WILHELMSEN SHIP MANAGEMENT INDIA P. LTD, MUMBAI V. ITO 8(10(2), MUMBAI

ITA 6160/MUM/2010

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0592 (ITAT-MUMBAI)
• Duration Of Justice: 7 year(s) 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: K
• Next Hearing Date: 14-10-2014
• Assessment Year: 2002-2003
• Appeal Filed On: 11-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N K CHAND
• Assessee Lawyers: P J PARDIWALA
• Keywords: Transfer pricing; International transaction
• Section: 143(3); 92B; 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH K , MUMBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI , JUDICIAL MEMBER ITA NO. 6160 /MUM/ 2010 : (A.Y : 2002 - 03 ) M/S. WILHE L MSEN SHIP MANAGEMENT INDIA PVT. LTD., 31/32, 3 RD FLOOR, APPLE HERITAGE, SIR M.V. ROAD, ANDHERI (EAST), MUMBAI 400 093 (APPELLANT) PAN : AAACI1614H VS. DCIT - 8(3), MUMBAI (RESPONDENT) APPELLANT BY : SHRI P. J. PARDIWALA & SHRI NISHANT THAKKAR RESPONDENT BY : SHRI N.K. CHAND (CIT - DR) DATE OF HEARING : 10 / 11 /201 7 DATE OF PRONOUNCEMENT : 07 /0 2 /201 8 O R D E R PER G.S. PANNU , AM : THE CAPTIONED APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(A) - 15 , MUMBAI DATED 0 2 . 06 .201 0 , PERTAINING TO THE ASSESSMENT YEAR 200 2 - 03 , WHICH IN TURN HAS ARISEN FROM THE ORDER PASSED BY THE ASSESSING OFFICER DATED 30 . 0 3.20 05 UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) PURSUANT TO ORDER DATED 22.03.2005 OF THE TRANSFER PRICING OFFICER - 1, MUMBAI . 2 ITA NO. 6160/MUM/2010 M/S. WILHELMSEN SHIP MANAGEMENT INDIA PVT. LTD. 2. IN ITS APPEAL, THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - 1. THE COMMISSIONER OF INCOME - TAX (APPEALS) 15, MUMBAI, [CIT(A), HEREAFTER] HAS ERRED IN UPHOLDING THE LEGALITY AND VALIDITY OF THE REFERENCE MADE U/S 92CA(1) OF THE ITA, TO THE TRANSFER PRICING OFFICER. 2. THE CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.68,262,138/ - . 3. THE CIT(A) HAS ERRED IN UPHOLDING M/S. CONFIDENCE SHIPPING CO. AS VALID COMPARABLE. 4. THE CIT(A) HAS ERRED IN REJECTING THE ALTERNATIVE PLEA OF THE APPELLANT TO TAKE INTO CONSIDERATION EXPENSES OF RS.63,878,901/ - INCURRED BY THE APPELLANTS AND COLLECTED BACK FROM THEIR AE, IN ORDER TO ARRIVE AT THE MANNING FEE CHARGED BY THE APPELLANT. 3. AS A PERUSAL OF THE AFORES T ATED G ROUND S OF APPEAL REVEAL , THE SUM AND SUBSTANC E OF THE DISPUTE IS WITH REGARD TO AN ADDITION OF RS. 6, 82,61,138 MADE TO THE RETURN ED INCOME ON ACCOUNT OF TRANSFER PRICING ADJUSTMENT RELATING TO THE INTERNATIONAL TRANSACTIONS ENTERED BY THE ASSESSE E WITH ITS OVERSEAS ASSOCIATED ENTERPRISE . IN ORDER TO APPRECIATE THE CONTROVERSY , THE RELEVANT FAC TS CAN BE SUMMARISED AS FOLLOWS. THE APPELLANT IS A COMPANY INCORPORATED U NDER THE PROVISIONS OF THE C OMPANIES ACT, 1956 , AND IS INTER - ALIA , ENGA GED IN THE BUSINESS OF SOURCING, SCREENING AND SELECTING INDIAN SE AFARERS AND ALSO PROVIDING ASSISTANCE IN COMPLETING THEIR PRE - JOINING FORMALITIES, ETC. F OR THE 3 ITA NO. 6160/MUM/2010 M/S. WILHELMSEN SHIP MANAGEMENT INDIA PVT. LTD. ASSESSMENT YEAR UNDER CONSIDERATION , IT FILED A RETURN OF INCOME DECLARING A LOSS OF RS.2,08,90 , 645 , WHICH WAS SUBJECT TO A SCRUTINY ASSESSMENT WHEREBY THE TOTAL INCOME HAS BEEN ASSESSED AT RS.4,89,55,180. THE SUBSTANTIVE DIFFERENCE BETWEEN THE RETURNED AND THE ASSESSED INCOME OF RS.6 , 82 , 62 , 138 IS BASED ON THE ORDER OF THE T RANSFER P RICING O FFICER (IN SHO RT TPO) PASSED UNDER SECTION 92CA(3) OF THE ACT , WHEREIN ARM S LENGTH PRICE OF THE INTERNATIONAL TRANSACTION OF PROVIDING MANNING SERVICES TO THE ASSOCIATED ENTERPRISE HAS BEEN DETERMINED ABO VE THE STATED VALUES BY THE AFORESAID AMOUNT. SINCE THE DISPUTE REVOLVES AROUND THE SAID ADDITION , OUR FURTHER DISCUSSION RELATES TO THE FACTS RELEVANT FOR SUCH ADDITION. THE A PPELLANT BEFORE US IS A SUBSIDIARY OF BARBER INTERNATIONAL LTD. , HONGKONG, WHICH IN TURN IS FULLY OWNED BY W ILH WLHELMSEN ASA NORWAY . T HE A SSESSE COMPANY HAD UNDERTAKEN CERTAIN INTERNATIONAL TRANSACTION S WITHIN THE MEANING O F SECTION 92B OF THE ACT , WITH ITS ASSOCIATE ENTERPRISE , M/S. BARBER SHIP MANAGEMENT LTD., HONG KONG, WHICH I NTER - ALIA , INCLUDED P ROVI D IN G OF M A N NING S ERVICES. NOTABLY , THE ASSESSE RECRUITS SEAFARERS FOR THE VESSELS OWNED OR MANAGED BY ITS ASSOCIATE ENTERPRISE. IN THE COURSE OF SUCH ACTIVITY , THE ASSESSE COMPANY ENGAGES IN SOURCING, SCREENING, SELECTING INDIAN SEAFARERS AND PROVIDING ASSISTANCE IN COMPLETING THEIR PRE - JOINING 4 ITA NO. 6160/MUM/2010 M/S. WILHELMSEN SHIP MANAGEMENT INDIA PVT. LTD. FORMALITIES SO AS TO ENABLE SUCH PERSONNEL TO JOIN THE SHIPS MANAGED BY ITS ASSOCIATE ENTERPRISE, BARBER SHIP MANAGEMENT LTD. , HONGKONG. IT S ACTIVITIES ALSO INCLUDE RUNNING A TRAINING CE NTRE FOR THE SEAFARERS WHICH IS CALLED I NDIAN M ARITIME T RAINING C ENTRE. THE ASSESSE COMPANY, IN TERMS OF A TECHNICAL MAN MANAGEMENT AND CONSULTANCY SERVICE S AGREEMENT DATED 08.12.1998, IS PROVIDING MANNING SERVICES FOR THE VESSELS OR SHIPS EITHER OWNED BY BARBER SHIP MANAGEMENT LTD., HONGKONG OR MANAGED BY IT ON BEHALF OF THE RESPECTIVE SHIP OWNERS. FURTHER , IN T ERM OF A S UPPLEMENTARY A GREEMENT DATED 0 1. 0 4.2000 , THE CONSIDERATION PAY ABLE TO THE ASSESSE FOR THE PERIOD UNDER CONSIDERATION HAS BEEN SPECIFIED AS RS.2000 PER CREW PER MONTH AND ON THIS BASIS ASSESSE COMPANY HAS CREDITED IN ITS P ROFIT AND LOSS A CCOUNT A SUM OF RS.2,16 , 97 , 822 ON THIS COUNT . BEFORE THE TPO, ASSESSE CONTENDED THAT THE STATED VALUE OF THE SAID INTERNATIONAL TRANSACTION WAS AT AN ARM S LENGTH PRICE. THOUGH, AS PER T HE ORDER OF THE TRANSFER PRICING OFFICER, THE METHOD ADOPTED BY THE ASSESSEE TO COMPUTE ARMS LENGTH PRICE OF THE IMPUGNED TRANSACTION IS SAID TO BE THE COST PLUS METHOD , H OWEVER , A T THE TIME OF HEARING , THE LEARNED REPRESENTATIVE FOR THE ASSESSE E POINTED OUT THAT THE SAID STATEMENT WAS WRONG IN AS MUCH AS IN ITS TRANSFER PRICING STUDY , THE ASSESSE E HAD SELECTED THE TRANSACTIONAL NET 5 ITA NO. 6160/MUM/2010 M/S. WILHELMSEN SHIP MANAGEMENT INDIA PVT. LTD. MARGIN (T N M) METHOD AS THE MOST APPROPRIATE METHOD TO COMPUTE THE ARMS LENGTH PRICE . ON THIS ASPECT , THERE IS NO REBUTTAL BY THE LEARNED DR , AND THEREFORE WE PROCEED FURTHER BY NOTICING THAT THE ASSESSE E COMPANY HAD BENCHMARKED THE INTERNATIONAL TRANSACTION OF PROVIDING MANNING SERVICES TO ITS ASSOCIATE ENTERPRISE BY SELECTING THE T N M METHOD AS THE MOST APPROPRIATE METHOD . IN ORDER TO COMPLETE THE FACTS - NARRATION , IT MAY ALSO BE NOT ED THAT BEFORE THE TP O, ASSESSE E POINTED OUT THAT ITS MARGIN IN THE MANNING SERVICES SEGMENT WAS 24.03% AND ON COMPARISON W ITH THE AVERAGE MARGIN OF THE COMPARABLE S SELECTED AT 10.63%, THE MARGIN OF THE ASSESSE E WAS FOUND TO BE FAVOURABLE AND THUS THE INTERNATIONAL TRANSACTION OF PROVIDING MANNING SERVICES TO ASSOCIATE ENTERPRISE WAS AT ARM S LENGTH PRICE. HOWEVER , THE TPO HAS GIVEN A GO - BY TO THE T N M METHOD SELECTED BY THE ASSESSE E AND INSTEAD HE HAS APPLIED THE COMPARABLE UNCONTROLLED PRICE (CUP) METHOD TO BENCHMARK THE TRANSACTIONS . THE RELEVANT DISCUSSION IN THE ORDER OF TPO REVEALS THAT HE CALLED FOR A LI S T OF CONCERNS WHO WER E ENGAGED IN SIMILAR ACTIVITIES. THE TPO SOUGHT INFORMATION UNDER SECTION 133(6) OF THE ACT FROM TWO SUCH CONCERNS , VIZ. MITSUI OSK LINES MARITIME INDIA PVT. LTD. AND CONFIDENCE SHIPPING PVT. LTD . THE INFORMATION SO OBTAINED BY THE TPO HAS BEEN TR EATED AS THE RELEVANT 6 ITA NO. 6160/MUM/2010 M/S. WILHELMSEN SHIP MANAGEMENT INDIA PVT. LTD. DATA TO APPLY THE CUP METHOD. THE DISCUSSION IN THE ORDER OF TPO ALSO REVEALS THAT ULTIMATELY HE HAS RELIED UPON THE DATA OBTAINED FROM CONFIDENCE SHIPPING PVT. LTD. ONLY AND THEREFORE OUR FURTHER DISCUSSION IS CONFINED TO THE SAME. AT THIS POINT , WE MAY BRING OUT THAT BEFORE US VARIOUS ARGUMENTS HAVE BEEN RAISED TO ASSAIL THE ADDITION, BUT A PERTINENT ISSUE HAS BEEN RAISED WHICH RELATES TO THE EFFICACY OF THE CUP DATA WHICH HAS BEEN USED BY THE TPO . FOR THE PRESENT, WE ARE CONFINING OURSELVES TO THE FACTS RELEVANT TO THE AFORESAID ASPECT ONLY. 4. THE TPO A DOPTED THE RATE QUOTED BY CONFI DENCE SHIPPING LTD. O F US$ 150 AS AN ARM S LENG T H RATE FOR THE MANNING SERVICES PROVIDED BY THE ASSESSE E AND ACCOR DINGLY WORKED OUT THE ADJU STMENT OF RS.6,82,62138. 5. BEFORE THE CIT(A) AS WELL AS BEFORE US , ASSESS E E H AS RAISED MULTIPLE SUBMISSIONS IN ORDER TO ASSAIL THE TRADITION. SUCH SUBMISSIONS , INTER - ALIA , INCLUDE THE IN - APPROPRIATENESS OF CONSIDERING THE DATA PROVIDED BY C ONFIDENCE S HIPPING C OMPANY ON ACCOUNT OF IT BEING IRRELEVANT , SUCH DATA BEING UNSUBSTANTIATED ETC. , SO HOWEVER, ANOTHER PERTINENT POINT WHICH HAS BEEN CONSISTENTLY BEEN P URSUED BY THE A PPELLANT IS THAT EVEN IF THE DATA PRO VIDED BY CONFIDENCE S HIPPING 7 ITA NO. 6160/MUM/2010 M/S. WILHELMSEN SHIP MANAGEMENT INDIA PVT. LTD. COMPANY OF US $ 150 IS TAKEN AS A VALID CUP DATA , EVEN THEN THE ACTUAL CHARGES RECOVERED BY THE ASSESSE E FROM ITS ASSOCIATE ENTERPRISE WORKS OUT TO BE AT AN ARM S LENGTH PRICE. THIS HAS BEEN ARGUED BY THE ASSESSE E , BASED ON THE FACT , THAT IT HAS BEEN REIMBURSED BY ITS ASSOCIATE ENTERPRISE OF EXPENSES AMOUNTING TO RS. 6,38,78 , 9 01, WHICH HAS NOT BEEN FACTORED IN THE BENCHMARKING ANALYSIS BY THE TPO. IN OTHER WORDS, AS PER THE ASSESSE E , IF THE REIMBURSEMENT OF EXPENSES OF R S.6,38,78,901 IS CONSIDERED WHILE DETERMINING THE ARM S LENGTH PRICE OF THE INTERNATIONAL TRANSACTION , THEN THE RATE CHARGED BY THE ASSESSE E FOR THE MANNING SERVICES COMES TO US $ 152, WHICH IS IN EXCESS OF THE ARM S LENGTH RATE OF US $ 150 ADOPTED BY THE TP O. IN THIS CONTEXT , OUR ATTENTION HAS BEEN DRAWN TO PARA 10(XIV) OF THE STATEMENT OF FACTS , FILED BEFORE THE CIT (A) WHICH WE FIND APPROPRIATE TO REPRODUCE AS UNDER: - XIV) THE TPO/ITO HAVE ALSO IGNORED THE FACT THAT HAD THE AMOUNTS OF EXPENSES BILLED ON THEIR PRINCIPALS AND THE AMOUNTS RECEIVED FROM THEIR PRINCIPALS BY YOUR APPELLANTS BEEN CONSIDERED BY THE SAID TPO/ITO PROPERLY, THEY WOULD HAVE OBSERVED THE BARE TRUTH THAT THE AMOUNT RECEIVED/REALISED BY YOUR APPELLANTS FROM THEIR PRINCIPALS WAS US$ 152.94 AS AGAINST THE US$ 150/ - CONSIDERED BY THE TPO/ITO, AS SET OUT HEREUNDER: - 8 ITA NO. 6160/MUM/2010 M/S. WILHELMSEN SHIP MANAGEMENT INDIA PVT. LTD. TABLE SL. NO. PARTICULARS RUPEES RUPEES 1 ON BILLED BASIS : MANNING FEE INCLUDED IN P&L A/C 21,697,822 ADD : EXP. INCURRED UNDER CURRENT A/C 63,878,901 85,576,723 ADD : PROJECT EXP. INCURRED/BILLED 3,988,466 TOTAL 89,565,189 NO. OF MAN MONTHS AS PER TPO 12,213 THEREFORE, CHARGE PER MAN MONTH 7,334 EXCHANGE RATE AS PER TPO 48.80 THEREFORE, CHARGE PER MAN MONTH IN US$ AS PER BSMI 150.28 CHARGE PER MAN MONTH AS PER TPO IN US$ 150.00 EXCESS RECEIVED BY BSMI IN US$ 0.28 2 AS PER TPO/ITO : MANNING FEE AS PER TPO @ US$ 150/ - PER MAN MONTH FOR 12,213 MAN MONTHS 89,325,960 3 ON RECEIVED BASIS : MANNING FEE INCLUDED IN P&L A/C 21,697,822 ADD : EXPENSES RECEIVED 69,451,805 TOTAL 91,149,627 91,149,627 NO. OF MAN MONTHS AS PER TPO 12,213 THEREFORE, CHARGE PER MAN MONTH 7,469 EXCHANGE RATE AS PER TPO 48.80 THEREFORE, CHARGE PER MAN MONTH IN US$ AS PER BSMI 152.94 CHARGE PER MAN MONTH AS PER TPO IN US$ 150.00 EXCESS RECEIVED BY BSMI IN US$ 2.94 THUS, THE TPO/ITO OVERLOOKED THE FACT THAT THE SUM CHARGED/REALISED BY YOUR APPELLANTS ARE MORE BY US$ 0.28 PER MAN - MONTH UNDER THE BILLED METHOD AND MORE BY US$ 2.94 PER MAN - MONTH UNDER THE RECEIPT METHOD (WHICH WAS IN FACT THE METHOD CONSIDERED BY THE ITO IN MAKING THE ADDITION OF INR 1,583,688/ - .) 9 ITA NO. 6160/MUM/2010 M/S. WILHELMSEN SHIP MANAGEMENT INDIA PVT. LTD. ON THIS BASIS , IT IS SOUGHT TO BE CANVASSED EVEN IF ONE H A S TO GO BY THE MANNER IN WHICH BENCHMARKING HAS BEEN C A RRIED OUT BY THE TPO , EVEN THEN THE TRANSACTIONS OF THE ASSESSE E ARE AT AN ARM S LE NGTH PRICE TAKING INTO CONSIDERATION THE AMOUNT OF EXPENSES REIMBURSED BY THE ASSOCIATED ENTERPRISE OVER AND ABOVE THE FIXED RATE OF PAYMENT . 6. ON THE AFORESAID ALTERNATE PLEA OF THE APPELLANT, THE STAND OF THE R E VENUE IS MANIFESTED IN PARA S 7 TO 7.2 O F THE ORDER OF THE CIT (A) . THE L EARNED CIT - DR APPEARING FOR THE REVENUE , REFERRED TO THE ORDER OF THE TPO IN THIS REGARD A ND P O INTED OUT THAT IT HAS BEEN BROUGHT OUT THAT SUCH EXPENSES HAVE NOT BEEN DEBITED IN THE PROFIT & LOSS ACCOUNT AND THEREFORE SUCH AMOUNT COULD NOT BE CONSIDERED FOR THE DETERMINATION OF THE ARM S LENGTH PRICE. IN FACT, THE CIT (A) IN PARA 7.1 OF HIS ORDER ALSO TAKES A SOMEWHAT SIMILAR LINE THAT ASSESSE E SHOULD HAVE INCLUDED SUCH EXPENSES IN ITS PROFIT & LOSS ACCOUNT SO AS TO ENABLE COMPUTATION OF APPROPRIATE MARK - UP ON IT. PERTINENTLY , THE SAID OBSERVATION OF THE CIT (A) IS FACTUALLY UNTENABLE, HAVING REGARD TO THE FACT THAT THE COMPENSATION E ARNED BY THE ASSESSE E FOR PROVI DING M ANNING SERVICES IS NOT BASED ON A COST PLUS MARK - UP MODEL BUT IS INSTEAD B A SED ON A NEGOTIATED RATE OF RS. 2000 PER CREW PER MONTH , AS IS EVIDENT BY PAGE 8 OF THE PAPER BOOK WHEREIN IS PLACED THE RELEVANT ANNEXURE TO THE 10 ITA NO. 6160/MUM/2010 M/S. WILHELMSEN SHIP MANAGEMENT INDIA PVT. LTD. T ECHNICAL M ANAGEMENT AND C ONSULTANCY A GREEMENT W ITH THE ASSOCIATE ENT E R PRISE . 8. BE THAT THAT IT MAY , WE HAVE CONSIDERED THE SAID ALTERNATE PLEA OF T HE ASSES S E E AND FIND THAT THE SAME IS POTENT . THE REL E VANT DETAILS WHICH WE HAV E EXTRACTED ABOVE, CLEARLY SUGGEST THAT ASSESSE E INCURRED EXPENSES FOR PROVIDING MANNING SERVICES TO THE EXTENT OF RS. 6,38,78,901 WHICH WERE REIMBURS ED BY ITS ASSOCIATE ENTERPRISE. A T TH E TIME OF THE HE ARING , OUR ATTENTION H AS ALSO BEEN DRAWN TO THE PAYMENTS TERMS AND CONDITIONS ANNEXED TO THE T ECHNICAL M ANAGEMENT AND CONSULTANCY AGREEMENT, W H ICH INTER - ALIA , INCLUDED CLAUSE 5 WHICH READS AS UNDER: - 5. FIRST PARTY SHALL PROVIDE FREE OF COST FOLLOWING FACILITIES TO THE PERSONNEL DEPUTED BY SECOND PARTY AND FOR THAT PURPOSE REIMBURSE EXPENSES INCURRED BY THE SECOND PARTY ON BEHALF OF FIRST PARTY. A) SALARIES AND PERQUISITES OF PERSONNEL. B) APPRORIATE LODGING AND BOARDING FACILITIES. C) L OCAL TRANSPORTATION FOR DUE PERFORMANCE OF DUTIES AND PERSONAL USE. D) TO AND FRO AIR PASSAGE. E) MEDICAL FACILITIES. IT HAS BEEN CLARIFIED BEFORE US, THAT THE REIMBURSEMENT OF THE EXPENSES OF RS. 6,38,78,901 IS GOVERNED BY ABOVE CLAUSE 5 OF THE ARRANGEMENT 11 ITA NO. 6160/MUM/2010 M/S. WILHELMSEN SHIP MANAGEMENT INDIA PVT. LTD. WITH THE ASSOCIATED ENTERPRISE. NOTABLY , THE TPO IN PAGE 10 OF HIS ORDER HAS REPRODUCED THE DETAILS OF EXPENSES REIMBURSED BY THE ASSOCIATE ENTERPRISE WHICH ARE ON VARIOUS HEADS, VIZ. , FISH VESSEL EXPENSES, TRAVELLING EXPENSES, PORT EXPENS ES, LICENCE AND CERTIFICATION EXPENSES, UNIFORM EXPENSES , TRAINING EXPENSES, REPAIR TEAM EXPENSES ETC. IN FACT , IN P ARA (II) AT PAGE 12 OF HIS ORDER , THE TPO FURTHER RECORDS THAT THE AMOUNT OF RS.6,38,78,901 ...... ARE THE EXPENSES INCURRED BY THE COMPANY FOR RENDERING THE SERVICES AND SHOULD HAVE BEEN SHOWN IN THE PROFIT & LOSS ACCOUNT . THE AFORESAID FINDING OF THE ASSESSING OFFICER CLEARLY SUPPORTS THE ASSERTION OF THE ASSE SS E E TO THE EFFECT THAT THE SAID EXPENSES HAVE BEEN INCURRED BY IT IN THE COURSE OF PROVIDING THE MANNING SERVICE TO THE ASSOCIATE ENTERPRISE, A N D THE SAME HAVE BEEN RECOVERED FROM THE ASSOCIATE ENTERPRISE AS REIMBURSEMENTS. WE ARE ONLY TRYING TO HIGHLIGHT THE FACT THAT THE SAID EXPENSES ARE IN RELATION TO THE TESTED TRANS ACTION AND THEREFORE THERE IS NO JUSTIFICATION IN NOT CONSIDERING THEM WHILE COMPUTING THE ARM S LENGTH PRICE . 10. THE PLEA OF THE REVENUE BEFORE US, BASED ON THE OBSERVATION OF THE CIT (A) THAT THE EXPENSES HAVE NOT BE E N SHOWN IN TH E PROFIT & LOSS ACCOUNT, AND THEREFORE, IT CANNOT BE TAKEN INTO CONSIDERATION , IS TO SAY THE LEAST , AVOIDING THE OBVIOUS. OSTENSIBLY, IF SUCH EXPENSES WERE TO BE 12 ITA NO. 6160/MUM/2010 M/S. WILHELMSEN SHIP MANAGEMENT INDIA PVT. LTD. DEBITED TO THE PROFIT & LOSS ACCOUNT, IT WOULD REQUIRE SIMULTANEOUS EQUIVALENT CREDIT TO THE PROFIT & L OSS ACCOUNT ON ACCOUNT OF REIMBURSEMENTS. OSTENSIBLY, IF ONE IS TO DETERMINE THE RATE CHARGED BY THE ASSESSE E FROM ITS ASSOCIATE ENTERPRISE PER CREW PER MONTH , IT WOULD ENTAIL TAKING INTO CONSIDERATION THE RECOVER I E S BY WAY OF REIMBURSEMENT S ALSO ; A ND , AS THE T ABULATION REPRODUCED BY US EARLIER SHOWS THAT ONCE SUCH RECOVERIES ARE ALSO FACTORED I N TO THE RATE CHARGED FROM THE ASSOCIATED ENTERP RISE , THE RATE COMES TO US $ 150.28 PER CREW PER MONTH AND UPO N COMPARISON WITH THE RATE OF US$ 150 ADOPTED BY THE TPO, THE AMOUNT RECOVERED BY THE ASSESSEE FROM THE ASSOCIATE ENTERPRISE COMPARES FAVOURABLY, AND, THUS IT WOULD OBVIATE THE NEED FOR ANY FURTHER ADJUSTMENT TO THE STATED VALUES IN ORDER TO ARRIVE AT THE ARM S LENGTH PRICE . THER E FORE, ON THIS SHORT POINT , THE ADJUSTMENT SUSTAINED BY THE C IT (A) IS FOUND TO UNT ENABLE . WE HOLD SO. 11. BEFORE PARTING , WE MAY PLACE IT ON RECORD THAT OUR AFORESAID DECISION IS IN NO REFLECTION ON OTHER ISSUES RAISED , VIZ. VALIDITY OF SELECTION OF THE CUP METHOD OR THE QUALITY OF THE CUP DATA USED BY THE T PO , WHICH HAVE ALSO BEEN CHALLENGED BY THE APPELLANT . ALL THESE ISSUES ARE KEPT OPEN, SINCE W E HA V E DISPOSED OF THE APPEAL ON AN ALTERNATE PLEA OF THE ASS ESSE E THAT EVEN IF THE APPROACH A DOPTED BY THE TPO IS 13 ITA NO. 6160/MUM/2010 M/S. WILHELMSEN SHIP MANAGEMENT INDIA PVT. LTD. ACCEPTED , STILL NO ADDITION IS M AINTAINABLE ONCE THE CONSIDERATION RECEIVED BY THE ASSESSE E FROM THE ASSOCIATE ENTERPRISE FOR PROVIDING MANNING SERVICES IS CORRECTLY COMPUTED BY INCLUDING THE RECOVERI ES ON ACCOUNT OF REIMBURSEMENTS. THUS, IN CONCLUSION, WE SET - ASID E THE ORDER OF THE CIT(A) AND DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION OF RS.6,82,62,138. 12. IN THE RESULT, THE APPEAL OF THE ASSESSE E IS ALLOWED, AS ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 7 T H FEBRUARY , 201 8 . SD/ - SD/ - ( RAM LAL NEGI ) JUDICIAL MEMBER ( G.S. PANNU ) ACCOUNTANT MEMBER MUMBAI, DATE : 7 T H FEBRUARY , 201 8 * SSL * COPY TO : 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT(A) CONCERNED 4) THE CIT CONCERNED 5) THE D.R, K BENCH, MUMBAI 6) GUARD FILE BY ORDER DY./ASSTT. REGISTRAR I.T.A.T, MUMBAI