Direction by the bench for placing the issue of determination of correct ratio.

This Income Tax Appellate Tribunal case involves Federal Express Corporation and the determination of the correct Commercial Linehaul Charges (CLC) to Total Linehaul Charges (TLC) ratio. The tribunal recalled a previous order to address an inadvertent error regarding the CLC/TLC ratio. The Assessing Officer had initially used a 4% ratio, but a subsequent order mentioned 7.5%. The tribunal has directed a fresh adjudication to determine the accurate ratio, considering the assessee's arguments for a 2.08% actual ratio or the 7.5% mentioned in MAP proceedings.

IN THE INCOME TAX APPELLATE TRIBUNAL
“I” BENCH, MUMBAI

BEFORE HON’BLE SHRI AMARJIT SINGH, JM AND
HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM
(Hearing through Video Conferencing Mode)

I.T.A. No.7312/Mum/2019
Assessment Year: 2015-16)

Federal Express Corporation
Boomerang, Unit No.801
Wing A, 8th Floor
Chandivali Farm Road,
Andheri(East), Mumbai-400 072.
Appellant)

Vs.

DCIT(International Taxation)-2(3)(1)
Room No.1614, 16th Floor
Air India Building, Nariman Point
Mumbai-400 021.
PAN/GIR No. AAACF-4135-E
Respondent)

Revenue by : Shri Sreenivasaraghavan S.Iyengar-Ld. DR
Assessee by : Shri Dhanesh Bafna-Ld. AR

Date of Hearing : 28/01/2021
Date of Pronouncement : 11/02/2021

 O R D E R

Manoj Kumar Aggarwal (Accountant Member)

1. Aforesaid matter is a recalled matter since the appeal wasearlier disposed-off vide order dated 31/01/2020. However, uponassessee’s miscellaneous application MA No.204/Mum/2020 orderdated 06/01/2021, the order has been recalled, though for very limited purpose, in the following manner: -

4. The plea of the assessee applicant is indeed correct. The AssessingOfficer himself had adopted 4% as CLC/TLC ratio, and the same was,as noted by us required to be adopted this year as well. The mention of 7.5% as adjusted CLC/TLC ratio, in paragraph 7, was clearly an inadvertent error. We, therefore, deem it fit and proper to recall the  matter on this point, and refix the matter for adjudication afresh on that point. The Registry is directed to refix the matter for the abovepurposes, before the regular bench on 29.01.2021. Order accordingly.

Accordingly, the matter has come up for fresh hearing for limited purpose of determining correct Commercial linehaul charges to Total linehaul charges (CLC / TLC) ratio.

2. The perusal of Tribunal order dated 31/01/2020 would revealthat the assessee was engaged in the business of integrated airand ground transportation of time sensitive shipments. The assessee used its own aircrafts as well as third party aircraft for transportation of these shipments. In case of third part aircrafts, the assessee has been denied treaty protection under Article 8 of IndiaUSA DTAA and the profits from these operations were computedby Ld. AO by adopting ratio of commercial line haul (on third partyaircrafts) @10% and profit on the same was estimated at globalprofitability ratio of 4.07% of such revenue. The stand of Ld. AO,upon confirmation by Ld. DRP, was under challenge before thisTribunal wherein the assessee argued for acceptance of actual CLC/TLC ratio of 2.08%. It was further argued that the estimatedratio should not be more than 7.5% as adopted by Ld. AO as aresult of MAP proceedings. Further, Ld. AO himself had adoptedrate of 4% in previous year and therefore, the same should havebeen adopted in this year as well. The bench, in para 7, directed Ld. AO to adopt this ratio @7.5%. 

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