M/s. MSC Agency (India) Pvt. Ltd., CHENNAI V. ITO, CHENNAI

CO 50/CHNY/2010

• Counselvise Citation: [2010] 122 COUNSELVISE.COM (IT) 5235 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 24 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 26-10-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 26-10-2010
• Assessment Year: 2007-2008
• Appeal Filed On: 02-07-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K E B RENGARAJAN JR
• Assessee Lawyers: SHRI
• Keywords: Business income; Double taxation relief
• Section: 143(3); 246

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH C CHENNAI BEFORE SHRI K.K. GUPTA, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER I.T.A. NO. 871/MDS/2010 ASSESSMENT YEAR :2007-08 THE INCOME-TAX OFFICER, INTERNATIONAL TAXATION-I, CHENNAI. V. M/S. MSC AGENCY (INDIA) P. LTD., NO.3, 3 RD FLOOR, SAIZBURG SQUARE, 107, HARRINGTON ROAD, CHETPUT, CHENNAI-31. (PAN : AACCM7663A) (APPELLANT) (RESPONDENT) A N D C.O. NO. 50/MDS/2010 (IN ITA NO. 871/MDS/2010) ASSESSMENT YEAR : 2007-08 M/S. MSC AGENCY (INDIA) P. LTD., V. THE INCO ME-TAX OFFICER, CHENNAI-31. INTERNATIONAL TAXATION-I, CHENNAI. (CROSS OBJECTOR) (RESPONDENT) DEPARTMENT BY : SHRI K.E.B. RENGARAJAN, JR.STANDING COUNSEL ASSESSEE BY : SHRI KANCHUN KAUSHAL,CA, SHRI V.P. MANIKANDAN, CA AND SHRI DHANESH BAFNA, CA O R D E R PER BENCH: ITA 871/MDS/2010 IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LEARNED CIT(APPEALS)-IV, CHENNAI I N APPEAL NO. CIT(A)- IV/CHE/125 TO 130/09-10 DATED 11-2-2010 FOR THE ASS ESSMENT YEAR 2007-08. I.T.A. NO.871/MDS/2010 & CO NO. 50/MDS/2010 2 C.O. NO. 50/MDS/2010 IS THE CROSS OBJECTION FILED B Y THE ASSESSEE AGAINST THE REVENUES APPEAL IN ITA NO. 871/MDS/2010. 2. SHRI K.E.B. RENGARAJAN, JR. STANDING COUNSEL REPR ESENTED ON BEHALF OF THE REVENUE AND SHRI KANCHUN KAUSHAL, SHRI V.P. MANIKAN DAN AND SHRI DHANESH BAFNA, CHARTERED ACCOUNTANTS REPRESENTED ON BEHALF OF THE ASSESSEE. 3. IN THE REVENUES APPEAL, THE REVENUE HAS RAISED THE FOLLOWING GROUNDS : 1. THE ORDER OF THE LEARNED CIT(A) IS CONTRARY T O LAW AND FACTS OF THE CASE. 2. THE LEARNED CIT(A) ERRED IN ADMITTING APPEAL FILED AGAINST THE ORDER PASSED U/S. 172(4) AS THIS IS NOT AN APPEALABLE ORDER BEFORE CIT(A) AS PER SECTION 24 6A OF THE IT ACT. 3. WITHOUT PREJUDICE TO THE GROUND RAISED ABOVE, THE LD. CIT(A) OUGHT TO HAVE APPRECIATED THE FACT T HAT IT IS MANDATORY ON THE PART OF THE MASTER OF THE SHIP OR ANY OTHER PERSON AUTHORIZED BY HIM TO FILE THE VOYAGE W ISE RETURNS U/S 172(3) IN CASES WHERE THEY HAVE OBTAINE D PORT CLEARANCE CERTIFICATE. 4. THE LD. CIT(A) OUGHT TO HAVE APPRECIATED THE FACT THAT EVEN THOUGH THE PRINCIPAL WAS IN REGULAR SHIPPING BUSINESS, WHEN THE ASSESSEE ON ITS OWN VOL ITION CHOSE TO APPLY FOR A PORT CLEARANCE U/S ASSESSEE172 (6) THROUGH IT INDIAN AGENCY ON BEHALF OF THE MASTER OF THE SHIP, THE PROVISIONS OF SECTION 172 BECOMES AUTOMAT ICALLY APPLICABLE. I.T.A. NO.871/MDS/2010 & CO NO. 50/MDS/2010 3 5. THE LD. CIT(A) OUGHT TO HAVE APPRECIATED THE FACT THAT THE ASSESSEE HAS NOT PRODUCED ANY NO OBJECTION CERTIFICATE FROM THE ASSESSING OFFICER OF THE PRINCIPAL WITH REFERENCE TO APPLICABILITY OF DTAA. 6. FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUCED AT THE TIME OF HEARING, IT IS PRAYED THAT T HE ORDER OF THE LEARNED CIT(A) MAY BE SET ASIDE AND TH AT OF THE ASSESSING OFFICER BE RESTORED. 4. IN REGARD TO GROUND NO.2 THE LEARNED DR SUBMITTE D THAT THE LEARNED CIT(A) ERRED IN ADMITTING THE APPEAL FILED BY THE A SSESSEE AGAINST THE ORDER PASSED U/S. 172(4) OF THE INCOME-TAX ACT, 1961. IT WAS THE SUBMISSION THAT AS PER THE PROVISIONS OF SECTION 246A AN ORDER PASSED U/S. 172(4) WAS NOT AN APPEALABLE ORDER BEFORE THE LEARNED CIT(A). IT WAS THE SUBMISSION THAT AS PER THE PROVISIONS OF SECTION 246A(1)(F) AN ORDER U/S. 171 COULD HAVE BEEN APPEALED AGAINST BUT THE ORDER PASSED IN THE PRESENT CASE IS AN ORDER U/S. 172(4) ON THE BASIS OF A RETURN FILED BY THE ASSESSEE UNDER SECTI ON 172(2) AND THE SAME IS NOT APPEALABLE. IT WAS THE SUBMISSION THAT AS THE ORDE R WAS NOT APPEALABLE, THE ORDER OF THE LEARNED CIT(A) HAD TO BE QUASHED. 5. IN REPLY, THE LEARNED AUTHORISED REPRESENTATIV E PLACED BEFORE US COPY OF THE DECISION OF THE HON'BLE SUPREME COURT IN THE CA SE OF UNION OF INDIA & ORS. V. ARABIAN EXPRESS LINE & ANR. IN CIVIL APPEAL NO. 1032 8 OF 1995 DATED 9-11-1995 WHEREIN UNDER SIMILAR CIRCUMSTANCES IN RESPECT OF A N ORDER PASSED U/S. 172(4) THE HON'BLE SUPREME COURT HAD CATEGORICALLY HELD TH AT THE ASSESSEE HAD I.T.A. NO.871/MDS/2010 & CO NO. 50/MDS/2010 4 CHALLENGED ITS LIABILITY TO BE ASSESSED U/S. 172 AN D IN VIEW OF THE PROVISIONS OF SECTION 246(1)(A) AS IT STOOD THEN, THE ASSESSEE WA S ENTITLED TO FILE AN APPEAL BEFORE THE CIT(A), IT WAS THE SUBMISSION THAT IN V IEW OF THE DECISION OF THE HON'BLE SUPREME COURT AND IN VIEW OF THE FACT THAT THE WORDS USED IN SECTION 246 AND THE WORDS USED IN SECTION 246A(1)(A) ARE IN PARI MATERIA, THE ASSESSEE SHOULD BE HELD TO BE ENTITLED TO FILE APPEAL BEFORE THE LEARNED CIT(A). 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE HA VE ALSO PERUSED THE ORDER OF THE HON'BLE SUPREME COURT PLACED BEFORE US . A PERUSAL OF THE PROVISIONS OF SECTION 246A(1)(A) IS ALSO FOUND TO B E SUBSTANTIALLY IN PARI MATERIA WITH THE PROVISIONS OF SECTION 246 INSOFAR AS THE W ORDS USED ARE OR TO THE AMOUNT OF TAX DETERMINED. AS THE ASSESSEE HAS CHA LLENDED THE AMOUNT OF TAX DETERMINED UNDER THE PROVISIONS OF SECTION 172(4), RESPECTFULLY FOLLOWING THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE O F ARABIAN EXPRESS LINE & ANOTHER, REFERRED TO SUPRA, THE LEARNED CIT(A) WAS RIGHT IN ADMITTING AND ADJUDICATING THE APPEAL AS FILED BY THE ASSESSEE BE FORE HIM. IN THE CIRCUMSTANCES, GROUND NO.2 IN THE REVENUES APPEAL STANDS DISMISSED. 7. IN REGARD TO THE GROUNDS NO. 3, 4 & 5 IT WAS SUB MITTED BY THE LEARNED DR THAT THE ASSESSEE HAD NOT PLACED BEFORE THE ASSESSI NG OFFICER NECESSARY CERTIFICATE BEING DOUBLE INCOME TAX RELIEF CERTIFIC ATE WHEN FILING ITS RETURN U/S. 172(2) OF THE I.T.ACT, 1961. IT WAS THE SUBMISSION THAT AS THE CERTIFICATE HAS NOT BEEN PLACED, THE ASSESSING OFFICER WAS RIGHT IN ASS ESSING THE INCOME OF THE I.T.A. NO.871/MDS/2010 & CO NO. 50/MDS/2010 5 ASSESSEE AS PER THE SAID SECTION. IT WAS THE SUBMI SSION THAT IN THE ASSESSMENT NO ENHANCEMENT OF THE INCOME HAS BEEN MADE AND ONLY THE RETURNED INCOME HAS BEEN ACCEPTED AND THERE IS NO ROOM FOR MAKING A NY ADJUSTMENT TO THE SAME. 8. IN REPLY, THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED BEFORE US COPY OF THE ASSESSMENT ORDER PASSED BY THE DEPUTY DIRECT OR OF INCOME-TAX, (INTERNATIONAL TAXATION)-4(1), MUMBAI IN THE CASE O F THE ASSESSEE FOR THE ASSESSMENT YEAR 2007-08 PASSED U/S. 143(3) WHEREIN THE ASSESSEES BUSINESS INCOME TO THE EXTENT OF ` 9,39,13,11,481/- HAS BEEN BROUGHT TO TAX U/S. 44B OF THE I.T.ACT. IT WAS THE SUBMISSION THAT AS THE RET URN WAS FILED IN MUMBAI NO ASSESSMENT COULD BE PASSED U/S. 172(4) AS THE PROVI SIONS OF SEC. 172 WERE IN RELATION TO THE OCCASIONAL SHIPPING BUSINESS AND TH E PROVISIONS OF SECTION 44B RELATED TO THE INCOME THAT WAS LIABLE TO BE ASSESSE D IN RELATION TO THE BUSINESS OF SHIPPING. IT WAS THE SUBMISSION THAT THE ASSESSEE HAD ALSO APPLIED FOR THE DIT RELIEF CERTIFICATES BEFORE THE ASSESSING AUTHORITY IN MUMBAI ON 4.4.2006 AND THE ASSESSEE HAD BEEN GIVEN TWO CERTIFICATES DATED 14-2 -2007 AND 22-3-2007 WHICH WERE VALID UPTO 31-3-2007. HOWEVER, ON A QUERY FRO M THE BENCH AS TO PROOF THAT THE CERTIFICATES WERE PLACED BEFORE THE ASSESS ING OFFICER, THE LEARNED AUTHORISED REPRESENTATIVE WAS UNABLE TO PRODUCE THE SAME. THE LEARNED AUTHORISED REPRESENTATIVE FURTHER PLACED RELIANCE O N THE CALCULATION FILED BY THE ASSESSEE BEFORE THE ASSESSING AUTHORITY IN MUMBAI W HEREIN THE INCOME OF THE ASSESSEE HAS BEEN ASSESSED AT R 9,39,13,11,481/-. IT WAS THE SUBMISSION THAT I.T.A. NO.871/MDS/2010 & CO NO. 50/MDS/2010 6 THE INCOME HAS BEEN TOTALLY ASSESSED TO TAX AS THE INCOME AND THE AMOUNT WHICH IS BEING ASSESSED IN THE PRESENT APPEAL WAS ONLY IN RELATION TO THE PORTION OF THE INCOME WHICH HAS ALREADY BEEN ASSESSED TO TAX IN TH E REGULAR ASSESSMENT, CONSEQUENTLY THE DEMAND WAS NOT LIABLE TO BE RAISED ON THE ASSESSEE U/S. 172(4). THE LEARNED AUTHORISED REPRESENTATIVE ARGU ED THAT THE ORDER OF THE LEARNED CIT(A) WAS LIABLE TO BE UPHELD. 9. IT WAS THE FURTHER SUBMISSION BY THE LEARNED AUT HORISED REPRESENTATIVE THAT THE TOTAL NUMBER OF VOYAGES IN RELATION TO THE CHENNAI PORT WAS ONLY 48 VOYAGES. IT WAS THE SUBMISSION THAT OUT OF THE SAI D 48 VOYAGES THE DISPUTE IN REGARD TO THE TAXABILITY OF 42 VOYAGES HAD BEEN ADJ UDICATED BY THE LEARNED CIT(A) IN HIS ORDER IN ITA NO. 8/07-08. IT WAS THE SUBMISSION THAT IN THE PRESENT APPEAL THE ISSUE WAS IN RELATION TO ONLY 6 BALANCE VOYAGES. IT WAS THE SUBMISSION THAT IN RESPECT OF THE 42 VOYAGES THE RE VENUE HAD ACCEPTED THE ORDER OF THE LEARNED CIT(A) AND AGAINST THE ORDER O F THE LEARNED CIT(A) NO APPEAL HAS BEEN FILED BY THE REVENUE. IT WAS ALSO SUBMITTED THAT AS THE ISSUES WERE IDENTICAL THE LEARNED CIT(A) IN THE PRESENT OR DER HAS FOLLOWED HIS ORDER DATED 11-2-2008, REFERRED TO SUPRA, WHICH HAD BEEN ACCEPTED BY THE REVENUE. IT WAS THEREFORE SUBMITTED THAT THE ORDER OF THE LE ARNED CIT(A) SHOULD NOT BE DISTURBED. 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. IT IS NOTICED THAT THE LEARNED CIT(A) HAS PASSED A CONSOLIDATED ORDER IN RESPECT O F SIX ORDERS PASSED BY THE I.T.A. NO.871/MDS/2010 & CO NO. 50/MDS/2010 7 ASSESSING OFFICER. OBVIOUSLY, SIX APPEALS OUGHT TO HAVE BEEN FILED BEFORE THE TRIBUNAL. IT IS NOTICED THAT THIS HAS NOT BEEN DON E. EVEN ON THIS GROUND THE CONSOLIDATED APPEAL FILED BY THE REVENUE IS LIABLE TO BE DISMISSED. HOWEVER, CONSIDERING THAT THE FACTS ARE IDENTICAL AND IT IS ONLY A TECHNICAL BREACH, THE ISSUES IN THE APPEAL ARE BEING DISPOSED OF ON MERIT S. 11. THE PROVISIONS OF SECTION 44B SHOWS THAT IT IS APPLICABLE FOR COMPUTING THE PROFITS AND GAINS OF SHIPPING BUSINESS. A PERUSAL OF THE PROVISIONS OF SECTION 172 SHOWS THAT IT IS APPLICABLE TO THE PROFITS OF NON-R ESIDENTS FROM OCCASIONAL SHIPPING BUSINESS. A PERUSAL OF THE ASSESSMENT ORD ER PASSED BY THE ASSESSING OFFICER BEING THE DEPUTY DIRECTOR OF INCOME-TAX (IN TERNATIONAL TAXATION)-4(1), MUMBAI, SHOWS THAT HE HAS INVOKED THE PROVISIONS OF SECTION 44B AND HAS BROUGHT TO TAX THE INCOME OF THE ASSESSEE IN MUMBAI . WE ARE HOWEVER NOT ADJUDICATING THE APPLICABILITY OF THE PROVISIONS OF SECTION 44B OR ON THE ORDER OF THE LEARNED ASSESSING OFFICER WHO HAS PASSED THE AS SESSMENT ORDER IN MUMBAI. ALL WE ARE SAYING IS THAT THE PROVISIONS OF SECTION 44B HAVE BEEN INVOKED AND THE ORDER HAS BEEN PASSED IN THE CASE OF THE ASSESSEE. ONCE THE PROVISIONS OF SEC.44B HAVE BEEN INVOKED, THEN APPLICABILITY OF SE CTION 172 NO MORE SURVIVES. THIS IS BECAUSE A HIGHER AMOUNT HAS BEEN ASSESSED U /S. 44B AND HIGHER TAX HAS BEEN LEVIED. FURTHER IT IS ALSO NOTICED THAT THE N ECESSARY DIT RELIEF CERTIFICATE HAS BEEN ISSUED ON 14.2.2007 AND 22-3-2007 AND THE ASSESSMENT ORDER U/S. 172(4) HAS BEEN PASSED ONLY ON 8.5.2007. THUS IN A NY CASE THE ASSESSEE DID I.T.A. NO.871/MDS/2010 & CO NO. 50/MDS/2010 8 HAVE THE NECESSARY CERTIFICATE BEING THE DIT RELIEF CERTIFICATE. ASSUMING THAT THIS HAS NOT BEEN PRODUCED BEFORE THE ASSESSING OFF ICER STILL IN VIEW OF THE DECISION OF THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF MANDIRA D. VAKHARIA IT IS ONLY A TECHNICAL BREACH WHICH CAN BE RECTIFIE D. IN THE CIRCUMSTANCES WE ARE OF THE VIEW THAT THE ORDER OF THE LEARNED CIT(A) CA NCELING THE DEMAND RAISED IN THE ASSESSMENT ORDER PASSED UNDER SECTION 172(4) IS ON A RIGHT FOOTING AND DOES NOT CALL FOR ANY INTERFERENCE. EVEN OTHERWISE IN VI EW OF THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF RADHASOAMI SAT SANG V. CIT REPORTED IN 193 ITR 321 AS THE REVENUE HAS ACCEPTED THE DECISIO N OF THE LEARNED CIT(A) IN RESPECT OF 42 VOYAGES OUT OF THE 48 VOYAGES WITHIN THE SAME FINANCIAL YEAR AND WHICH HAVE THE IDENTICAL FACTS, WE ARE OF THE VIEW THAT THE ISSUE HAS GOT SETTLED AND CONSEQUENTLY THE LEARNED CIT(A) HAS RIGHTLY FOL LOWED HIS EARLIER ORDER AND WE FIND NO MISTAKE IN HIS ORDER WHICH REQUIRES OUR INT ERFERENCE. IN THE CIRCUMSTANCES, THE ORDER OF THE LEARNED CIT(A) STAN DS UPHELD AND THE APPEAL OF THE REVENUE STANDS DISMISSED. 12. IN THE CROSS OBJECTION FILED BY THE ASSESSEE IT IS FAIRLY AGREED BY THE LEARNED AUTHORISED REPRESENTATIVE THAT AS THE APPEA L OF THE REVENUE IS DISMISSED THE CROSS OBJECTION FILED BY THE ASSESSEE BECOMES I NFRUCTUOUS. AS WE HAVE DISMISSED THE REVENUES APPEAL ACCEPTING THE CLAIM OF THE ASSESSEE THE CROSS OBJECTION FILED BY THE ASSESSEE IS ALSO DISMISSED. I.T.A. NO.871/MDS/2010 & CO NO. 50/MDS/2010 9 13. IN THE RESULT, BOTH THE REVENUES APPEAL AND TH E ASSESSEES CROSS OBJECTION ARE DISMISSED. 14. THE ORDER WAS DICTATED AND PRONOUNCED IN THE CO URT ON 26-10-2010. SD/- SD/- (K.K. GUPTA) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED THE 26 TH OCTOBER, 2010. H. COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE