The ITO, International Taxation, GANDHIDHAM V. M/s. Sea Horse Ship Agencies Pvt. Ltd., GANDHIDHAM

ITA 102/RJT/2012

• Counselvise Citation: [2012] 120 COUNSELVISE.COM (IT) 0140 (ITAT-RAJKOT)
• Duration Of Justice: 6 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-10-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 16-10-2012
• Assessment Year: 2010-2011
• Appeal Filed On: 20-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AVINASH KUMAR
• Keywords: Recovery proceedings; Double taxation relief

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBULAL; RAJKOT BENCH, RAJKOT. . .. . . .. . , , , , . .. . . .. . , , , , $ $ $ $ BEFORE SHRI T. K. SHARMA, JM AND SHRI D. K. SRIVASTAV A, AM ITA NO. 102/RJT/2012 / ASSESSMENT YEAR 2010-11 INCOME TAX OFFICER, (INTERNATIONAL TAXATION), PLOT NO.20/A, SECTOR-8, GANDHIDHAM-KUTCH ( * / APPELLANT) VS. M/S SEAHORSE SHIP AGENCIES PVT. LTD. MANI COMPLEX SUITE #106 PLOT NO.84, SECTOR-08, GANDHIDHAM AS AGENT OF M/S ANL SINGAPORE P LTD., SINGAPORE. PAN: +,* / RESPONDENT - / REVENUE BY SHRI AVINASH KUMAR /- / ASSESSEE BY NONE - /DATE OF HEARING 16.10.2012 - / DATE OF PRONOUNCEMENT 19.10.2012 / / / / ORDER . .. . . . . . , , , , / T. K. SHARMA, J. M. THIS APPEAL BY THE REVENUE IS AGAINST THE ORDER DATED 27.12.2011 OF CIT (A), GANDHINAGAR, FOR THE ASSESSMENT YEAR 2010-11. 2. THE REVENUE FILED THIS APPEAL ON 20.3.2012 AND IT WAS PLACED FOR HEARING ON 18.7.2012. AT THE REQUEST OF THE LD. AR V IDE APPLICATION DATED 16.7.2012 THE APPEAL WAS ADJOURNED TO 16.10.2012. AT THE TIME OF HEARING NONE PRESENT ON BEHALF OF THE ASSESSEE. SINCE T HE ISSUE INVOLVED IN THIS APPEAL STANDS COVERED, WE PROCEED TO DECIDE THE APPEAL EX-PARTE ITA NO. 102/RJT/2012 2 QUA THE ASSESSEE ON MERIT ON THE BASIS OF MATERIAL AVAI LABLE AND AFTER HEARING THE LD. DR. 3. THE FACTS IN BRIEF ARE THAT THE AGENT M/S SEAHORSE SHIP AGENCIES PVT. LTD. GANDHIDHAM HAS FILED VARIOUS VOVAGE F INAL RETURN U/S 172(3) OF THE INCOME TAX ACT 1961 ON VARIOUS DATES FROM THE FINANCIAL YEAR 2009- 2010 TO 20010-2011 FOR THE FREIGHT BENEFICIARY OF M/ S ANL SINGAPORE P LTD., SINGAPORE WITHOUT PAYING FREIGHT TAX. THE AO FOR THE SAKE OF CONVENIENCE AND SINCE THE ISSUE INVOLVED IN THE MATTER P ASSED COMMON ORDER U/S 172(4) OF THE ACT ON 29.12.2010 IN RESPECT O F ENTIRE VOVAGE RETURN FILED DURING THE FINANCIAL YEAR 2009-10. IN THIS ORDER, THE AO HELD THAT M/S ANL SINGAPORE P LTD., SINGAPORE HAVING OCCASI ONAL BUSINESS ON PORT AT MUNDRA AND NOT ENGAGED IN REGULAR BUSINESS OF SHIPPING AND HENCE, NOT ELIGIBLE FOR BENEFIT OF ARTICLE 8 OF INDO -SINGAPIORE TREATY. FURTHER IN THIS ORDER THE AO HELD THAT THE PRINCIPA L IS NOT OWNED OR CHARTERED NONE OF THE VESSEL, THEREFORE, THE AGENT/FREIGHT BENEFICIARY IS NOT ENTITLED TO CLAIM OF DTAA BENEFIT FOR THE SAID CHA RTERED VESSEL FOR THE VARIOUS REASONS DISCUSSED IN PARAGRAPH 12 OF THE IMPUGNED ORDER. TO SUM UP, THE AO WORKED OUT THE INCOME AND TAX PAYABLE THEREON AS UNDER: TOTAL AMOUNT OF FREIGHT EARNED IN INDIAN RUPEES WHICH IS INCLUDING THC : RS. 7, 26,63,957/- TAXABLE INCOME I.E. 7.5% : RS. 54,49,796/- TAX PAYABLE ON TAXABLE INCOME : RS. 23, 01,449/- INCOME TAX LESS : DOUBLE INCOME-TAX RELIEF : NIL TAX PAID ON FINAL RETURN DATED : NIL BALANCE TAX PAYABLE : RS. 23,01,449/- ITA NO. 102/RJT/2012 3 4. ON APPEAL, BEFORE THE LD. CIT(A), THE ASSESSEE CONT ENDED THAT PRINCIPAL M/S ANL SINGAPORE P LTD., SINGAPORE. IS ENGA GED IN REGULAR SHIPPING BUSINESS AND NOT OCCASIONAL BUSINESS. THEY ARE FI LING RETURN OF INCOME U/S 139(1) READ WITH SECTION 44B OF THE ACT FOR THE PAST SEVERAL YEARS INCLUDING FOR THE ASSESSMENT YEAR UNDER CONSIDERATIO N. THE ACKNOWLEDGMENT OF COPY OF RETURN OF INCOME FOR THE ASSE SSMENT YEAR 2010-11 WAS SUBMITTED BEFORE THE AO DURING SECTION 172 PROCEEDINGS. IT WAS FURTHER CLAIMED THAT THE APPELLANT WAS ASSESSED TO TAX U/S 44B OF THE ACT BEFORE THE DY.DIRECTOR OF INCOME-TAX (INT. TAXATI ON)-, MUMBAI AND THEREFORE IT WAS HELD THAT THE ASSESSEE WAS LIABLE TO CL AIM THE BENEFIT OF TREATY. IT WAS ALSO ARGUED THAT ONCE THE PROVISIONS OF SECTION 44B ARE APPLICABLE THEN APPLICABILITY OF SECTION 172 NO MORE S URVIVE. THIS IS BECAUSE THE HIGHER AMOUNT IS SUBJECT TO TAX U/S 44B AS IT CONSIDERED TOTAL INCOME OF THE ASSESSEE AS COMPARED TO TAX UNDER SECTION 17 2 WHICH CONSIDERED ONLY INCOME ON A PARTICULAR PORT OR A SHIPPI NG. AFTER CONSIDERING THEIR ARGUMENTS, THE LD. CIT(A), IN THE IM PUGNED ORDER HELD THAT THE ORDER PASSED U/S 172(4) IS NULL AND VOID BECA USE THE ASSESSEE IS NOT ENGAGED IN OCCASIONAL BUSINESS IS BACKED BY ITS ACTIN G ALTERNATIVE CLAUSE PROVIDED UNDER SECTION 172 (7) OF THE ACT, 1961 . THE RELEVANT PORTION OF THE DECISION OF THE LD. CIT(A) AS CONTAINED IN PARAGRAPH 4.2 OF THE IMPUGNED ORDER IS AS UNDER: 4.2 I HAVE PERUSED THE SUBMISSION MADE BY THE APPELLA NT AND AM OF THE OPINION THAT THE APPELLANT IS IN REGULAR SHIPPING BUSINESS AND NOT IN OCCASIONAL SHIPPING BUSINESS. I HAVE CONSIDERED THE JUDGMENTS CITED. ONCE A PERSON CLAIMS THAT IT IS NOT E NGAGED IN OCCASIONAL SHIPPING BUSINESS AND WANTS TO GO OUT OF THE AMB IT OF SECTION 172; THE RECOURSE IS PROVIDED IN SECTION 172 (7) ONLY AND FOR THAT IT HAS TO OPT FOR FILLING RETURN U/S 139(1) . IT HAS ALSO APPROACHED ITS REGULAR ASSESSING OFFICER TO GET DIT RELIEF FROM ADIT MUMBAI FOR THE FINANCIAL YEAR SHOWING ITS INTENT TO BE TAXES THERE. THE APPELLANT HAS BEEN FILING RETURNS AT MUMBAI A ND ALSO ITA NO. 102/RJT/2012 4 REQUESTED THE AO TO TRANSFER ITS CASE THERE. IN THE A SSESSMENT ORDER AT PAGE 6 THE AO HAS REPRODUCED THE FOLLOWING F ROM THE REQUEST :. IN THIS CONNECTION, WE HAVE TO ADVISE YOU THAT SEAHOR SE SHIP AGENCIES PVT. LTD, HAVE BEEN REPRESENTING ANL SINGAPO RE PVT LTD. SINGAPORE AT ALL PORTS IN INDIA. SEAHORSES REGISTERED OFFICE AT MUMBAI AND OUR HEAD OFFICE HAS ALSO OBTAINED SIMILAR DIT RELIEF FROM THE INTERNATIONAL TAXATION DIVISIONS AT MUMBAI. WHILE, OBTAINING DIT FROM INTERNATIONAL TAXATION D IVISION AT MUMBAI, OUR HEAD OFFICE AS REQUIRED BY THE CONCERNED OF FICE, HAS GIVEN AN UNDERTAKING TO FILE THE ANNUAL RETURN (FOR ALL LOCATIONS IN INDIA), ACCORDINGLY, OUR HEAD OFFICE SHALL BE FILING THE ANNUAL RETURN AT MUMBAI BEFORE THE DUE DATE. WE SHALL ARR ANGE TO SUBMIT THE COPY OF THE RETURN FOR YOUR RECORD, UPON FILING . IN VIEW OF THE SAME, ANL SINGAPORE PVT LTD. INCOME AT ALL LOCATION IN INDIA WILL BE ASSESSED TO MUMBAI AND OUR HEAD OFFI CE SHALL BE SUBMITTING ALL RELEVANT DOCUMENTS AT MUMBAI AT THE T IME OF ASSESSMENT. THE APPELLANT FOLLOWED IT WITH RETURN FILED MUCH BE FORE THE ASSESSMENT U/S 172(4) WAS COMPLETED AND THE AO WAS APPRAISE D OF THE FACT AND DESIRE TO BE TAXED ON TOTAL INCOME (R EFER TO PARA 13 PAGE 9 OF THE ORDER). SINCE, THE APPELLANT HAS OPTE D FOR THE OPTION TO BE ASSESSED U/S 172(7) BY FILING RETURN OF INCOME U /S 139(1); IT IS ESTABLISHED THAT THE APPELLANT IS IN REGULAR SHIPPI NG BUSINESS AND LIABLE TO BE ASSESSED UNDER OTHER PROVISIONS OF THE ACT I NCLUDING 44B, AND NOT U/S 172(4). THUS THE ORDER PASSED U/S 172(4 ) BY THE INCOME TAX OFFICER IS NULL AND VOID AS ASSESSEES CLAIM THA T IT IS NOT ENGAGED IN OCCASIONAL SHIPPING BUSINESS BACKED BY ITS TAKING THE ALTERNATE RECOURSE PROVIDED IN SECTION 172(7) IT SELF. ONE MORE ASPECT HERE IS THAT ONCE THE AO SAYS THAT THE APPELLANT IS NOT OWNER/CHARTER OF THE VESSEL, THEN HE COULD NOT HA VE TAKEN RECOURSE TO SECTION 172 ITSELF AS THE SECTION APPLIES TO FREIGHT INCOME PAID /PAYABLE TO THE OWNER/CHARTER ONLY (OR AN Y PERSON ON ITS BEHALF). THE SUBSECTION (1) READS AS UNDER : 172. (1) THE PROVISIONS OF THIS SECTION SHALL, NOTWITHSTANDIN G ANYTHING CONTAINED IN THE OTHER PROVISIONS OF THIS ACT, APPLY FOR THE PURPOSE OF THE LEVY AND RECOVERY OF TAX IN THE CASE O F ANY SHIP, BELONGING TO OR CHARTERED BY A NON-RESIDENT, WHICH CA RRIES PASSENGERS, LIVESTOCK, MAIL OR GOODS SHIPPED AT A PORT IN INDIA. IN ADDITION, THE RELEVANT PART OF SUB-SECTION (3) REA DS AS UNDER : 172. (3) BEFORE THE DEPARTURE FROM ANY PORT IN INDIA OF ANY SUCH SHIP, THE MASTER OF THE SHIP SHALL PREPARE AND FURNISH TO THE ITA NO. 102/RJT/2012 5 ASSESSING OFFICER A RETURN OF THE FULL AMOUNT PAID OR PAYABLE TO THE OWNER OR CHARTERER OR ANY PERSON ON HIS BEHALF, ON ACCOUNT OF THE CARRIAGE OF ALL PASSENGERS, LIVESTOCK, MAIL OR GOODS SHIPPED (EMPHASIS SUPPLIED) AT THAT PORT SINCE THE LAST ARRIVAL OF THE SHIP THEREAT: THEREFORE, THE SECTION APPLIES ONLY FOR FREIGHT RECEIV ED/RECEIVABLE BY OWNER /CHARTER(OR ANY PERSON ON ITS BEHALF). HOWEV ER, WHETHER THE APPELLANT IS OWNER/CHARGER OR NOT ON THE FACTS OF T HE CASE IS NOT ADJUDICATED HERE, BECAUSE EVEN IN CASE IT IS, IT HAS TO BE ASSESSED AS PER OPTION EXERCISED U/S 172(7). 5. AGGRIEVED WITH THE ORDER OF THE LD. CIT(A), THE REVENUE IS IN APPEAL BEFORE THIS TRIBUNAL BY TAKING FOLLOWING GROU NDS : 1. 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 A SSESSEE IS ASSESSABLE UNDER SECTION 172(7) OF THE ACT. 3. THE LD. CIT(A) HAS FURTHER ERRED IN LAW AND ON FA CTS IN HOLDING THAT THE BENEFIT OF DTAA BETWEEN INDIA AND SINGAPORE IS AVAILABLE TO THE ASSESSEE IGNORING THE FACT THAT IN RESP ECT OF ITS SLOT CHARTERING BUSINESS, THE ASSESSEE IS NOT ENGAGED IN OPERA TION OF SHIPS AND IT HAS NEITHER OWNED NOR CHARTERED THE VESSELS I N WHICH THE GOODS HAVE BEEN TRANSPORTED. 5. THE APPELLANT CRAVES LEAVE TO ADD/ALTER/MODIFY/DEL ETE ANY OF THE GROUNDS OF APPEAL AT THE TIME OF HEARING 6. AT THE TIME OF HEARING BEFORE US, ON BEHALF OF T HE REVENUE SHRI AVINASH KUMAR, THE LD. DR APPEARED AND CONTENDED TH AT PRINCIPAL HAS NOT OWNED OR CHARTERED ANY OF THE VESSEL, THEREFORE, PRINCIPAL HAD WRONGLY CLAIMED DTAA BENEFIT FOR THE SLOT CHARTERED VESSELS. HE ACCORDINGLY RELYING ON THE REASONING GIVEN BY THE AO I N THE ASSESSMENT ORDER CONTENDED THAT THE ASSESSEE THROUGH ITS LOCAL AGEN T HAS WRONGLY CLAIMED DTAA BENEFIT, THEREFORE, THE AO RIGHTLY MA DE THE ASSESSMENT U/S 172(4) OF THE ACT AND LD. CIT(A) IS NOT JUSTIFIED IN HOLDING THE SAME AS NULL AND VOID ON THE GROUND M/S ANL SINGAPORE P LTD ., SINGAPORE. IS ASSESSABLE U/S 172(7) OF THE ACT. ITA NO. 102/RJT/2012 6 7. NONE APPEARED ON BEHALF OF THE ASSESSEE. WE FIND T HAT THE ISSUE RAISED IN THIS APPEAL STANDS COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY THE DECISION OF THE RAJKOT BENCH OF TH E TRIBUNAL IN THE CASE OF I.T.O V/S M/S CMA CGM AGENCIES (INDIA) PVT. LT D. IN ITA NOS. 151 TO 190/RAJ/2012(AY-2010-2011) DATED 31.08.2012 WHEREIN ON IDENTICAL FACTS THE TRIBUNAL DISMISSED THE APPEAL OF TH E ASSESSEE WITH CERTAIN OBSERVATIONS. 8. HAVING HEARD THE LD. DR WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. ADMITTEDLY, THE RAJKOT B ENCH OF THE TRIBUNAL IN THE CASE OF I.T.O V/S M/S CMA CGM AGENCIES (INDIA) PV T. LTD. (SUPRA) ON IDENTICAL FACTS, QUASHED THE ORDER PASSED U/S 172(4) OF THE ACT WITH THE OBSERVATION THAT THE JURISDICTIONAL AO MAY V ERIFY 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 ASSESSEE FROM THE VARIOUS VOYAGES DOES NOT ESCAPE ASSESSMENT AS PER THE NORMAL PROVISIONS OF THE I-T ACT. THE FACTS OF THE ASSESSEES CASE ARE IDENTICAL TO THAT OF THE CASE DECIDED BY THE CO-ORDINATE BENCH OF THE TRIBUNAL IN I.T.O V/S M/S CMA CGM AGENCIES (INDIA) PVT. LTD. (SUPRA). THE PRINCIPAL M/S ANL SINGAPORE P LTD., SINGAPORE HAS FILED RETURN OF INCOME FOR THE ASSESSMENT YEAR 2010- 11 WITH DY.DIRECTOR OF INCOME TAX (INT. TAXATION), MUMBAI THE SAID CASE HAS ALREADY BEEN UNDER SCRUTINY OF THE REGULAR ASSESSIN G OFFICER OF M/S ANL SINGAPORE P LTD., SINGAPORE. THIS CLEARLY INDI CATES THAT M/S ANL SINGAPORE P LTD., SINGAPORE HAS ACCEPTED THE LIABI LITY TO BE DEALT WITH THE PROVISIONS OF SECTION 172(7) OF THE ACT. THE JURISDI CTIONAL AO 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 IN COME OF THE ASSESSEE ITA NO. 102/RJT/2012 7 FROM THE 93 VOYAGES DOES NOT ESCAPE ASSESSMENT AS PER NOR MAL PROVISIONS OF THE ACT. 9. IN VIEW OF THE FOREGOING DISCUSSION, THE APPEAL OF THE REVENUE IS DISMISSED SUBJECT TO THE OBSERVATIONS MADE ABOVE. THIS ORDER IS PRONOUNCED IN THE OPEN COURT ON THE DAT E MENTIONED HEREINABOVE. SD SD ( .. / D. K. SRIVASTAVA) ( .. / T. K. SHARMA) / ACCOUNTANT MEMBER /JUDICIAL MEMBER 3/ ORDER DATE 19.10-2012. /RAJKOT SRL - -- - +4 +4 +4 [phone] / COPY OF ORDER FORWARDED TO:- 1. * / APPELLANT-, 2. +,* / RESPONDENT- 3. : / CONCERNED CIT. 4. :- / CIT (A). 5. 4 +, , / DR, ITAT, RAJKOT 6. / GUARD FILE. / BY ORDER , TRUE COPY SENIOR PRIVATE SECRETARY , INCOME TAX APPELLATE TRIBUNAL, RAJKOT.