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| The Tax Publishers2020 TaxPub(DT) 1342 (Mum-Trib) : (2020) 203 TTJ 0984 INCOME TAX RULES, 1962
Rule 10
Where in relation to user of third party aircrafts for transportation of shipments by assessee-US company, AO adopted adjusted commercial linehaul charges to total linehaul charges ratio of 7.5 per cent as a result of MAP proceedings in past assessment years, it was considered justified to adopt same ratio for computing relevant assessment year's taxable income as well.
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Income of non-resident - Estimation of income - Ratio of commercial linehaul charges (CLC) to total linehaul charges (TLC) -
Assessee-US company was engaged in business of integrated air and ground transportation of time sensitive shipments. AO computed profits from operation in relation to use of third party aircrafts by adopting ratio of commercial linehaul (on third party aircraft) to total linehaul charges at 10 per cent and computing taxable income on these operations @ 4.07 per cent i.e., global profits. Assessee contended that it relied on MAP outcome for previous assessment years (2007-08 and 2008-09) and accordingly adopted said rate. Held: While outcome of MAP proceedings does not indeed bind arties for the years other than years before competent authorities, it does indeed provide a reasonable basis particularly when it is dealing with an estimation parameter. AO gave vague reasons for deviating from same in relevant year. Therefore, it was considered reasonable to adopt 7.5 per cent as adjusted CLC/TLC ratio is adopted for computing relevant year's taxable income as well.
REFERRED :
FAVOUR : In assessee's favour
A.Y. : 2014-15
IN THE ITAT, MUMBAI, 'I' BENCH
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