Hapang Lloyd AGC (Formerly known Hapang Lloyd container line gmbh), Mumbai V. The Income Tax Officer (International Taxation), GANDHIDHAM

CO 4/RJT/2013

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 8984 (ITAT-RAJKOT)
• Duration Of Justice: 6 month(s) 21 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 14-08-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 13-08-2013
• Assessment Year: 2010-2011
• Appeal Filed On: 24-01-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: AVINASH KUMAR DR H H
• Assessee Lawyers: DHINAL SHAH CA H
• Keywords: Double taxation relief
• Section: 139

Judgement Text

T , IN THE INCOME TAX APPELLATE TRIBULAL; RAJKOT BENCH, RAJKOT . . R E . . E E BEFORE SHRI T. K. SHARMA JM AND SHRI D. K. SRIVASTAVA AM ITA NO. 510 /RJT/2012 H H / ASSESSMENT YEAR : 20 10 - 11 THE INCOME - TAX OFFICER (INTERNATIONAL TAXATION), GANDHIDHAM ( / APPELLANT) M/S. HAPAG - LLOYD AKTIENGESELLCHAF (FORMERLY KNOWN AS HAPANG - LLOYD CONTAINER LINE GMBH) 15 01, ONE INDIABULLS CENTRE, TOWER 2, WING B, 15 FLOOR, JUPITER MILLS, SENAPATI BAPAT ROAD, ELPHINSTONE, MUMBAI PAN : AAACH 0979 G NR / RESPONDENT C.O. NO. 04/RJT/2013 H H / ASSESSMENT YEAR : 20 10 - 11 M/S. HAPAG - LLOYD AKTIENGESELLCHAF (FORMERLY KNOWN AS HAPANG - LLOYD CONTAINER LINE GMBH) PAN : AAACH 0979 G ( / APPELLANT) THE INCOME - TAX OFFICER (INTERNATIONAL TAXATION), GANDHIDHAM NR / RESPONDENT H / REVENUE BY SHRI AVINASH KUMAR, DR H H / ASSESSEE BY SHRI DHINAL SHAH, CA H / DATE OF HEARING 13 .0 8 .2013 H / DATE OF PRONOUNCEMENT 14 .0 8 .2013 / ORDER . . , R E / T. K. SHARMA, J. M . : THIS APPEAL BY THE REVENUE AND CROSS - OBJ ECTION BY THE ASSESSEE ARE AGAINST THE ORDER DATED 06.06.2012 OF CIT(A) , GANDHINAGAR FOR THE ASSESSMENT YEAR 20 10 - 11 . 2. THE FACTS IN BRIEF ARE THAT THE AGENT M/S. GERMAN EXPRESS SHIPPING AGENCY (INDIA) PVT. LTD. AND HAPAG - LLYOD INDIA PVT LTD, GANDHIDHAM FILED VARIOUS VOYAGE FINAL RETURNS U/S. 172(3) OF THE ACT ON VARIOUS DATES DURING THE FINANCIAL YEAR 2009 - 10 RELEVANT TO ASSESSMENT YEAR 2010 - 11 FOR THE FREIGHT BENEFICIARY OF M/S. HAPAG LLYOD AG, GERMANY WITHOUT PAYING FREIGHT TAX. ALL THE VOYAGE RETURN S FILED FOR THE AFORESAID PERIOD BEING SIMILAR, THE ASSESSING OFFICER ACCORDINGLY PASSED AN ORDER U/S. 172(4) WHEREIN HE WORKED OUT THE INCOME AND TAX PAYABLE AS UNDER: - 510 - RJT - 2012 - HAPAG LLOYD INDIA P LTD 2 TOTAL CARGO LOADED BY THE VESSEL : AS PER SCHEDULE - 1 OF THE ABOVE ORDER TOTAL AMOU NT OF FREIGHT EARNED IN : RS.8,90,34,689 INDIAN RUPEES (AS PER SCHEDULE - 1 WHICH IS INCLUDING THC. TAXABLE INCOME I.E. 7.5% : RS.66,77,602 TAX PAYABLE ON TAXABLE INCOME : RS.28,19,951 INCOME - TAX LESS : DOUBLE INCOME - TAX RELIEF : NIL TAX PAID ON FIN AL RETURN DATED : NIL BALANCE TAX PAYABLE : RS.28,19,951 3. ON APPEAL BEFORE THE LD CIT(A), THE ASSESSEE CONTENTED THAT PRINCIPAL NAMELY M/S. HAPAG - LLOYD AG, GERMANY HAD FILED RETURN OF INCOME U/S 139 OF THE ACT AND HENCE THE ORDER PASSED U/S 172(4) O THE ACT OUGHT TO BE QUASHED. THE LD CIT(A) FORWARDED THIS PLEA TO THE FILE OF THE ASSESSING OFFICER FOR HIS COMMENTS. AFTER CONSIDERING THE COMMENTS OF THE ASSESSING OFFICER, THE LD CIT(A) QUASHED THE ASSESSMENT ON THE GROUND THAT THE ASSESSEE HAS EXERCISE D THE OPTION U/S 172(7) OF THE ACT BEFORE THE IMPUGNED COMBINED ORDER U/S. 172(4) WAS PASSED. THE LD CIT(A) ACCORDINGLY HELD THAT SINCE THE ASSESSEE HAS OPTED FOR THE OPTION TO BE ASSESSED U/S 172(7) BY FILING RETURN OF INCOME U/S 139(1) OF THE I.T. ACT ; I T IS ESTABLISHED THAT THE ASSESSEE IS IN REGULAR SHIPPING BUSINESS AND LIABLE TO BE ASSESSED UNDER OTHER PROVISIONS OF THE ACT INCLUDING 44B; AND NOT U/S 172(4). THUS, THE ORDER PASSED U/S 172(4) OF THE ACT BY THE INCO ME - TAX OFFICER IS NULL AND VOID AS TH E ASSESSEES CLAIM THAT IT IS NOT ENGAGED IN OCCASIONAL SHIPPING BUSINESS IS BACKED BY ITS TAKING THE ALTERNATE RECOURSE PROVIDED IN SECTION 172(7) ITSELF. THE LD CIT(A) FURTHER HELD THAT EVEN A PERSON ENGAGED IN OCCASIONAL SHIPPING BUSINESS IN FACT CAN O PT FOR BEING ASSESSED OTHERWISE AS PER SECTION 172(7) OF THE INCOME - TAX ACT, 1961. AGGRIEVED WITH THE ORDER OF THE LD CIT(A), THE REVENUE IS NOW IN APPEAL BEFORE THIS TRIBUNAL ON THE FOLLOWING GROUNDS: - I . THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS I N HOLDING THAT THE ORDER OF THE AO IS NULL AND VOID AND THAT THE ASSESSEE IS ASSESSABLE U/S 172(7) OF THE ACT. II. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT THE BENEFIT OF DTAA BETWEEN INDIA AND GERMANY IS AVAILABLE TO THE ASSESSEE EVEN THOUGH THE ASSESSEE COMPANY IS NOT ENGAGED IN THE OPERATION OF SHIPS OR IT HAS NEITHER OWNED NOR CHARTERED THE SAID VESSELS FOR WHICH AGREEMENT FOR SLOT CHARTER IS SIGNED, IN WHICH THE GOODS HAVE BEEN TRANSPORTED. III. IT IS, THEREFORE, PRAYED THAT THE O RDER OF THE LD. CIT(A) MAY BE CANCELLED AND THAT OF THE ASSESSING OFFICER BE RESTORED TO THE ABOVE EXTENT. 510 - RJT - 2012 - HAPAG LLOYD INDIA P LTD 3 IV. THE APPELLANT CRAVES LEAVE TO ADD/ALTER/MODIFY/DELETE ANY OF THE GROUNDS OF APPEAL AT THE TIME OF HEARING. 4. THE ASSESSEE HAS ALSO FILED THE CROSS - OBJECTIONS ON THE FOLLOWING GROUNDS: - ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED INCOME - TAX OFFICER (INTERNATIONAL TAXATION) 1 . ERRED IN OBJECTING THE ORDER OF THE HONBLE COMMISSIONER OF INCOME - TAX, (APPEALS), GANDHINAGAR [CIT( A)] ON THE FOLLOWING GROUNDS THAT THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN HOLDING THAT THE ORDER OF THE ASSESSING OFFICER IS NULL AND VOID. THAT THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN HOLDING THAT THE ASSESSEE IS ASSESSABLE UNDER SECTION 172(7) OF THE INCOME - TAX ACT, 1961. THAT THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN HOLDING THAT THE BENEFIT OF DOUBLE TAXATION AVOIDANCE AGREEMENT BETWEEN INDIA AND GERMANY IS AVAILABLE TO THE ASSESSEE EVEN THOUGH THE ASSESSEE COMPANY IS NOT ENGAGE D IN THE OPERATION OF SHIPS OR ITS HAS NEITHER OWNED NOR CHARTERED THE SAID VESSELS FOR WHICH AGREEMENT FOR SLOT CHARTER IS SIGNED, IN WHICH THE GOODS HAVE BEEN TRANSPORTED. 2 . WITHOUT PREJUDICE TO THE ABOVE GROUNDS, THE RESPONDENT CRAVES THAT THE LEARNED A SSESSING OFFICER (AO) ERRED IN HOLDING THAT THE RESPONDENT IS NOT HAVING REGULAR SHIPPING BUSINESS. 3 . WITHOUT PREJUDICE TO THE ABOVE GROUNDS, THE RESPONDENT CRAVES THAT THE LEARNED AO ERRED IN HOLDING THAT THE RESPONDENT CANNOT BE TREATED AS ENGAGED IN SHIP PING BUSINESS AS STIPULATED UNDER SECTION 172(1) OF THE ACT WHEN THE LEARNED AO HAS HIMSELF COMPUTED THE INCOME OF THE RESPONDENT AT THE RATE OF 7.5 PERCENT ON GROSS FREIGHT RECEIPTS AND THEN TAXED THE SAME AT 42. 23 PERCENT, THUS INDIRECTLY AGREEING TO THE FACT THAT THE RESPONDENT IS COVERED UNDER SECTION 172(1) OF THE ACT AND ACCORDING LY ENTITLED TO THE RELIEF GIVEN UNDER ARTICLE 8 OF THE INDIA - GERMANY TAX TREATY. 4 . WITHOUT PREJUDICE TO THE ABOVE GROUNDS, THE RESPONDENT CRAVES THAT THE LEARNED AO ERRED IN R ELYING ON THE RULING OF THE MUMBAI TAX TRIBUNAL IN CASE OF DDIT VS CIA DE NAVEGACAO NORSUL (2009) 27 SOT 316 (MUM), WITHOUT APPRECIATING THE FACT THAT THE SAID RULING WAS RENDERED IN THE CONTEXT OF INDIA - BRAZIL TAX TREATY, WHICH DEFINES THE TERM OPERATING OF SHIPS IN INTERNATIONAL TRAFFIC. 5 . WITHOUT PREJUDICE TO THE ABOVE GROUNDS, THE RESPONDENT CRAVES THAT THE LEARNED AO ERRED IN HOLDING THAT THE AGREEMENT ENTERED INTO WITH VARIOUS SHIPPING LINES VIZ APL, CMA, CGM, NYK, OOCL, MISC, WANHAI, HYUNDAI MERCHAN T, ETC ARE NOT POOL AGREEMENT. 6 . WITHOUT PREJUDICE TO THE ABOVE GROUNDS, THE RESPONDENT CRAVES THAT THE LEARNED AO ERRED IN NOT APPRECIATING THAT IN CERTAIN CASES CARGO WAS CARRIED ON POOLED VESSELS FROM ORIGIN PORT TO DESTINATION PORT OR ORIGIN PORT TO HUB PORT AND FROM HUB PORT TO THE DESTINATION ON THE VESSELS OWNED OR CHARTERED OR POOLED BY THE RESPONDENT. 7 . WITHOUT PREJUDICE TO THE ABOVE GROUNDS, THE RESPONDENT CRAVES THAT THE LEARNED AO ERRED IN NOT APPRECIATING THE FACT THAT THE CARGO WAS TRANSPORTED O N FEEDER VESSELS ONLY TILL THE HUB PORTS FROM WHERE THE SAME 510 - RJT - 2012 - HAPAG LLOYD INDIA P LTD 4 WAS TRANSPORTED TILL THE DESTINATION PORTS ON VESSELS OWNED OR CHARTED OR POOLED BY THE RESPONDENT. 8 . WITHOUT PREJUDICE TO THE ABOVE GROUNDS, THE RESPONDENT CRAVES THAT THE LEARNED AO ERRED IN NOT APPRECIATING THE FACT THAT THE CARGO WAS TRANSPORTED ON FEEDER VESSELS ONLY OUT OF COMPULSION. 9 . WITHOUT PREJUDICE TO THE ABOVE GROUNDS, THE RESPONDENT CRAVES THAT THE LEARNED AO ERRED IN HOLDING THAT THE AGREEMENT ENTERED INTO BY THE RESPONDENT ARE DEFEC TIVE AND DO NOT HAVE LEGAL VALIDITY. THE RESPONDENT CRAVES TO CONSIDER EACH OF THE ABOVE GROUNDS OF CROSS - OBJECTIONS WITHOUT PREJUDICE TO EACH OTHER AND CRAVES LEAVE TO ADD, ALTER, DELETE OR MODIFY ALL OR ANY OF THE ABOVE GROUNDS OF CROSS OBJECTIONS. 5. AT THE TIME OF HEARING BEFORE US, ON BEHALF OF REVENUE SHRI AVINASH KUMAR, DR APPEARED AND POINTED OUT THAT BEFORE THE ASSESSING OFFICER THE ASSESSEE NEVER RAISED THE ISSUE OF IT FILING ITS RETURN OF INCOME UNDER SECTION 139 (1) OF THE ACT. THEREFORE, THE ASSESSING OFFICER RIGHTLY PASSED THE ORDER U/S. 172(4) COMPUTING TAX PAYABLE AT RS.28,19,951/ - . AS AGAINST THIS, SHRI DHINAL SHAH, CA APPEARED ON BEHALF OF THE ASSESSEE, POINTED OUT THAT THE PLEA RAISED BEFORE THE LD CIT(A) WAS LEGAL ONE. THE LD CIT(A) C ALLED FOR REMAND REPORT, ADMITTED THE LEGAL ISSUE RAISED BEFORE HIM AND THEREAFTER ANNULLED THE ASSESSMENT. THE VIEW TAKEN BY THE LD CIT(A) IS FAIR AND REASONABLE AND SIMILAR VIEW HAS BEEN TAKEN BY THE ITAT, RAJKOT BENCH IN THE FOLLOWING TWO CASES : - I ) ITO V. ALBATROSS SHIPPING LTD. IT APPEAL NO.28/RJT/2012 II ) ITO V. CMA CGM AGENCIES (INDIA) (P) LTD. 2012 26 TAXMANN.COM 121 (RAJKOT) TO SUM UP, THE COUNSEL OF THE ASSESSEE POINTED OUT THAT SINCE THE VIEW TAKEN BY THE LD CIT(A) IS IN CONFORMITY WITH THE VIEW TAKEN BY THE ITAT, RAJKOT BENCH IN THE AFORESAID TWO DECISIONS, THEREFORE THE SAME BE UPHELD. WITH REGARD TO THE CROSS - OBJECTIONS FILED BY THE ASSESSEE, LD COUNSEL STATED THAT MOST OF THE GROUNDS ARE IN SUPPORT OF ORDER OF LD CIT(A) AND IF APPEAL OF THE REVENUE IS DISMISSED, HE WILL NOT PRESS HIS CO. 6. WE HAVE HEARD BOTH THE SIDES AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. ADMITTEDLY, THE RAJKOT BENCH OF THE TRIBUNAL IN THE CASE OF ITO V. M/S. CMA CGM AGENCIES (INDIA) PVT. LTD. ON IDENTICAL FACTS RELIED ON BY THE LD COUNSEL OF THE ASSESSEE, QUASHED THE ORDER PASSED U/S 172(4) OF THE ACT WITH THE OBSERVATION THAT THE JURISDICTIONAL AO MAY VERIFY THE POSITION AND TAKE SUCH ACTION 510 - RJT - 2012 - HAPAG LLOYD INDIA P LTD 5 AS MAY BE WARRANTED IN LAW IN TERMS OF SECTION 172(7) T O ENSURE THAT THE INCOME OF THE ASSESSEE FROM THE VARIOUS VOYAGES DOES NOT ESCAPE ASSESSMENT AS PER THE NORMAL PROVISIONS OF THE INCOME - TAX ACT. THE FACTS OF THE ASSESSEES CASE ARE IDENTICAL TO THAT OF THE CASE RELIED ON BY THE ASSESSEE. THE PRINCIPAL M/S . HAPAG - LLOYD AKTIENGESELLCHAF, GERMANY HAS FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2010 - 11 ON 29.09.2010 WITH ADIT (INT. TAX.), WARD - 3(1), MUMBAI VIDE ACKNOWLEDGEMENT NO.163129551290910 . THE SAID CASE HAS ALREADY BEEN UNDER SCRUTINY OF THE REG ULAR ASSESSING OFFICER OF M/S. HAPAG - LLOYD AKTIENGESELLCHAF, GERMANY. THIS CLEARLY INDICATES THAT M/S. HAPAG - LLOYD AKTIENGESELLCHAF, GERMANY HAS ACCEPTED THE LIABILITY TO BE DEALT WITH THE PROVISIONS OF SECTION 172(7) OF THE ACT. THE JURISDICTIONAL ASSESS ING OFFICER MAY, THEREFORE, VERIFY THE POSITION AND TAKE SUCH ACTION AS MAY BE WARRANTED IN LAW IN TERMS OF SECTION 172(7) TO ENSURE THAT THE INCOME OF THE AS S ESSEE FROM THE VOYAGES DOES NOT ESCAPE ASSESSMENT AS PER NORMAL PROVISIONS OF THE ACT. 7. IN VI EW OF THE FOREGOING, THE APPEAL OF THE REVENUE IS DISMISSED SUBJECT TO THE OBSERVATIONS MADE ABOVE. 8. SINCE WE HAVE DISMISSED THE APPEAL OF THE REVENUE AND THE CROSS - OBJECTIONS FILED BY THE ASSESSEE IS IN SUPPORT OF THE LD CIT(A)S ORDER, THEREFORE THE CROSS - OBJECTIONS OF THE ASSESSEE BECOMES INFRUCTUOUS AND WE DISMISS IT AS INFRUCTUOUS. 9. IN THE RESULT, THE APPEAL OF THE REVENUE AND THE CROSS - OBJECTIONS FILED BY THE ASSESSEE ARE DISMISSED. THIS ORDER IS PRONOUNCED IN THE OPEN COURT ON THE DATE MENT IONED HEREINABOVE. SD/ - SD/ - ( D. K. SRIVASTAVA) (T. K. SHARMA) 2010 / ACCOUNTANT MEMBER / JUDICIAL MEMBER / ORDER DATE 14 .0 8 .2013 /RAJKOT *B T 510 - RJT - 2012 - HAPAG LLOYD INDIA P LTD 6 RJO O / COPY OF ORDER FORWARDED TO: - 1 . / APPELLANT - THE INCOME - TAX OFFICER, (INTERNATIONAL TAXATION), GANDHIDHAM 2 . NR / RESPONDENT - M/S. HAPAG - LLOYD AKTIENGESELLCHAF, (F ORMERLY KNOWN AS HAPANG - LLOYD CONTAINER LINE GMBH), MUMBAI 3 . T A / CONCERNED CIT - AHMEDABAD 4 . A - / CIT (A) , GANDHINAGAR 5 . NT , T , / DR, ITAT, RAJKOT 6 . H / GUARD FI LE. / BY ORDER , TRUE COPY PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL, RAJKOT