TMI Blog2022 (7) TMI 1408X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Taxability of management service fees - Issue decided in favour of assessee as own case for A.Y. 2011-12 [ 2019 (5) TMI 1978 - ITAT MUMBAI] held that 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, we delete the addition made by the Assessing Officer. Taxability of salary received - This issue also covered in favour of the assessee by the decision of the ITAT, Mumbai, in the case of the assessee itself [ 2019 (5) TMI 1978 - 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 we delete the addition made by the Assessing Officer. These grounds are allowed. - ITA No. 1382/Mum/2017 - - - Dated:- 15-7-2022 - Shri Amit Shukla, Judicial Member And Shri Amarjit Singh, Accountant Member For the Appellant : Nishant Thakkar Hiten Chande. For t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cumstances of the case and in law, the learned TPO/DRP; 6. erred in making an adjustment on the international transaction of payment to AE for sub contract of specified dredging activities without providing any cogent reason for disregarding the methodology adopted by the Applicant for benchmarking the transaction. 7. erred in benchmarking transaction of payment to AE for subcontract of specified dredging activities using the aggregation approach under TNMM disregarding the fact that the said transaction has been separately justified to be at arm's length; Allocation of Head Office expenses On the facts and in the circumstances of the case and in law, the learned TPO/DRP : 8. erred in making an adjustment to the transaction of payment of allocation of head office expenses, having failed to appreciate that the head office costs recovered by HO from the Applicant represent a mere allocation of costs without any mark-up; 9. erred in not appreciating the documentary evidence fled by the Appellant during the course of assessment proceedings to justify the setup of services as well as allocation of cost of head office expenses; 10. erred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le 12(4) of the Double Taxation Avoidance Agreement (DTAA) between India and the Netherlands as well as fee for technical services under Article 12(5) of India - Netherlands DTAA, thereby making an addition of Rs 3,85,97,891 to the income of the Appellant. 20. erred in not appreciating that for the services rendered by the Appellant to qualify as royalty, the same should provide know-how to the recipient. 21. erred in not appreciating that the services provided by the Appellant are in the nature of business support and administration services and are not in the nature of sharing information concerning industrial, commercial and scientific experience. 22. erred in not appreciating that that services rendered by the Appellant are in the nature of business support and administration services and not in the nature of technical or consultancy services; 23. erred in not appreciating that the services rendered by the Appellant do not make available any technical knowledge, experience, skill, knowhow or processes and hence, is not taxable even as fees for technical services in view of Article 12(5) of the India-Netherlands DTAA. 24. erred in not appreciating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the date of intimation instead of the date of the cheque as contemplated under the provisions of section 234D of the Act. The above grounds of objections are distinct and separate and without prejudice to each other. The appellant craves leave to add, alter, vary, omit, substitute or amend the above grounds of appeal, at any time before or at, the time of appeal, so as to enable the Hon'ble Tribunal to decide the appeal in accordance with the law. 2. The fact in brief is that the return of income declaring income of Rs. Nil was filed on 30.11.2012. The case was subject to scrutiny assessment and notice u/s 143(2) of the Act was issued on 08.08.2013. The assessee is a company incorporated in Netherland and it has executed a number of Dredging Contract in India, M/s VAN Oord Dredging Marine Contractors Pvt. Ltd. V. India Project office was set up as the Indian project office of VAN Oord Dredging Marine Contractors BV (VODMCBV) (a company incorporated in the Netherland) with the approval of the Reserve Bank of India to execute dredging Contracts with various ports and government authorities in India. The Transfer Pricing Officer passed order u/s 92CA(3) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als 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 completing the assessment under section 143(3) of the Act had accepted the charter hire charges for dredger Sagar Manthan, which is also under hire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 earlier known as VG Bouw norms. That being the case, the benchmarking done by the assessee applying the valuation certificate issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llow 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. 5. Similarly, the taxability of management service fees is also covered in favour of the assessee as per the aforesaid decision of the ITAT, Mumbai in the case of the assessee itself. The relevant part of the decision is reproduced as under: 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 resources and organization, etc. For providing such services to the Indian subsidiary assessee received a sum of₹ 9,72,01,066. While framing the draft assessment o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iew relying upon its own order for the assessment year 2009 10. 28. Having considered rival submissions, it is noticed that the Tribunal 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. 6. Following the decision of the coordinate bench as discussed above the ground of appeal no. 4 5, 19-24 25 to 28 are allowed. 7. Ground Nos. 1 3 filed by the assessee are general ground of appeal, therefore, the same not required any adjudication. 8. Ground Nos. 8-18, 29-31 are not pressed, therefore, the same stand dismissed. 9. Ground Nos. 6 7 were not adjudicated by the DRP, therefore, the same are restore to the file of the DRP for deciding on merit. Therefore, ground nos. 6 7 are allowed for statistical purposes. 10. In the result, the appeal of the assessee is partly allowed. Order pronounced in the open court on 15.07.2022. - - TaxTMI - TMITax - In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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