ACIT, CHENNAI V. VS&B Containers Pvt. Ltd., CHENNAI

ITA 1279/CHNY/2013

• Counselvise Citation: 127921714 RSA 2013
• Duration Of Justice: 2 year(s) 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-10-2015
• Appeal Filed By: Department
• Bench Allotted: D
• Next Hearing Date: 08-09-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 07-06-2013
• Court: TRIBUNAL
• Department Lawyers: P RADHAKRISHNAN
• Assessee Lawyers: S SRIDHAR; ANIL NAIR
• Keywords: Reopening of assessment; Depreciation; Double taxation relief; Deemed to accrue or arise in india; Difference of opinion; Change of opinion; Revenue expenditure; Capital expenditure
• Section: 143(3); 14A; 147; 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : CHENNAI . . . , . !' , # $ % [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ] ./ I.T.A.NOS.441 & 442/MDS/2011 / ASSESSMENT YEARS : 2002-03 & 2003-04 M/S VS&B CONTAINERS PVT. LTD OLD NO.50, NEW NO.8 Y BLOCK, 9 TH STREET ANNA NAGAR, CHENNAI - 40 VS. THE DY. COMMISSIONER OF INCOME-TAX COMPANY CIRCLE III(4) CHENNAI [PAN AAACV 3633 K ] ( &' / APPELLANT) ( ()&' /RESPONDENT) ./ I.T.A.NOS.557, 695 & 696/MDS/2011 & 1279/MDS/2013 / ASSESSMENT YEARS : 2002-03, 2003-04, 2006-07 & 2008 -09 THE DY. COMMISSIONER OF INCOME-TAX COMPANY CIRCLE III(4) CHENNAI VS. M/S VS&B CONTAINERS PVT. LTD OLD NO.50, NEW NO.8 Y BLOCK, 9 TH STREET ANNA NAGAR, CHENNAI - 40 ( &' / APPELLANT) ( ()&' /RESPONDENT) ASSESSEE BY : SHRI S. SRIDHAR, ADVOCATE & SHRI ANIL NAIR, CA DEPARTMENT BY : SHRI P. RADHAKRISHNAN, JCIT / DATE OF HEARING : 08 - 09 - 2015 / DATE OF PRONOUNCEMENT : 15 - 10 - 2015 / O R D E R PER N.R.S.GANESAN, JUDICIAL MEMBER BOTH ASSESSEE AND REVENUE FILED APPEALS FOR THE ASSESSMENT ITA NOS. 441/11 ETC. :- 2 -: YEARS 2002-03 AND 2003-04. THE DEPARTMENT ALSO FIL ED APPEALS FOR ASSESSMENT YEARS 2006-07 AND 2008-09. SINCE COMMO N ISSUE ARISES FOR CONSIDERATION IN ALL THE APPEALS, WE HEARD THEM TOGETHER AND DISPOSING OF THE SAME BY THIS COMMON ORDER. 2. LET US FIRST TAKE ASSESSMENT YEAR 2002-03. IN REVE NUES APPEAL I.T.A.NO.557/MDS/2011, THE REVENUE IS CHALLE NGING THE ORDER OF THE CIT(A) WHEREIN THE REOPENING OF ASSESSMENT U/S 147 OF THE ACT WAS HELD TO BE NOT VALID. 3. SHRI P. RADHAKRISHNAN, LD. DEPARTMENTAL REPRESENTAT IVE SUBMITTED THAT THE ASSESSING OFFICER COMPLETED THE ORIGINAL ASSESSMENT U/S 143(3) OF THE ACT BY AN ORDER DATED 29.3.2005. THE ASSESSING OFFICER FOUND THAT THE INCOME OTHER CHARG EABLE TO TAX HAS ESCAPED ASSESSMENT SINCE THE ASSESSEE HAS NOT FULLY AND TRULY DISCLOSED ALL THE MATERIAL FACTS RELEVANT FOR COMPL ETING THE ASSESSMENT. THEREFORE, THE ASSESSMENT WAS REOPENED BY ISSUING N OTICE U/S 148 OF THE ACT ON 31.3.2009. REFERRING TO THE REASONS REC ORDED BY THE ASSESSING OFFICER FOR REOPENING THE ASSESSMENT WHIC H WAS EXTRACTED IN THE ASSESSMENT ORDER AT PAGES 1&2, THE LD. DR SUBMI TTED THAT THE ASSESSEE HAS PAID ` 1.54 CRORES TOWARDS LEASE EXPENSES TO M/S CRONO CONTAINERS LTD, UNITED KINGDOM, WITHOUT DEDUCTION O F TAX. THE ASSESSING OFFICER ALSO FOUND THAT THE ASSESSEE HAS NOT DISCLOSED THE ITA NOS. 441/11 ETC. :- 3 -: ABOVE PAYMENT IN THE RETURN OF INCOME. EVEN THE NAM E OF THE RECIPIENT WAS NOT DISCLOSED TO THE DEPARTMENT AT TH E TIME OF ORIGINAL ASSESSMENT. THEREFORE, THE ASSESSING OFFICER REOPE NED THE ASSESSMENT U/S 147 AND COMPLETED THE ASSESSMENT AF TER GIVING REASONABLE OPPORTUNITY TO THE ASSESSEE. HOWEVER, ON APPEAL BY THE ASSESSEE, THE CIT(A) FOUND THAT THERE WAS A CHANGE OF OPINION, THEREFORE, THE REOPENING OF ASSESSMENT WAS NOT VALI D. THE LD. DR FURTHER SUBMITTED THAT THE ASSESSING OFFICER HAS NO T TAKEN ANY OPINION IN RESPECT OF THE PAYMENT MADE TO M/S CRONO CONTAIN ERS LTD. THE CLAIM OF DEPRECIATION TO THE EXTENT OF ` 0.70 CRORES WAS FOUND TO BE NOT ELIGIBLE SINCE THE ASSESSEE WAS NOT OWNER OF T HE CONTAINER. DURING THE COURSE OF ORIGINAL ASSESSMENT, THE ASSE SSEE DID NOT DISCLOSE THE NATURE OF THESE EXPENSES. SINCE THE A SSESSING OFFICER HAS NOT FORMED ANY OPINION AND THE DETAILS WERE ALSO NO T FURNISHED BY THE ASSESSEE DURING THE COURSE OF ORIGINAL ASSESSMENT, ACCORDING TO THE LD. DR, THERE IS NO CHANGE OF OPINION AS FOUND BY THE C IT(A). THEREFORE, THE JUDGMENT OF THE APEX COURT IN CIT VS KELVINATOR OF INDIA LTD, 320 ITR 561, IS NOT APPLICABLE TO THE FACTS OF THIS CA SE. 4. ON THE CONTRARY, SHRI S. SRIDHAR, LD. COUNSEL FOR T HE ASSESSEE SUBMITTED THAT THE ASSESSEE DISCLOSED ALL THE MATE RIAL FACTS RELEVANT FOR COMPLETING THE ASSESSMENT. REFERRING TO THE QU ESTIONNAIRE SAID TO BE ISSUED BY THE ASSESSING OFFICER IN THE COURSE OF REGULAR ASSESSMENT, ITA NOS. 441/11 ETC. :- 4 -: THE LD. COUNSEL SUBMITTED THAT IN QUESTION NO.9, TH E ASSESSING OFFICER ASKED FOR BRIEF NOTE ON LEASE RENTALS AND PICK UP C REDIT. THE ASSESSING OFFICER HAS ALSO CALLED FOR DETAILS WITH REGARD TO REPOSITIONING COST AND DOMESTICATION EXPENSES. THE ASSESSEE FILED THE DE TAILS AS CALLED FOR BY THE ASSESSING OFFICER, THEREFORE, IT IS NOT A CA SE OF NEGLIGENCE ON THE PART OF THE ASSESSEE FOR NOT FURNISHING ANY RE LEVANT MATERIAL. REFERRING TO PROVISO TO SEC.147 OF THE ACT, THE LD. COUNSEL SUBMITTED THAT THE ASSESSING OFFICER COMPLETED THE ASSESSMENT U/S 143(3)OF THE ACT ON THE BASIS OF THE RETURN FILED BY THE ASSES SEE, THEREFORE, AFTER COMPLETION OF FOUR YEARS, THE ASSESSING OFFICER CAN NOT REOPEN THE ASSESSMENT AS THERE WAS NO FAILURE ON THE PART OF T HE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS RELEVAN T FOR COMPLETING THE ASSESSMENT. THE LD. COUNSEL PLACED HIS RELIANCE O N THE JUDGMENT OF THE MADRAS HIGH COURT IN CIT VS ARVIND REMEDIES LTD 2015-TIOL-1544- HC-MAD-IT, THE COPY OF WHICH IS FILED BY THE LD. CO UNSEL AND SUBMITTED THAT THE MADRAS HIGH COURT AFTER CONSIDERING EXPLAN ATION 1 TO SEC. 147 OF THE ACT, FOUND THAT WHEN THE ASSESSEE FILED THE COMPLETE DETAILS BEFORE THE ASSESSING OFFICER AND THE ASSESSING OFFI CER HAS NOT CONSIDERED THE SAME AT THE TIME OF PASSING AN ORDER U/S 143(3), THE ASSESSEE CANNOT BE FASTENED WITH ANY LIABILITY. IN THIS CASE ALSO, ACCORDING TO THE LD. COUNSEL, THE ASSESSEE HAS FUR NISHED ALL DETAILS, THEREFORE, REOPENING OF ASSESSMENT AFTER EXPIRY OF FOUR YEARS IS NOT ITA NOS. 441/11 ETC. :- 5 -: JUSTIFIED. ON A QUERY FROM THE BENCH WHEN THE ASSE SSING OFFICER SPECIFICALLY CLAIMS THAT THE ASSESSEE HAS NOT FURN ISHED THE NAME OF THE RECIPIENT AND THE NATURE OF PAYMENT, WHETHER SUCH D ETAILS WERE FILED BEFORE THE ASSESSING OFFICER IN RESPONSE TO THE QUE STIONNAIRE ISSUED, THE LD. COUNSEL SUBMITTED THAT ALL THE DETAILS WERE FURNISHED BEFORE THE ASSESSING OFFICER. WHEN IT WAS BROUGHT TO THE NOTI CE OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE REPLY FILED BY TH E ASSESSEE BEFORE THE ASSESSING OFFICER DOES NOT CONTAIN ANY SUCH DET AILS, THE LD. COUNSEL CLARIFIED THAT THE BOOKS OF ACCOUNT WERE PRODUCED B EFORE THE ASSESSING OFFICER. THE LD. COUNSEL HAS ALSO CLARIFIED THAT I F NECESSARY, THE ASSESSEE IS READY TO PRODUCE THE BOOKS OF ACCOUNT B EFORE THIS TRIBUNAL ALSO. THE LD. COUNSEL FURTHER SUBMITTED THAT IF TH E ASSESSEE HAS NOT FURNISHED THE NAME OF THE RECIPIENT, HOW THE ASSESS ING OFFICER WAS ABLE TO REFER THE NAME OF THE RECIPIENT WHILE RECOR DING REASONS FOR REOPENING THE ASSESSMENT. THE VERY FACT THAT THE A SSESSING OFFICER MENTIONED THE NAME OF THE RECIPIENT WHILE RECORDING REASONS FOR REOPENING THE ASSESSMENT SHOWS THAT THE ASSESSEE H AS FURNISHED THE NAME OF THE RECIPIENT BEFORE THE ASSESSING OFFICER IN THE ORIGINAL ASSESSMENT. THE LD. COUNSEL FURTHER SUBMITTED THAT THE CIT(A) HAS NOT DECIDED THE ISSUE ON MERIT. IF FOR ANY REASON THIS TRIBUNAL CAME TO THE CONCLUSION THAT THE REOPENING WAS VALID, THEN THE M ATTER HAS TO GO BACK TO THE FILE OF THE CIT(A) FOR DECIDING THE SAM E ON MERIT. ITA NOS. 441/11 ETC. :- 6 -: 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. AD MITTEDLY, THE ASSESSING OFFICER REOPENED THE ASSESSMENT AFTER EXP IRY OF FOUR YEARS. PROVISO TO SEC.147 OF THE ACT CLEARLY SAYS THAT WHE NEVER THE ASSESSMENT WAS COMPLETED U/S 143(3) THE SAME CANNO T BE REOPENED AFTER EXPIRY OF FOUR YEARS PROVIDED THERE WAS A NEG LIGENCE ON THE PART OF THE ASSESSMENT FOR FURNISHED THE PARTICULARS REQ UIRED FOR COMPLETING THE ASSESSMENT. IN THE CASE BEFORE US, WHILE RECOR DING REASONS FOR REOPENING THE ASSESSMENT, THE ASSESSING OFFICER CAT EGORICALLY MENTIONED THAT THE ASSESSEE HAS NOT FULLY AND TRUL Y DISCLOSED ALL THE MATERIAL FACTS AT THE TIME OF ORIGINAL ASSESSMENT. FROM THE ORDER OF THE ASSESSING OFFICER IT APPEARS THAT THE ASSESSE E HAS NOT FILED ANY DETAILS WITH REGARD TO PAYMENT MADE TO NON-RESIDENT AND THE DETAILS OF TAX DEDUCTED AT SOURCE. THEREFORE, DURING THE ASSE SSMENT PROCEEDINGS, THE ASSESSING OFFICER CALLED FOR CERTA IN DETAILS WITH REGARD TO LEASE RENTALS PAID AND PICK UP CREDIT. THE ASSE SSING OFFICER HAS ALSO CALLED FOR DETAILS WITH REGARD TO CERTAIN EXPENSES. QUESTION NO.8 AND 10 IN THE QUESTIONNAIRE ISSUED TO THE ASSESSEE BY THE ASSESSING OFFICER READ AS FOLLOWS: ITA NOS. 441/11 ETC. :- 7 -: 8. A BRIEF NOTE ON LEASE RENTALS AND PICK UP CRED IT (SCHEDULE 11) 10. (A)REPOSITIONING COST OF ` 3,32,275/- AND (B) DOMESTICATION EXPENSES OF ` 70,21,921/- WHY DO THEY FIGURE AS A NEW ITEM OF EXPENDITURE DUR ING THIS YEAR. PLEASE GIVE A BRIEF NOTE ON THE ABOVE. FOR THE ABOVE QUESTIONNAIRE, THE ASSESSEE HAS ANSW ERED AS FOLLOWS, A COPY OF WHICH IS AVAILABLE AT PAGE 6 OF THE PAPER B OOK. 8. DETAILS REGARDING COMMISSION PAID ARE ENCLOSED IN ANNEXURE-VII. 10. DETAILS OF SOFTWARE PURCHASED DURING THE YEAR. 6. FROM THE ABOVE, IT IS OBVIOUS THAT EVEN AFTER A SPE CIFIC QUESTIONNAIRE WAS ISSUED TO THE ASSESSEE BY THE ASS ESSING OFFICER DURING THE COURSE OF REGULAR ASSESSMENT PROCEEDINGS , THE ASSESSEE COULD NOT FURNISH THE NAME OF THE RECIPIENT, NATURE OF PAYMENT AND THE DETAILS OF TAX DEDUCTED AT SOURCE. THEREFORE, AS R IGHTLY FOUND BY THE ASSESSING OFFICER, THERE WAS A NEGLIGENCE ON THE PA RT OF THE ASSESSEE IN FURNISHING FULLY AND TRULY ALL THE MATERIAL FACT S RELEVANT FOR COMPLETING THE ASSESSMENT. 7. LET US NOW SEE WHETHER THERE IS A CHANGE OF OPINION AS FOUND BY THE CIT(A). WE HAVE CAREFULLY GONE THROUG H THE ASSESSMENT ORDER DATED 29.3.2005. THERE IS NO DISCUSSION ABOU T THE EXPENDITURE INCURRED BY THE ASSESSEE WITH REGARD TO PAYMENT OF LEASE RENTALS TO ITA NOS. 441/11 ETC. :- 8 -: NON-RESIDENT AND THE CLAIM OF DEPRECIATION. THEREF ORE, IT IS OBVIOUS THAT THE ASSESSING OFFICER HAS NOT FORMED ANY OPINI ON WITH REGARD TO THIS ISSUE. WHEN THE ASSESSING OFFICER HAS NOT FORM ED ANY OPINION, IT CANNOT BE SAID THAT THERE WAS A CHANGE OF OPINION A S FOUND BY THE CIT(A). IN THE CASE BEFORE THE APEX COURT IN KELVI NATOR OF INDIA LTD (SUPRA), THE ASSESSING OFFICER HAS TAKEN ONE OF THE POSSIBLE VIEWS, THEREFORE, THE APEX COURT FOUND THAT ONCE A VIEW WA S TAKEN IT CANNOT BE CHANGED BY THE ASSESSING OFFICER BY REOPENING TH E ASSESSMENT. IN THIS CASE, IT IS NOT A CASE OF CHANGE OF OPINION A T ALL. THE FACT REMAINS THAT THE ASSESSING OFFICER HAS NOT TAKEN ANY VIEW I N THE ORIGINAL ASSESSMENT, THEREFORE, THERE IS NO QUESTION OF ANY CHANGE OF OPINION. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ASSESSING OFFICER HAS RIGHTLY REOPENED THE ASSESSMENT AFTER EXPIRY OF FOUR YEARS SINCE THERE WAS A FAILURE ON THE PART OF THE ASSESSEE IN DISCLOSING FULLY AND TRULY ALL THE MATERIAL FACTS RELEVANT FOR COMPLETIN G THE ASSESSMENT. THEREFORE, THE CIT(A) IS NOT CORRECT IN HOLDING THA T REOPENING OF ASSESSMENT IS NOT VALID. 8. THE NEXT CONTENTION OF THE ASSESSEE IS THAT THE CI T(A) HAS NOT CONSIDERED THE ISSUE ON MERIT, THEREFORE, IN CA SE THE REOPENING OF ASSESSMENT IS HELD TO BE VALID, THE MATTER HAS TO G O BACK TO THE CIT(A) FOR DECIDING THE ISSUE RAISED BY THE ASSESSEE ON M ERIT. WE FIND FORCE IN THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSES SEE. ACCORDINGLY, ITA NOS. 441/11 ETC. :- 9 -: THE ORDER OF THE CIT(A) IS SET ASIDE AND THE ENTIRE ISSUE RAISED BY THE ASSESSEE ON MERIT IS REMITTED BACK TO THE FILE OF T HE CIT(A). THE CIT(A) SHALL CONSIDER THE ISSUE RAISED BY THE ASSE SSEE ON MERIT AND THEREAFTER DECIDE THE SAME IN ACCORDANCE WITH LAW A FTER GIVING A REASONABLE OPPORTUNITY TO THE ASSESSEE. 9. IN THE RESULT, APPEAL OF THE REVENUE I.T.A.NO.557/M DS/2011 IS ALLOWED AND THE APPEAL OF THE ASSESSEE I.T.A.NO .441/MDS/2011 IS ALLOWED FOR STATISTICAL PURPOSES. 10. NOW COMING TO ASSESSMENT YEAR 2003-04, IN I.T.A.NO. 442/MDS/2011, THE ASSESSEE HAS RAISED A GROUND CHA LLENGING THE REOPENING OF ASSESSMENT U/S 147 OF THE ACT. HOWEV ER, DURING THE COURSE OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT HE IS NOT PRESSING THIS GROUND. THE LD. COUNSEL HAS MADE AN ENDORSEMENT TO THAT EFFECT IN THE APPEAL FOLDER. IN VIEW OF TH E ABOVE, THE GROUND OF APPEAL RAISED BY THE ASSESSEE WITH REGARD TO REOPE NING OF ASSESSMENT U/S 147 IS DISMISSED AS NOT PRESSED. 11. THE NEXT GROUND OF APPEAL IS WITH REGARD TO DISALLO WANCE OF ` 3,78,342/- SAID TO BE PAID TO OVERSEAS PARTIES TOWA RDS MARKETING COMMISSION FEES. 12. SHRI S. SRIDHAR, LD. COUNSEL SUBMITTED THAT THE C OMMISSION WAS PAID TO M/S ABC CONTAINERS PVT. LTD., COLOMBO. ACCORDING TO THE ITA NOS. 441/11 ETC. :- 10 -: LD. COUNSEL, THE FOREIGN COMPANY HAS NOT RENDERED A NY SERVICE IN INDIA. THEREFORE, THE PAYMENT MADE TO M/S ABC CON TAINERS PVT. LTD. COLOMBO, IS NOT TAXABLE IN INDIA, HENCE, THE ASSES SEE IS NOT LIABLE TO DEDUCT TAX IN INDIA. THE LD. COUNSEL SUBMITTED THA T THE ASSESSEE IS ENGAGED IN LEASING OF CONTAINERS. THE LD. COUNSEL CLARIFIED THAT THE ASSESSEE IS NOT HIRING ANY SHIP FOR TRANSPORT OF CO NTAINER. THE BUSINESS OF THE ASSESSEE IS EXCLUSIVELY TO TAKE CO NTAINERS ON LEASE AND PROVIDE THE SAME TO OTHER PERSONS WHO REQUIRE CONTA INERS FOR TRANSPORTATION OF MATERIALS. ACCORDING TO THE LD . COUNSEL, THE FOREIGN COMPANY NAMELY, M/S ABC CONTAINERS PVT. LTD. COLOMB O, HAS NOT RENDERED ANY SERVICE IN INDIA, HENCE, THE PAYMENT O F ` 3,78,342/- DOES NOT REQUIRE ANY TAX TO BE DEDUCTED. THEREFORE , THE DISALLOWANCE MADE BY THE ASSESSING OFFICER U/S 40(A)(I) IS NOT CALLED FOR. 13. ON THE CONTRARY, SHRI P. RADHAKRISHNAN, LD. DR SUBM ITTED THAT THE CONTAINERS TAKEN ON LEASE BY THE ASSESSEE MIGHT HAVE REACHED INDIAN TERRITORY AT ONE POINT OF TIME, THER EFORE, IT CANNOT BE SAID THAT THE FOREIGN COMPANY HAS NOT RENDERED ANY SERVICE IN INDIA. MOREOVER, NO MATERIAL WAS PRODUCED BEFORE THE ASSES SING OFFICER AND THE CIT(A), THEREFORE, THE CIT(A) FOUND THAT THE PA YMENT OF ` 3,78,342/- MADE TO M/S ABC CONTAINERS PVT. LTD. COL OMBO, HAS TO BE TREATED AS DEEMED INCOME ACCRUED IN INDIA U/S 9 OF THE ACT AND THE ITA NOS. 441/11 ETC. :- 11 -: ASSESSEE IS LIABLE TO DEDUCT TAX U/S 195 OF THE AC T. SINCE THERE WAS A FAILURE ON THE PART OF THE ASSESSEE TO DEDUCT TAX U/S 195 OF THE ACT, THE ASSESSING OFFICER HAS RIGHTLY DISALLOWED THE PA YMENT MADE BY THE ASSESSEE U/S 40(A)(I) OF THE ACT. 14. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE CLAIM OF THE ASSESSEE IS THAT THE ASSESSEE HAS TAKEN CONTAINER ON LEASE AND USED THE SAME FOR HIS LEASING BUSINESS. THE COPIES OF T HE AGREEMENT ENTERED INTO BETWEEN THE ASSESSEE AND M/S ABC CONT AINERS PVT. LTD. COLOMBO, FOR TAKING CONTAINERS ON LEASE OR THE SERV ICES TO BE PROVIDED BY M/S ABC CONTAINERS PVT. LTD. COLOMBO, ARE NOT FU RNISHED EITHER BEFORE THE LOWER AUTHORITIES OR BEFORE THIS TRIBUNA L. THE CIT(A) CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICE R ON THE GROUND THAT THE ASSESSEE HAS NOT ESTABLISHED THAT THE COM MISSION PAID TO NON-RESIDENT COMPANY WAS FOR SOLICITING BUSINESS OU TSIDE INDIA. THEREFORE, IT IS OBVIOUS THAT IN THE ABSENCE OF ANY MATERIAL BEFORE THE LOWER AUTHORITIES, THE PAYMENT OF COMMISSION TO M/S ABC CONTAINERS PVT. LTD. COLOMBO WAS DISALLOWED. THIS TRIBUNAL I S OF THE CONSIDERED OPINION THAT GIVING ONE MORE OPPORTUNITY TO THE AS SESSEE TO PRODUCE NECESSARY MATERIAL BEFORE THE ASSESSING OFFICER MAY NOT PREJUDICE THE INTEREST OF REVENUE IN ANY WAY. IN OTHER WORDS, GI VING ONE MORE OPPORTUNITY TO THE ASSESSEE TO PRODUCE NECESSARY M ATERIAL BEFORE THE ITA NOS. 441/11 ETC. :- 12 -: ASSESSING OFFICER MAY PROMOTE THE CAUSE OF JUSTICE. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE AND T HE ISSUE OF DISALLOWANCE OF ` 3,78,342/- IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL REC ONSIDER THE ISSUE AFRESH IN THE LIGHT OF MATERIAL THAT MAY BE FILED B Y THE ASSESSEE AND THEREAFTER DECIDE THE SAME IN ACCORDANCE WITH LAW A FTER GIVING A REASONABLE OPPORTUNITY TO THE ASSESSEE. 15. NOW COMING TO THE DEPARTMENTAL APPEAL I.T.A.NO. 695/MDS/2011, SHRI P. RADHAKRISHNAN, LD. DR SUBMITT ED THAT THE ASSESSEE TAKES MARINE CONTAINERS ON LEASE FROM M/S CRONO CONTAINERS LTD,UK. THE ASSESSEE, IN TURN, LEASED OUT THESE C ONTAINERS TO VARIOUS CUSTOMERS. DURING THE YEAR UNDER CONSIDERATION, TH E ASSESSEE HAS PAID A SUM OF ` 3,68,04,792/- TO M/S CRONO CONTAINERS LTD, TOWARDS LEASING CHARGES. HOWEVER, NO TAX WAS DEDUCTED AT S OURCE WHILE MAKING THE PAYMENT TO THE NON-RESIDENT COMPANY. TH EREFORE, THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSE SSEE U/S 40(A)(I) OF THE ACT. HOWEVER, ON APPEAL BY THE ASSESSEE, THE CIT(A) FOUND THAT SINCE THE NON-RESIDENT COMPANY HAS NOT RENDERED ANY SERVICE IN INDIA THEREFORE, THERE IS NO NEED FOR DEDUCTION OF TAX U /S 195 OF THE ACT. THE LD. DR POINTED OUT THAT IN THE COURSE OF ITS BU SINESS ACTIVITY, THE CONTAINERS MIGHT HAVE REACHED INDIAN TERRITORY AT A NY POINT OF TIME, ITA NOS. 441/11 ETC. :- 13 -: THEREFORE, IT CANNOT BE SAID THAT THE FOREIGN COMPA NY HAS NOT RENDERED ANY SERVICES IN INDIA. 16. ON THE CONTRARY, SHRI S SRIDHAR, LD. COUNSEL SUBMIT TED THAT THE ASSESSING OFFICER, AFTER CONSIDERING THE AGREEM ENT ENTERED INTO WITH M/S CRONO CONTAINERS LTD, FOUND THAT THE ASSE SSEE TOOK MARINE CONTAINERS ON LEASE FROM M/S CRONO CONTAINERS LTD, AND IN TURN LEASES OUT THE SAME TO VARIOUS CUSTOMERS. REFERRING TO AR TICLE 9 OF DOUBLE TAXATION AVOIDANCE AGREEMENT (DTAA) BETWEEN INDIA A ND UNITED KINGDOM, THE LD. COUNSEL SUBMITTED THAT IN VIEW OF ARTICLE 9, IN RESPECT OF INCOME ARISING OUT OF LEASING OF CONTAINERS IS L IABLE FOR TAXATION IN THE CONTRACTING STATE, THEREFORE, THE INCOME OF M/S CRONO CONTAINERS LTD IS LIABLE TO BE TAXED ONLY IN UNITED KINGDOM. HENCE, THE ASSESSEE IS NOT LIABLE TO DEDUCT TAX U/S 195 OF THE ACT. E VEN OTHERWISE, THE LD. COUNSEL SUBMITTED THAT NO SERVICES WERE RENDERED IN INDIA BY THE NON- RESIDENT COMPANY, THEREFORE, THE INCOME OF THE NON- RESIDENT COMPANY IS NOT TAXABLE IN INDIA, HENCE, THE ASSESSEE IS NO T LIABLE TO DEDUCT TAX U/S 195 OF THE ACT. THE CIT(A) BY PLACING RELIANCE ON THE JUDGMENT OF APEX COURT IN GE INDIA TECHNOLOGY CENTRE P. LTD VS CIT, 327 ITR 456, FOUND THAT A PERSON MAKING PAYMENT TO NON-RESIDENT IS NOT OBLIGED TO DEDUCT TAX IF THE SAME IS NOT TAXABLE IN INDIA. TH EREFORE, THE CIT(A) HAS RIGHTLY ALLOWED THE CLAIM OF THE ASSESSEE. ITA NOS. 441/11 ETC. :- 14 -: 17. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE ALSO GONE THROUGH THE DTAA BETWEEN INDIA AND UNITED KINGDOM, A COPY OF WHICH IS FILED BY THE ASSESSEE. ARTICLE 9 OF THE DTAA B ETWEEN INDIA AND UNITED KINGDOM READS AS FOLLOWS: ARTICLE 9 SHIPPING 1. INCOME OF AN ENTERPRISE OF A CONTRACTING STATE FROM THE OPERATION OF SHIPS IN INTERNATIONAL TRAFFIC SHALL BE TAXABLE ONLY IN THAT STATE. 2. THE PROVISIONS OF PARAGRAPH 1 OF THIS ARTICLE S HALL NOT APPLY TO INCOME FROM JOURNEYS BETWEEN PLACES WHICH ARE SITUATED IN A CONTRACTING STATE. 3. FOR THE PURPOSES OF THIS ARTICLE, INCOME FROM T HE OPERATION OF SHIPS INCLUDES INCOME DERIVED FROM THE RENTAL ON A BAREBOAT BASIS OF SHIPS IF SUCH RENTAL INCOME IS INCIDENTAL TO THE INCOME DESCRIBED IN PARAGRAPH 1 OF THIS ARTICLE. 4. NOTWITHSTANDING THE PROVISIONS OF ARTICLE 7 (BU SINESS PROFITS) OF THIS CONVENTION, THE PROVISIONS OF PARA GRAPHS 1 AND 2 OF THIS ARTICLE SHALL LIKEWISE APPLY TO INCOM E OF AN ENTERPRISE OF A CONTRACTING STATE FROM THE USE, MAINTENANCE OR RENTAL OF CONTAINERS (INCLUDING TRAI LERS AND RELATED EQUIPMENT FOR THE TRANSPORT OF CONTAINERS) USED FOR THE TRANSPORT OF GOODS OR MERCHANDISE. 5. THE PROVISIONS OF THIS ARTICLE SHALL APPLY ALSO TO INCOME DERIVED FROM PARTICIPATION IN A POOL, A JOIN T BUSINESS OR AN INTERNATIONAL OPERATING AGENCY. 6. GAINS DERIVED BY AN ENTERPRISE OF A CONTRACTING STATE FROM THE ALIENATION OF SHIPS OR CONTAINERS OWNED AN D OPERATED BY THE ENTERPRISE SHALL BE TAXED ONLY IN T HAT ITA NOS. 441/11 ETC. :- 15 -: STATE IF EITHER THE INCOME FROM THE OPERATION OF TH E ALIENATED SHIPS OR CONTAINERS WAS TAXED ONLY IN THA T STATE, OR THE SHIPS OR CONTAINERS ARE SITUATED OUTS IDE THE OTHER CONTRACTING STATE AT THE TIME OF THE ALIENATI ON. 18. SUB CLAUSE (4) OF ARTICLE 9 CLEARLY SAYS THAT CLAUS E (1) AND (2) OF ARTICLE WILL APPLY TO INCOME OF AN ENTERPRISE OF A CONTRACTING STATE FROM THE USE, MAINTENANCE OR RENTAL OF CONTAINERS. IN THIS CASE, THE NON-RESIDENT COMPANY, M/S CRONO CONTAINERS LTD, UK, ADMITTEDLY, LEASED OUT THE CONTAINER TO THE ASSESSEE AND THE ASSESSEE IS PAYING LEASE RENTALS FOR USE OF THE CONTAINER BELONGED TO M/S CRONO CONTAINERS LTD, UK. THEREFORE, THE LEASE RENTAL OF THE CONTAINER IS SUBJECTED TO TAX IN THE CONTRACTING STATE NAMELY, U K, IN VIEW OF ARTICLE 9 OF THE DTAA. IT IS WELL SETTLED PRINCIPLES OF LA W THAT DTAA WILL PREVAIL OVER THE DOMESTIC LAW NAMELY, INDIAN INCOME-TAX ACT . IT IS OPEN TO THE PARTIES TO TAKE ADVANTAGE OF THE BENEFICIAL PRO VISIONS UNDER THE INCOME-TAX ACT, 1961, IN VIEW OF SEC. 90(2) OF THE ACT. IN VIEW OF THE DTAA, LEASE RENTAL RECEIVED BY M/S CRONO CONTAINERS LTD, FROM THE ASSESSEE IS NOT TAXABLE IN INDIA, THEREFORE, THERE IS NO LIABILITY FOR THE ASSESSEE TO DEDUCT TAX U/S 195 OF THE ACT IN VIEW OF THE JUDGMENT OF THE APEX COURT IN GE INDIA TECHNOLOGY CENTRE P. LT D(SUPRA). THEREFORE, THIS TRIBUNAL DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) AND ACCORDINGLY, THE SAME IS CONFIRMED. ITA NOS. 441/11 ETC. :- 16 -: 19. THE NEXT GROUND OF APPEAL IS WITH REGARD TO DISALLO WANCE DOMESTICATION EXPENSES OF ` 64,66,273/-. 20. SHRI P. RADHAKRISHNAN, LD. DR SUBMITTED THAT THE A SSESSEE CLAIMED DOMESTICATION EXPENSES OF ` 1,22,37,909/-. ACCORDING TO THE LD. DR, THE ASSESSEE IS NOT OWNER OF MARINE CONTAI NERS. ADMITTEDLY, THE MARINE CONTAINERS WERE TAKEN ON LEASE FROM M/S CRONO CONTAINERS LTD,UK, . ACCORDING TO THE LD. DR, THESE EXPENSES ARISE PROVIDED THAT THE CONTAINERS ARE NOT RE-EXPORTED WITHIN THE STIPU LATED TIME. THIS EXPENDITURE, ACCORDING TO THE LD. DR, IS CAPITAL IN NATURE. THE CONTAINERS WILL LOSE ITS COMMERCIAL IMPORTANCE UNLE SS THE ASSESSEE INCURRED EXPENDITURE ON DOMESTICATION. THE DOMESTI CATION EXPENSES ENABLE THE CONTAINERS TO BE FIT FOR RE-EXPORTATION. ACCORDING TO THE LD. DR, AN ASSET WHICH HAS LOST ITS FITNESS HAVING BEEN CONVERTED INTO DURABLE ASSET BY INCURRING DOMESTICATION EXPENSES, THEREFORE, THE DOMESTICATION EXPENDITURE INCURRED BY THE ASSESSEE HAS TO BE TREATED AS CAPITAL IN NATURE. ACCORDING TO THE LD. DR, THE CLAIM OF THE ASSESSEE WAS RIGHTLY DISALLOWED BY THE ASSESSING OF FICER BY TREATING THE SAME AS CAPITAL EXPENDITURE. 21. ON THE CONTRARY, SHRI S. SRIDHAR, LD. COUNSEL FOR T HE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER MADE ADDITION OF ` 64,66,273/- EVEN THOUGH THE ASSESSEE CLAIMED THE DOMESTICATION EXPENSES OF ` ITA NOS. 441/11 ETC. :- 17 -: 1,22,37,909/-. THE ASSESSING OFFICER EXCLUDED THE AMOUNT COVERED BY EXEMPTION CERTIFICATE U/S 197(1) OF THE ACT. ACCOR DING TO THE LD. COUNSEL IT IS NOT IN DISPUTE THAT THE MARINE CONTAI NER DOES NOT BELONG TO THE ASSESSEE. THE ASSESSEE INCURRED EXPENDITU RE TO MAINTAIN THE CONTAINER WHICH WAS TAKEN ON LEASE FROM THE NON-RE SIDENT COMPANY. ACCORDING TO THE LD. COUNSEL, THE DOMESTICATION EXP ENSES INCLUDES CUSTOMER DOMESTICATION, TRANSPORTATION COST, LEASE RENTALS, SURVEY, HANDLING EXPENSES ETC. THE OWNERSHIP OF THE MARINE CONTAINER REMAINS WITH THE NON-RESIDENT COMPANY, THEREFORE, T HE ASSESSEE HAS NOT OBTAINED ANY ENDURING BENEFIT BY INCURRING DOME STICATION EXPENSES. THE LD. COUNSEL FURTHER CLARIFIED THAT N O DEPRECIATION WAS CLAIMED ON THE EXPENDITURE INCURRED BY THE ASSESSE E. THE EXPENSES ARE REGULAR AND RECURRING EXPENSES, THEREFORE, THE CIT(A) HAS RIGHTLY ALLOWED THE SAME AS REVENUE EXPENDITURE. 22. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT THE MARINE CONTAINER DOES NOT BELONG TO THE ASSESS EE. IN FACT, THE CONTAINER WAS TAKEN ON LEASE FROM M/S CRONO CONTAIN ERS LTD, UK. THE NATURE OF EXPENDITURE WHICH WAS CLAIMED AS DOMESTIC ATION EXPENSES ARE CUSTOMER DOMESTICATION, TRANSPORTATION COST, LE ASE RENTALS, SURVEY, HANDLING CHARGES ETC. WHEN THE ASSESSEE HAS TAKEN THE MARINE CONTAINER ON LEASE, THE ASSESSEE IS DUTY BOUND TO MAINTAIN THE ITA NOS. 441/11 ETC. :- 18 -: CONTAINER AND KEEP THE SAME TO BE FIT FOR USE. IT IS ALSO NOT IN DISPUTE THAT THE CONTAINER TAKEN ON LEASE WAS IN TURN USED BY THE ASSESSEE IN ITS LEASING BUSINESS. THEREFORE, AS RIGHTLY FOUND BY THE CIT(A), THE EXPENDITURE INCURRED BY THE ASSESSEE IN THE NATURE OF CUSTOMER DOMESTICATION, TRANSPORTATION COST, LEASE RENTAL, S URVEY ETC. ARE REGULAR AND RECURRING EXPENDITURE THEREFORE, IT IS IN THE R EVENUE FIELD. THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH T HE ORDER OF THE CIT(A). ACCORDINGLY, THE SAME IS CONFIRMED. 23. IN THE RESULT, THE ASSESSEES APPEAL I.T.A.NO.442 /MDS/2011 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES AND REVE NUES APPEAL I.T.A.NO.695/MDS/2011 IS DISMISSED. 24. NOW COMING TO REVENUES APPEAL I.T.A.NO.696/MDS/201 1 FOR ASSESSMENT YEAR 2006-07, THE FIRST GROUND OF APPEAL IS WITH REGARD TO DISALLOWANCE MADE BY THE ASSESSING OFFICER U/S 14A OF THE ACT. 25. WE HEARD LD. DR AND LD. COUNSEL FOR THE ASSESSEE. THE ASSESSMENT YEAR UNDER CONSIDERATION IS 2006-07. RU LE 8D IS NOT APPLICABLE FOR THE YEAR UNDER CONSIDERATION, THEREF ORE, A REASONABLE ESTIMATION HAS TO BE MADE WITH REGARD TO EXPENSES I NCURRED BY THE ASSESSEE FOR EARNING THE EXEMPTED INCOME. THE ASSE SSING OFFICER ESTIMATED THE EXPENDITURE BY APPLYING RULE 8D. HOW EVER, THE CIT(A) FOUND THAT RULE 8D IS APPLICABLE FROM ASSESSMENT YE AR 2008-09, ITA NOS. 441/11 ETC. :- 19 -: THEREFORE, IT IS NOT APPLICABLE FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. ACCORDINGLY, THE CIT(A) RESTRICTED THE DISALLOWANCE TO 2% OF THE GROSS EXEMPTED INCOME. IT IS NOT IN DISP UTE THAT RULE 8D IS NOT APPLICABLE FOR THE YEAR UNDER CONSIDERATION, TH EREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE CIT( A) HAS RIGHTLY RESTRICTED THE DISALLOWANCE TO 2% OF THE EXEMPTED I NCOME. THIS TRIBUNAL DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A). ACCORDINGLY THE SAME IS CONFIRMED. 26. THE NEXT GROUND OF APPEAL IS WITH REGARD TO DISALLO WANCE OF KEY MAN INSURANCE PREMIUM PAID TO THE EXTENT OF ` 10 LAKHS. 27. SHRI P RADHAKRISHNAN, LD. DR SUBMITTED THAT THE AS SESSEE HAS CLAIMED A SUM OF ` 10 LAKHS TOWARDS PREMIUM PAID FOR INSURANCE ON THE LIFE OF THE MANAGING DIRECTOR OF THE COMPANY SHRI BIJOY PAULOSE. THE ASSESSEE CLAIMED THE SAME AS KEY MAN INSURANCE POLICY. THE ASSESSING OFFICER, AFTER VERIFYING THE POLICY FOUND THAT THE BASIC CONDITION FOR ISSUING OF INSURANCE POLICY IS THAT K EYMAN SHOULD NOT HAVE MORE THAN 51% OF THE SHAREHOLDING IN THE COMPA NY. THE FAMILY MEMBERS OF THE KEYMAN ALSO SHOULD NOT HAVE MORE THA N 70% OF THE SHARES. IN THIS CASE, THE MANAGING DIRECTOR WHOSE LIFE WAS INSURED IS HOLDING 79.48% OF THE SHARES IN THE COMPANY. THE M ANAGING DIRECTORS WIFE SMT.SUJATHA PAULOSE IS HOLDING SHAR ES OF 19.50%. ITA NOS. 441/11 ETC. :- 20 -: SINCE THE SHAREHOLDING PATTERN IS MORE THAN 50%, TH E ASSESSEE IS NOT QUALIFIED FOR KEYMAN INSURANCE AS PER THE TERMS OF THE INSURANCE COMPANY. 28. ON THE CONTRARY, SHRI S. SRIDHAR, LD. COUNSEL SUBMI TTED THAT KEYMAN INSURANCE WAS TAKEN ON THE LIFE OF THE MANAG ING DIRECTOR WHOSE SERVICE IS SIGNIFICANT FOR EARNING PROFIT. A CCORDING TO THE LD. COUNSEL, THE PREMATURE DEATH OF THE MANAGING DIRECT OR WOULD ADVERSELY AFFECT THE PROFIT OF THE COMPANY. THE LD . COUNSEL CLARIFIED THAT KEYMAN INSURANCE POLICY IS TO PROTECT THE ASSE SSEE-COMPANY FROM ADVERSE FINANCIAL EFFECTS IN CASE OF UNEXPECTED DEA TH OF THE MANAGING DIRECTOR. EVEN THOUGH AS PER THE TERMS OF THE INSU RANCE COMPANY, THE KEYMAN SHALL NOT HAVE SHARES MORE THAN 51%, THE FAC T IS THAT THE POLICY WAS TAKEN IN FAVOUR OF THE MANAGING DIRECTOR AND THE ASSESSEE- COMPANY HAS ALSO PAID THE PREMIUM. ON A QUERY FROM THE BENCH WHETHER THE ASSESSEE-COMPANY COULD MAKE ANY CLAIM O N THE KEYMAN INSURANCE POLICY IN VIEW OF THE CONDITIONS IMPOSED BY THE INSURANCE COMPANY, THE LD. COUNSEL CLARIFIED THAT THAT MAY NO T BE RELEVANT FACTOR FOR ALLOWING THE CLAIM OF THE ASSESSEE. ONCE THE ASSESSEE PAID THE PREMIUM FOR KEYMAN INSURANCE POLICY, SUCH EXPENDITU RE HAS TO BE ALLOWED AS REVENUE EXPENDITURE. ITA NOS. 441/11 ETC. :- 21 -: 29. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. AD MITTEDLY, THE ASSESSEE HAS PAID ` 10 LAKHS TOWARDS PREMIUM FOR KEYMAN INSURANCE POLICY ON THE LIFE OF THE MANAGING DIRECTOR SHRI BI JOY POULOSE. AS PER THE TERMS AND CONDITIONS OF THE INSURANCE POLICY, T O MAKE A CLAIM, THE PERSON WHO IS INSURED SHOULD NOT HAVE MORE THAN 51% OF THE SHARES IN THE COMPANY. THE FAMILY MEMBER OF THE KEYMAN SHOUL D NOT HAVE MORE THAN 70% SHARES. THEREFORE, APPARENTLY, THE T ERMS AND CONDITIONS OF THE INSURANCE POLICY PROHIBIT THE ASS ESSEE-COMPANY FROM MAKING ANY CLAIM ON THE DEATH OF THE MANAGING DIREC TOR. AS RIGHTLY CONTENDED BY THE LD. COUNSEL, THE KEYMAN INSURANCE POLICY IS ONLY TO PROTECT THE COMPANY FROM ADVERSE FINANCIAL EFFECTS IN CASE OF UNEXPECTED DEATH OF MANAGING DIRECTOR. BUT WHEN TH E ASSESSEE- COMPANY KNOWS VERY WELL THAT NO CLAIM COULD BE MADE ON THE DEATH OF THE MANAGING DIRECTOR, SHRI BIJOY POULOSE SINCE HE WAS HOLDING MORE THAN 51% OF THE SHARES IN THE COMPANY, IT IS NOT KN OWN HOW THE PAYMENT OF ` 10 LAKHS TOWARDS PREMIUM IS GOING TO PROTECT THE ASSESSEE-COMPANY FROM ADVERSE FINANCIAL EFFECTS IN CASE OF UNEXPECTED DEATH OF THE MANAGING DIRECTOR. WHEN THE ASSESSEE- COMPANY IS NOT ELIGIBLE TO MAKE A CLAIM SINCE THE KEYMAN INSURANCE POLICY HOLDER IS HOLDING MORE THAN 51% OF THE SHARES IN THE COMPANY, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT SUCH A EXPENDITURE W AS NOT FOR BUSINESS ITA NOS. 441/11 ETC. :- 22 -: PURPOSES. THE ASSESSEE-COMPANY HAS PAID THE AMOUNT KNOWING FULLY THAT THEY CANNOT CLAIM ANY COMPENSATION ON THE DEAT H OF THE MANAGING DIRECTOR, SHRI BIJOY POULOSE. UNDER THOSE CIRCUMSTANCES, SUCH A CLAIM CANNOT BE ALLOWED WHILE COMPUTING THE TOTAL INCOME. THE CIT(A) HAS PROCEEDED ON A FOOTING THAT THE INSURANC E COMPANY ACCEPTED THE PROPOSAL OF THE ASSESSEE-COMPANY AND I SSUED THE POLICY. HOWEVER, HE FAILED TO CONSIDER THAT THE POLICY WAS ISSUED UNDER CERTAIN RESTRICTION ONE OF WHICH IS THAT THE INSURED PERSON SHOULD NOT HOLD MORE THAN 51% SHARES OF THE COMPANY. SINCE THIS RE STRICTION CLAUSE WAS NOT TAKEN INTO CONSIDERATION BY THE CIT(A), TH IS TRIBUNAL IS UNABLE TO UPHOLD THE ORDER OF THE CIT(A). ACCORDINGLY, TH E ORDER OF THE CIT(A) IS SET ASIDE AND THAT OF THE ASSESSING OFFICER IS R ESTORED. 30. IN THE RESULT, APPEAL OF THE REVENUE I.T.A.NO. 696/MDS/2011 IS PARTLY ALLOWED. 31. NOW COMING TO THE REVENUES APPEAL I.T.A.NO. 1279/MDS/2013 FOR ASSESSMENT YEAR 2008-09, THE ONLY ISSUE ARISES FOR CONSIDERATION IS DISALLOWANCE OF LEASE RENTAL PAID TO M/S CRONO CONTAINERS LTD, UK, WITHOUT DEDUCTION OF TAX AT SOU RCE. 32. THIS ISSUE WAS CONSIDERED BY THIS TRIBUNAL IN EARLI ER PART OF THIS ORDER FOR ASSESSMENT YEAR 2003-04. THIS TRIBU NAL FOUND THAT IN VIEW OF ARTICLE 9 OF THE DTAA BETWEEN THE GOVERNME NT OF INDIA AND ITA NOS. 441/11 ETC. :- 23 -: GOVERNMENT OF UNITED KINGDOM, THE INCOME OF M/S CRO NO CONTAINERS LTD, UK, HAS TO BE TAXED ONLY IN UK, THEREFORE, THE RE IS NO LIABILITY ON THE PART OF THE ASSESSEE TO DEDUCT TAX U/S 195 OF THE ACT. THE ABOVE FINDING IS SQUARELY APPLICABLE FOR THE YEAR UNDER C ONSIDERATION ALSO. IN FACT, THE CIT(A) HAS ALSO FOLLOWED HIS ORDER FOR AS SESSMENT YEAR 2003- 04. FOR THE REASONS STATED BY THIS TRIBUNAL IN EAR LIER PART OF THIS ORDER, THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE I N THE ORDER OF THE CIT(A). ACCORDINGLY, THE SAME IS CONFIRMED. 33. IN THE RESULT, THE REVENUES APPEAL I.T.A.NO. 1279/ MDS/2013 STANDS DISMISSED. 34. TO SUMMARIZE THE RESULT, ASSESSEES APPEALS I.T.A.N O. 441/MDS/2011 FOR ASSESSMENT YEAR 2002-03 IS ALLOWED FOR STATISTICAL PURPOSES AND I.T.A.NO.442/MDS/2011 FOR ASSESSMENT Y EAR 2003-04 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. THE REVEN UES APPEALS I.T.A.NO.557/MDS/2011 FOR ASSESSMENT YEAR 2002-03 I S ALLOWED, I.T.A.NO.695/MDS/2011 FOR ASSESSMENT YEAR 2003-04 I S DISMISSED, I.T.A.NO.696/MDS/2011 FOR ASSESSMENT YEAR 2006-07 I S PARTLY ALLOWED AND I.T.A.NO.1279/MDS/2013 FOR ASSESSMENT YEAR 2008 -09 IS DISMISSED. ITA NOS. 441/11 ETC. :- 24 -: ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH OCTOBER, 2015, AT CHENNAI. SD/- SD/- ( . !' ) (A. MOHAN ALANKAMONY) # / ACCOUNTANT MEMBER ( . . . ) ) (N.R.S. GANESAN) / JUDICIAL MEMBER / CHENNAI ! / DATED: 15 TH OCTOBER, 2015 RD !' # $% &% / COPY TO: 1 . '( / APPELLANT 4. ) / CIT 2. #*'( / RESPONDENT 5. %+, # - / DR 3. ) () / CIT(A) 6. ,/ 0 / GF