduct tax at source. Following the aforesaid decision of the Hon'ble Supreme Court, we allow the ground raised by the assessee. 32. The additi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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