TaxTMI 
TaxTMI 
2025 (10) TMI 512
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....ion 250 of the Income-tax Act, 1961 (for brevity, 'the Act'), date of order 13/08/2024 for A.Y. 2016-17. The impugned order was emanated from the order of the Ld.Assistant Commissioner of Income- tax, Circle 5(3)2), Mumbai (for brevity the "Ld. AO")passed under section 143(3) read with section 144C(3) of the Act, date of order 26/02/2019. 2. The revenue has taken the following grounds: - "1. Whether on facts and circumstances of the case and in law, the CIT(A) erred in allowing the assessee's appeal ignoring the fact that assessee had shared documentation charges with its principal entity i.e. WAN HAI Lines Ltd., Taiwan in equal ratio (50% each) but had not received any services from the Principal in respect of the f....
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....C(1) of the Act" 3. Tersely we advert the fact of the case that the assessee filed its original return of income under Section 139(1) of the Act on 7th November 2016, declaring a total income of Rs. 2,26,62,600. The case was selected for scrutiny, referred to the Transfer Pricing Officer (TPO), and a notice under Section 92CA of the Act was issued, requiring the assessee to furnish all necessary details and documents in support of the Arm's Length Price (ALP). The assessee provided the relevant information and explanations to the TPO during the course of hearings. After examining the case, the Ld. TPO issued an order under Section 92CA(3) of the Act, concluding that the value of international transactions with Associated Enterprises ....
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....are these charges equally, i.e., 50% each. Aggrieved assessee filed an appeal before the Ld. CIT(A). The Ld. CIT(A) rejected the addition and allowed appeal of the assessee. Being aggrieved on impugned appeal order the revenue filed an appeal before us. 4. We heard the rival submissions and considered the documents available in the record. The Ld.DR vehemently argued and relied on the order of the Ld.AO. The Ld.AR argued that the assessee is an agent of Wan Hai (Lines) Ltd, Taiwan (in short, 'WHLLT'). The assessee has procured the service charges from the ships and accordingly assessee retained 50% of the documentation charges and 50% was transferred to the Principal as per the agreement of 2004. The assessee is in relation....
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....f Section 182 exists when the principal employs another person, who is not his employee, to act or represent him in dealings with a third person. An agent renders services to the principal. The agent docs what has been entrusted to him by the principal to do. It is the principal he represents before third parties, and not himself. As the transaction by the agent is on behalf of the principal whom the agent represents, the contract is between the principal and the third party. Accordingly the agent, except in some circumstances, is not liable to the third party 8. Agency is therefore a triangular relationship between the principal, agent and the third party. In order to understand this relationship, one has to examine the inter se r....
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....the company and principal" is a general approximation of the nature of arrangement between the company and its principal. There are a number of charges (under different charge codes) that are collected by the company from customers which are together referred to as "documentation charges and telex charges". Some of these charges are shared equally, some are retained entirely by the principal, and some are retained entirely by the agent assessee company. As an average approximation, these charges get distributed more or less equally between the parties. A detailed break up of these charges and their individual sharing as explained by appellant are tabulated below :- Type of Revenue Total Collection Shared with with principal Inco....
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....vided in Form 3CEB indicates that the documentation charges and telex charges are shared equally between the company and its principal. Accordingly, 50% of these charges were duly reimbursed to the principal. The amounts received by the assessee company on behalf of the principal were merely in the capacity of an agent, acting under the directions of the principal. Additionally, we note that in the books of account, only 50% of the charges were credited, and no corresponding expenses were debited that were reimbursed to the principal. Considering the impugned appeal order we find the charges were distributed by the assessee and AE and the said chart related details breakup of charges and they are distributed between the parties. We respe....