TaxTMI 
TaxTMI 
2016 (3) TMI 216
X X X X Extracts X X X X
X X X X Extracts X X X X
....was justified in upholding the arm's length price adjustment of Rs. 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 material facts within which the short issue requiring our adjudication is set out, we have considered it appropriate to proceed ex parte qua the assessee and decide the matter on the basis of material o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lace', 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 assessee was also asked as to why the "revenue should not be recalculated on the basis of minimum rate per crew member". The assessee did explain that, under clause 5.1 of the agreement with the AE, the fees of US $ 40,000 per month is irrespective of the number of crew members, and that the number of crew members varied from 152 to 180. It was also explained that there is no provision for minimum rate to be charged for each of the crew membe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....such services is not acceptable. In the notice the revenue has been recomputed after considering all the manpower deployed by the assessee company to its AE. However, in the submission the assessee has not provided any evidences in respect of such variances, but simply argued that the variance is not substantial. It has simply argued that it has charged highest rate when compared to the market is of no use as the arguments of the assessee is not supported with any third party transaction which has reached finality. It is also not understandable as to how 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ainable basis. It is not open to the Assessing Officer to decide that for each variation in the number of crew members on the job, the charges must vary. The computation of fees on the basis of number of members, as done by the Assessing Officer, is devoid of any legally sustainable basis. While determining arm'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 m....
X X X X Extracts X X X X
X X X X Extracts X X X X
....be taken into account. The rule 10AB, as stated in the Income Tax 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) enterprises, under similar circumstances considering all the relevant facts" is retrospective in effect. The coordinate bench, inter alia, has further observed as follows: 25. In effect, thus, it would appear that as lon....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed 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 researched. The legal principles governing the determination of ALP in a TP adjustment exercise have been expounded lucidly by the ITAT in the impugned orders. 8. 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 input under the residuary m....