SP Armada Oil Exploration Private Limited Vs DCIT (ITAT Mumbai)
ITAT Mumbai held that transfer pricing adjustment in relation to international transaction of payment of bareboat charter hire fees is directed to be deleted since benchmarking approach of assessee is already accepted by DRP in earlier years.
Facts- The assessee was awarded the contract by Oil and Natural Gas Corporation Ltd for supplying a Floating Production Storage and Offloading vessel and providing, inter alia, Operations and Maintenance services to ONGC for a period of 9 years. As the assessee did not own any FPSO vessel, nor did it possess the expertise relating to the construction and mobilisation of an FPSO vessel, it obtained the vessel on a bareboat charter hire basis from its associated enterprise, Armada C7 Pte Ltd, located in Singapore.
TPO computed the arm’s length price of the international transaction of bareboat charter hire charges at INR 408,44,74,120 instead of INR 418,92,04,225 paid by the assessee and made a downward transfer pricing adjustment of INR 10,47,30,105.
DRP held that the action of the TPO in attributing over 2.5% as brokerage/facilitation fees to be retained by the assessee from the fees paid to the associated enterprise for bareboat charter hire is reasonable and correct. In conformity with the directions issued by DRP, the AO passed the impugned final assessment order assessing the total income of the assessee at INR 42,11,15,313. Being aggrieved, the assessee is in appeal before us.
