DCIT Corporate Circle 2(1), CHENNAI V. East Coast Terminal Operation & Port Services Ltd., CHENNAI

ITA 1235/CHNY/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 3722 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 6 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-11-2020
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 26-04-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R ANITHA
• Assessee Lawyers: G BASKAR

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , B BENCH, CHENNAI [ , , BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ I.T.A.NO.1235/CHNY/2019 ( [ [ / ASSESSMENT YEAR: 2014-15) / APPELLANT BY : MS. R. ANITHA, JCIT / RESPONDENT BY : SHRI G. BASKAR, ADVOCATE /DATE OF HEARING : 26.10.2020 /DATE OF PRONOUNCEMENT : 09.11.2020 / O R D E R PER S. JAYARAMAN, ACCOUNTANT MEMBER: THE REVENUE FILED THIS APPEAL AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-6, CHENNAI IN ITA NO.477/CIT(A)-6/2016-17 DATED 11.01.2019 FOR THE ASSESSMENT YEAR 2014-15. THE DCIT, CORPORATE CIRCLE 2(1), CHENNAI 600 034. VS M/S.EAST COAST TERMINAL OPERATIONS & PORT SERVICES LTD., NO.4, 6 TH FLOOR, BHURAI TOWERS, MOORES ROAD, EGMORE, CHENNAI 600 006. PAN: AAACE4812D ( /APPELLANT) ( /RESPONDENT) 2 ITA NO.1235/CHNY/2019 2. M/S. EAST COAST TERMINAL OPERATIONS & PORT SERVICES LTD., THE ASSESSEE, A SHIPPING COMPANY AND A CO-OWNER OF COMMERCIAL SHIP, M.V. GEM OF ENNORE, ALONG WITH THREE OTHER COMPANIES OPTED FOR TONNAGE TAX SCHEME (TTS) U/S.115V OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT) IN ITS RETURN OF INCOME FILED FOR THE ASSESSMENT YEAR 2014-15. THE AO EXAMINED THE CLAIM AND FOUND THAT THE IMPUGNED SHIP WAS MAINLY USED FOR TRANSPORTING THERMAL COAL FOR TNEB BETWEEN VARIOUS PORTS OF INDIA WHICH ARE WELL CONNECTED BY ROADS, THE SERVICES RENDERED BY THE SHIP ARE SERVICES OF A KIND NORMALLY PROVIDED ON LAND AND HENCE HELD THAT IT DOES NOT SATISFY THE CONDITIONS LAID FOR A QUALIFYING SHIP AS PER SECTION 115VD(C)(I) OF THE ACT. SINCE THIS ISSUE BEING A RECURRENT ONE, THE CIT(A) AND THE ITAT HAS DECIDED AGAINST THE REVENUE, HOWEVER, THE REVENUES APPEAL BEFORE THE HONBLE HIGH COURT IS PENDING, THEREFORE THE AO CONCLUDED THAT THE ASSESSEE IS NOT ELIGIBLE TO OPT FOR TT SCHEME. FURTHER, THE AO FOUND THAT THE SHAREHOLDERS OF THE COMPANY VIZ. TRANS ARAB MARITIME LLC OF DUBAI HELD 58.67% OF SHARES, EMIRATES TRADING LLC OF DUBAI HELD 41.33% OF SHARES. THEREFORE, 99.99% OF THE SHARES WERE HELD BY TWO FOREIGN COMPANIES AND EFFECTIVE CONTROL MANAGEMENT OF THE ASSESSEE COMPANY IS OUTSIDE INDIA AND HENCE THE ASSESSEE IS NOT A QUALIFYING COMPANY TO OPT FOR TTS U/S.115VC ALSO. FURTHER, THE AO MADE DISALLOWANCES OF FOREX LOSS AND U/S.14A 3 ITA NO.1235/CHNY/2019 R.W.R 8D AND CONCLUDED THE ASSESSMENT. AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A). THE LD.CIT(A) ALLOWED THE APPEAL. AGGRIEVED AGAINST THAT ORDER, THE REVENUE FILED THIS APPEAL. 3. THE CASE WAS HEARD THROUGH VIDEO CONFERENCING. THE LD.DR SUBMITTED THAT THE LD.CIT(A) FOLLOWING THE DECISION OF THE HONBLE ITAT IN THE EARLIER YEARS IN THE ASSESSEES CASE, WHEREIN THE ISSUE WHETHER THE ASSESSEE IS A QUALIFYING COMPANY U/S.115VC OF THE ACT WAS NOT THERE, DECIDED THE APPEAL BASED ON THE DECISION RENDERED U/S.115VD OF THE ACT ALONE. THEREFORE, THE LD.DR PRESENTED THE CASE ON THE LINES OF GROUNDS OF APPEAL. PER CONTRA, THE LD.AR INVITED OUR ATTENTION TO THE ITAT DECISIONS IN THE ASSESSEES CASE VIZ., IN ITA NO.1636/MDS/2017 FOR THE AY 2013-14 DATED 13.09.2017, WHEREIN THIS TRIBUNAL FOLLOWING EARLIER YEARS ORDERS DECIDED THE ISSUE U/S.115VD OF THE ACT IN FAVOUR OF THE ASSESSEE AND IN ITAT NOS.1426 TO 1430/CHNY/2016 FOR THE AYS 2005-06 TO 2009-10 DATED 12.02.2018 WHEREIN THE ISSUE U/S.115VC OF THE ACT WAS REMANDED TO THE AO FOR A FRESH ADJUDICATION. THEREAFTER, BOTH THE LD.DR AND THE LD.AR AGREED THAT THE ISSUE U/S.115VC OF THE ACT BE RESTORED TO THE AO FOR A FRESH ADJUDICATION. SINCE THE OTHER ISSUES VIZ., DISALLOWANCES OF FOREX LOSS AND U/S.14A R.W.R. 8D OF THE RULES ARE ALSO DEPENDENT ON THE DETERMINATION OF WHETHER THE ASSESSEE IS A QUALIFYING COMPANY WITHIN 4 ITA NO.1235/CHNY/2019 THE SCOPE OF SECTION 115VC OF THE ACT, THEY PLEADED THAT THESE ISSUES BE REMITTED BACK TO THE AO FOR A FRESH EXAMINATION. 4. WE HEARD THE RIVAL SUBMISSIONS. SINCE THIS TRIBUNAL HAS REMITTED THE ISSUES U/S.155VC OF THE ACT IN THE ORDERS, SUPRA, TO THE AO FOR A FRESH ADJUDICATION AND THE OTHER ISSUES ARE DEPENDENT ON THE DECISION OF THIS ISSUE, WE DEEM IT FIT TO REMIT THE ISSUES IN THE APPEAL TO THE AO FOR A FRESH EXAMINATION. THE AO AFTER GIVING DUE OPPORTUNITY TO THE ASSESSEE TO SUBSTANTIATE ITS CASE, SHALL DECIDE THE ISSUES IN ACCORDANCE WITH LAW. 5. IN THE RESULT, THE REVENUES APPEAL IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 9 TH NOVEMBER, 2020 AT CHENNAI. SD/- SD/- /CHENNAI, /DATED 9 TH NOVEMBER, 2020 RSR /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. ( ) /CIT(A) 4. /CIT 5. /DR 6. [ /GF ( ) (V. DURGA RAO) /JUDICIAL MEMBER ( ) (S. JAYARAMAN) /ACCOUNTANT MEMBER