Underwater Services Company Ltd. Vs DCIT (ITAT Mumbai)
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) disposed of multiple appeals filed by Underwater Services Company Ltd. and the Revenue concerning Assessment Years 2012-13, 2017-18 and 2018-19.
The assessee, a resident corporate entity and subsidiary of Samson Maritime Ltd. (SML), was engaged in providing diving services for marine offshore activities, primarily to oil companies. Since the assessee did not own sea-going vessels, it obtained vessels on charter hire basis from its holding company.
For A.Y. 2012-13, the assessee challenged the validity of assessment completed under Section 153A read with Section 143(3) of the Income Tax Act, 1961. The original assessment under Section 143(3) had already been completed before the search operation under Section 132 conducted on 23.11.2017. The Assessing Officer subsequently made additions by disallowing charter hire charges paid to the related party under Section 40A(2)(b) and certain other expenses.
The assessee contended that the additions were not based on any incriminating material found during the search and seizure operation. It relied upon judicial precedents including PCIT vs. Abhisar Buildwell (P.) Ltd. and other decisions cited before the Tribunal.
The Tribunal observed that since the assessment for the relevant year had already attained finality before the search, the Assessing Officer in proceedings under Section 153A could make additions only on the basis of incriminating material found during the search. The Tribunal noted that the expenses and related transactions were already part of the original assessment record and no material was shown to establish that the issues were discovered only due to the search.
