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TMI Blog2022 (12) TMI 422X X X X Extracts X X X X X X X X Extracts X X X X ..... rged by the assessee for the services rendered to the A.E. under the aforesaid agreement is not at arm s length price. Revenue has only doubted the genuineness of the alleged reimbursement of expenses made by the assessee to its A.E. As noted above, the transaction is not reimbursement of expenses by the assessee to its A.E. and rather, is reimbursement of expenses by the A.E. to the assessee. We are of the considered opinion that the impugned adjustment made by the TPO and upheld by the learned DRP in respect of international transactions of reimbursement of the sea farers expenses is based on incorrect appreciation of facts. Therefore, we direct the TPO / A.O. to delete the said adjustment. Assessee appeal allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... afarer expenses to the total income without appreciating the facts of the case that these expenses were later reimbursed by the Associated Enterprise and have not been claimed as an expense by the appellant either in its Statement of Profit and Loss or in its Computation of Income. 6. On the facts and in the circumstances of the case and in law, the learned Income Tax Officer erred in adding an amount of Rs.10,86,103 to the total income through an: adjustment made to the Arm's Length Price with regards to international transactions entered into by the Appellant with its Associated Enterprise for the provision of services rendered to Associated Enterprise without considering the facts of the case and the submission of Appellant in thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bserved that the assessee has reimbursed an amount of Rs.1,42,29,492, to its A.E. In the absence of any document / information pertaining to benchmarking of the transaction of reimbursement of sea farer expenses, the TPO determined the arm's length price of transaction as Nil. Accordingly, adjustment of Rs.1,42,29,492, was proposed in respect of international transactions pertaining to reimbursement of sea farer expenses. In conformity, the Assessing Officer ("A.O.‟), inter-alia, passed the draft assessment order incorporating the adjustment proposed by the TPO. 6. In proceedings before the learned Dispute Resolution Panel ("DRP‟), the assessee filed detailed objections against the aforesaid adjustment proposed by the TPO / ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the international transaction of reimbursement of sea farers expenses, the reimbursement was made by the A.E. to the assessee and not the other way around as understood by the lower authorities. In support of its submissions, the learned A.R. referred to copy of agreement between the assessee and the A.E., summary of reimbursement of expenses and sample vouchers, forming part of paper book. 8. On the other hand, the learned Departmental Representative ("learned D.R") submitted that the assessee has not done any benchmarking in respect of the aforesaid international transaction. 9. We have considered the rival submissions and perused the material available on record. From the perusal of the aforesaid agreement dated 10/03/2014 entered in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the additional evidences filed by the assessee, the TPO agreed with the fact that in the present case, the assessee has received reimbursement of expenses from the A.E. and not reimbursed the expenses to its A.E. as mentioned in the order of the TPO. The relevant observations of the TPO, in this regard, in the remand report are as under:- "7. On perusal of the agreement between the assessee & AE, the contention of the assessee that they have received the said amount of 1,42,29,492/- and not reimbursed the same to its AE as mentioned in the order, was found to be correct However, it is pertinent to mention here that during the TP proceedings, despite being given ample opportunities, the assessee had failed to produce any documentary, e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pressed.
13. Grounds no.1 and 2 are general in nature and therefore, need no separate adjudication.
14. Ground no.3, is pertaining to levy of interest under section 234B of the Act, which is consequential in nature. Therefore, ground no.3, is allowed for statistical purposes.
15. Insofar as ground no. 4 raised in assessee‟s appeal is concerned, the total income of the assessee shall be recomputed in view of our aforesaid findings. Accordingly, ground no.4 raised in assessee‟s appeal is rendered consequential in nature and is allowed for statistical purpose.
16. In the result, appeal by the assessee is partly allowed for statistical purpose.
Order pronounced in the open Court on 18/08/2022 X X X X Extracts X X X X X X X X Extracts X X X X
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