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.
Conclusion- Co-ordinate bench in assessee’s own case has held that the transfer pricing regulations do not apply to the assessee to the extent of operations carried out through operating qualifying ships where the income is taxed under TTS.
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 TTS.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
This appeal is against the final order of assessment passed by the Deputy Commissioner of Income-tax-5(3), M umbai dated 11/12/2013 passed under section 143(3) read with section 144C(14) of the Income-tax Act, 1961 (in short, ‘the Act’) for the assessment year 2009-10.
2. The issues contended by the assessee through grounds of appeal are –
