Case Law Details
DCIT Vs Transocean Drilling Services (I) Pvt Ltd (ITAT Mumbai)
ITAT Mumbai held that when the transaction is in the reimbursement of expenses to AE, the third party cost incurred is a Comparable Uncontrolled Price (CUP) for the reimbursement. Accordingly, adjustment proposed is directed to be deleted.
Facts- The assessee company is engaged in the business of coordination / liaisoning services to the group companies. During the year under consideration, the assessee company has shown revenue from operations at Rs.6,54,08,130/- and other related income at Rs.29,78,840/-.
AO found that the assessee company had entered into Contractor Agreement with Oil and Natural Gas Corporation Ltd. (ONGC) for the hire of drilling rigs and had given a sub-contract of the same activity to its group company. A reference u/s 92CA(1) of the Act was made by the AO to the file of the TPO for determining the ALP of international transactions carried out by the assessee.
The assessee is an Indian company liable to income tax in India as per the provisions of the Act. The AE of the assessee is engaged in offshore drilling activities by deploying rigs and skilled personnel. The AEs operate as project offices in India and pay taxes in India under section 44BB of the Act @40% plus surcharge and cess on the income determined @10% of total receipts on a gross basis. On the contrary, the assessee is engaged in providing coordination / liaisoning services to AEs and remunerated the cost plus markup basis on its own cost.
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