TaxTMI 
TaxTMI 
2018 (4) TMI 1811
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....ully owned by Wilh Wlhelmsen ASA, Norway. In the year under dispute, the assessee had undertaken international transaction relating to provision of manning services with its Associate Enterprise (A.E) M/s. Barber Ship Management Ltd., Hong Kong. As per the scope of work, assessee recruits seafarers for the vessels owned or managed by its A.E. In the impugned assessment year assessee credited an amount of Rs. . 3,43,50,125/- to the profit and loss account towards fees received from AE towards provision for manning services. Before the Transfer Pricing Officer, though, the assessee claimed the amount received by it from its A.E. to be at arm's length, however, the Transfer Pricing Officer (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 P....
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..... towards provision of manning services. In fact, the TPO while adopting the rate charged by M/s. Confidence Shipping Co. has categorically stated that there is no material difference in fact involved between assessment year 2002-03 and the impugned assessment year. On a perusal of the order dated 7th February 2018, passed in assessee's own case by the Tribunal, for assessment year 2002-03 in ITA no.6160/Mum./2010, it is noticed that while deciding identical issue relating to transfer pricing adjustment made on fees charged for manning services the Tribunal has deleted the addition holding as under:- "5. Before the CIT(A) as well as before us, assessee has raised multiple 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 as....
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....nbsp; Total 91,149,627 91,149,627 No. of man months as per TPO 12,213 Therefore, charge per man month 7,469 Exchange 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 appe....
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....re on various heads, viz., fish vessel expenses, travelling expenses, port expenses, licence and certification expenses, uniform expenses, training expenses, repair team expenses etc. In fact, in Para (ii) at page 12 of his order, the TPO further records that the amount of Rs. 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 o....