Case Law Details
Van Oord India Pvt Ltd Vs DCIT (ITAT Mumbai)
Held that the transfer pricing provisions are not applicable to the assessee to the extent of operations carried out through operating qualifying ships where the income is taxed under Tonnage Tax Scheme.
Facts- The assessee is a wholly owned subsidiary of Van Oord Dredging and Marine Contractors BV, a company registered in the Netherlands. The assessee over the years has become a main contractor directly entering into contracts with Government and port authorities in India. The assessee also owns certain equipment which it uses for undertaking specified dredging activities. The assessee is registered as a Tonnage Tax Company under the Tonnage Tax Scheme (TTS) as provided under Chapter XXIIHG of the Act. As per the provisions of TTS, income derived from porting qualified ships would be treated as shipping income and would be taxable as per the computation mechanism provided therein.
The case of the assessee was selected for scrutiny under CASS and the statutory notices were duly served on the assessee. A reference was made to the Transfer Pricing Officer (TPO) in order to determine the arm’s length price from the international transaction detailed in the audit report in form 3CEB.
TPO made an adjustment of Rs.10,60,78,531/-. AO passed a draft assessment order incorporating the said addition. Aggrieved, the assessee filed its objections before DRP. The DRP rejected the objections from the assessee and confirmed the TP adjustment. AO passed final assessment order pursuant to the directions of the DRP against which the assessee is in appeal before the Tribunal.
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