In this circumstance he is correct. If he is under the hood in VMC, you are a required crew member, and you can/should be logging PIC. He would log PIC as well as "sole manipulator". When I'm logging simulated instrument time in the plane, I always also write in my log the name of the person acting as PIC while I'm under the hood, because if he/she isn't there, I'm not legal to be flying/logging simulated instruments.
It is actually in Part 91, I had not previously noted that this is listed under "flight instruction", when this actually seems to be done frequently outside of flight instruction (for currency). Anyone know if there is a similar reference elsewhere in the regs?
§ 91.109 Flight instruction; Simulated instrument flight and certain flight tests.
(a) No person may operate a civil aircraft (except a manned free balloon) that is being used for flight instruction unless that aircraft has fully functioning dual controls. However, instrument flight instruction may be given in a single-engine airplane equipped with a single, functioning throwover control wheel in place of fixed, dual controls of the elevator and ailerons when—
(1) The instructor has determined that the flight can be conducted safely; and
(2) The person manipulating the controls has at least a private pilot certificate with appropriate category and class ratings.
(b) No person may operate a civil aircraft in simulated instrument flight unless—
(1) The other control seat is occupied by a safety pilot who possesses at least a private pilot certificate with category and class ratings appropriate to the aircraft being flown.
(2) The safety pilot has adequate vision forward and to each side of the aircraft, or a competent observer in the aircraft adequately supplements the vision of the safety pilot; and
(3) Except in the case of lighter-than-air aircraft, that aircraft is equipped with fully functioning dual controls. However, simulated instrument flight may be conducted in a single-engine airplane, equipped with a single, functioning, throwover control wheel, in place of fixed, dual controls of the elevator and ailerons, when—
(i) The safety pilot has determined that the flight can be conducted safely; and
(ii) The person manipulating the controls has at least a private pilot certificate with appropriate category and class ratings.
(c) No person may operate a civil aircraft that is being used for a flight test for an airline transport pilot certificate or a class or type rating on that certificate, or for a part 121 proficiency flight test, unless the pilot seated at the controls, other than the pilot being checked, is fully qualified to act as pilot in command of the aircraft.
Jeff