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2022 (7) TMI 1408 - AT - Income TaxTP Adjustment - MAM selection - assessee has taken on lease dredgers from its associated enterprises - TPO rejected the independent valuer certificate used by the assessee for benchmarking the transaction of charter hire of dredgers using cup as most appropriate method and proceeded to benchmark charter hire dredgers and payment to associate enterprises for sub-contract of specified dredging activities using TNMM and aggregating these transaction - HELD THAT - As decided in assessee's own case 2019 (5) TMI 1978 - ITAT MUMBAI the material facts permeating through different assessment years are more or less identical as the terms and conditions on which the dredgers are hired have not changed. That being the case, applying the rule of consistency, a different view cannot be taken in the impugned assessment year with regard 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. 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.
Issues Involved:
1. Transfer pricing adjustment of Rs. 1,28,51,051 2. Taxability of Management service fees of Rs. 3,85,97,891 3. Taxability of the reimbursements of salary received of Rs. 1,23,75,980 4. Levy of surcharge and education cess 5. Levy of interest under section 234B of the Act 6. Incorrect computation of interest under section 234D of the Act Issue-wise Detailed Analysis: 1. Transfer Pricing Adjustment of Rs. 1,28,51,051: The appellant raised objections against the TPO/DRP's rejection of the economic analysis and the independent valuer's certificate, which benchmarked the charter hire/lease rent paid for dredgers using the Comparable Uncontrolled Price (CUP) method. The TPO instead applied the Transactional Net Margin Method (TNMM) and used the margin of Dredging Corporation of India Ltd as a comparable, leading to an adjustment. The Tribunal noted that in previous years, the valuation done by the independent valuer using VG Bouw/CIRIA norms was accepted as a valid CUP by the department. The Tribunal upheld the appellant's method and directed the AO/TPO to accept the benchmarking done by the appellant under the CUP method after verifying that the independent valuer used CIRIA norms. 2. Taxability of Management Service Fees of Rs. 3,85,97,891: The AO/DRP treated the management service fees received by the appellant as "Royalty" under Article 12(4) of the India-Netherlands DTAA and as fees for technical services under Article 12(5) of the DTAA. The Tribunal referred to its previous decision in the appellant's own case for the assessment year 2009-10, where it was held that the management fee is neither in the nature of royalty nor fees for technical services under Article 12 of the DTAA. Consequently, the Tribunal deleted the addition made by the AO, following the principle of consistency. 3. Taxability of the Reimbursements of Salary Received of Rs. 1,23,75,980: The AO/DRP treated the reimbursement of salary as fees for technical services under Article 12(5)(a) of the India-Netherlands DTAA. The Tribunal referred to its decision in the appellant's case for the assessment year 2009-10, where it was held that the reimbursement of salary is not in the nature of fees for technical services under Article 12(5) of the DTAA. Therefore, the Tribunal deleted the addition made by the AO. 4. Levy of Surcharge and Education Cess: The appellant challenged the levy of surcharge and education cess on the income chargeable to tax under the India-Netherlands DTAA. However, this ground was not pressed by the appellant during the proceedings, and hence, it was dismissed. 5. Levy of Interest under Section 234B of the Act: The appellant contested the levy of interest under section 234B, citing a Supreme Court decision in its own case where the Special Leave Petition filed by the Department for levy of interest under section 234B was dismissed. This ground was not pressed by the appellant during the proceedings and was dismissed. 6. Incorrect Computation of Interest under Section 234D of the Act: The appellant argued that the interest on excess refund granted should be computed from the date of the cheque instead of the date of intimation as per section 234D of the Act. This ground was not pressed by the appellant during the proceedings and was dismissed. Conclusion: The Tribunal partly allowed the appeal, upholding the appellant's method for benchmarking the charter hire/lease rent and deleting the additions related to management service fees and reimbursement of salary. The grounds not pressed by the appellant were dismissed, and certain issues were restored to the file of the DRP for adjudication on merit.
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