DCIT (IT) 2(2)(2), MUMBAI V. HOYER GLOBAL TRANSPORT B.V., MUMBAI

ITA 1543/MUM/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0846 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-01-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 18-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M V RAJGURU LD
• Keywords: Double taxation relief; Permanent establishment
• Section: 143(3)

Judgement Text

ITA NO.1543/MUM/2016 HOYER GLOBAL TRANSPORT B.V. ASSESSMENT YEAR 2011-12 IN THE INCOME TAX APPELLATE TRIBUNAL L BENCH, MUMBAI . , , BEFORE SHRI C.N. PRASAD, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.1543/MUM/2016 ( / ASSESSMENT YEAR: 2011-12) DEPUTY COMMISSIONER OF INCOME TAX (IT) - 2(2)(2) ROOM NO.1729,17 TH FLOOR AIR INDIA BUILDING, NARIMAN POINT MUMBAI -400 021 / VS. HOYER GLOBAL TRANSPORT B.V. (FORMERLY HOYER ODFJELL BV) C/O GAC SHIPPING (INDIA) PVT.LTD. BADHEKA CHAMBERS, 31,MANOHARDAS STREET FORT, MUMBAI -400 001 !' ./ ./ PAN/GIR NO.AAACH-9241-F ( '$ /APPELLANT ) : ( %'$ / RESPONDENT ) REVENUE BY : M.V.RAJGURU, LD. DR ASSES SEE BY : KETAN VED, LD.AR / DATE OF HEARING : 17/01/2018 / DATE OF PRONOUNCEMENT : 24 /01/2018 /O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY REVENUE FOR ASSESSMENT Y EAR [AY] 2011-12 CONTEST THE ORDER OF THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-56 [CIT(A)], MUMBAI, APPEAL NO.CIT(A)-56/DDIT(IT)3(1)/ 14-15/283-H DATED 18/12/2015 BY RAISING THE FOLLOWING EFFECTIVE GROUN DS OF APPEAL: - 2 ITA NO.1543/MUM/2016 HOYER GLOBAL TRANSPORT B.V. ASSESSMENT YEAR 2011-12 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS JUSTIFIED IN DIRECTING THE AO TO DELETE ADDITION OF RS.1,66,45,025/-, WITHOUT APPRECIATING THE FACTS OF THE CASE THAT SAMSARA SHI PPING PVT. LTD ACTS AS A DEPENDENT AGENT AND DOES ALL THE WORKS AND ACTIVITI ES ON BEHALF OF THE ASSESSE COMPANY, AND THEREFORE CONSTITUTED THE PE OF THE AS SESSE IN INDIA. 2. THE APPELLANT PRAYS THAT THE ORDER OF THE LD. C IT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED . 3. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER AN Y GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. THE ASSESSMENT FOR IMPUGNED AY WAS FRAMED BY LD. DEPUTY DIRECTOR OF INCOME-TAX (INTERNATIONAL TAXATION)-3(1) ON 25/04/2 014 U/S 144C(3) READ WITH SECTION 143(3) OF THE INCOME TAX ACT,1961. 2.1 BRIEFLY STATED THE ASSESSEE BEING NON-RESIDENT CORPORATE ASSESSEE ENGAGED IN THE BUSINESS OF TRANSPORTATION OF CONTAINERIZED CARGO WAS ASSESSED FOR IMPUGNED AY ON ESTIMATED BASIS @7.5% O N TOTAL RECEIPTS WHICH CAME TO RS.1,66,45,025/- AS AGAINST NIL RETURN FILED BY THE ASSESSEE ON 27/09/2011. THE ASSESSE COMPANY WAS INCORPORATED IN NETHERLANDS AND EARNED INCOME OF RS.22.19 CRORES FROM ITS BUSINESS OPERATIONS OF TRANSPORTATION OF CONTAINERIZED CARGO AND CLAIMED E XEMPTION IN TERMS OF ARTICLE-5 OF DOUBLE TAXATION AVOIDANCE AGREEMENT [DTAA] WITH NETHERLANDS IN VIEW OF THE FACT THAT THE ASSESSEE D ID NOT HAVE ANY PERMANENT ESTABLISHMENT [PE] IN INDIA. HOWEVER, LD. AO SHOW-CAUSED ASSESSEE AS TO WHY NOT THE AGENT OF THE ASSESSEE NA MELY SAMSARA SHIPPING PRIVATE LIMITED [SSPL] BE TREATED AS THE ASSESSEES AGENCY PE IN INDIA AS DONE IN EARLIER ASSESSMENT YEARS. THE ASSE SSEE CONTENDED THAT THE AGENT WAS NOT DEPENDENT AGENT BUT UNRELATED, IN DEPENDENT ENTITY WHO PROVIDED SIMILAR SERVICES TO SEVERAL PRINCIPLES BES IDES THE ASSESSEE AND 3 ITA NO.1543/MUM/2016 HOYER GLOBAL TRANSPORT B.V. ASSESSMENT YEAR 2011-12 HENCE, DID NOT CONSTITUTE ASSESSEES AGENCY PE IN I NDIA. IT WAS ALSO POINTED OUT THAT THE ASSESSEE MERELY CONTRIBUTED ONLY 7.87% TOWARDS INCOME OF THE AGENT. HOWEVER, NOT CONVINCED, LD. AO ESTIMATED THE INCOME @7.5% ON ASSESSEES TOTAL RECEIPTS AND COMPLETED THE ASSESSM ENT. 2.2 AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WIT H SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 18/12/2015 WHERE T HE LD. CIT(A), PLACING RELIANCE ON THE STAND OF ITS PREDECESSORS I N ASSESSEES OWN CASE FOR EARLIER YEARS, CONCURRED WITH THE STAND OF ASSE SSEE AND CONCLUDED THE MATTER IN THE FOLLOWING MANNER:- 4.5 THUS, THE PERUSAL OF THE APPELLANTS SUBMISSI ON CLEARLY ESTABLISHES THE AGENT IN INDIA I.E. SAMSARA SHIPPING PVT.LTD. IS NOWHERE DEP ENDENT AGENT OF THE APPELLANT AND HENCE DOES NOT QUALIFY AS PE AS ENVISAGED IN ARTICL E 5(5) AND 5(6) OF THE INDIA- NETHERLANDS DTAA. IN THE APPELLANTS CASE, IN A.Y.2 008-09 MY PREDECESSOR CIT(A) VIDE HIS ORDERS BEARING NO. CIT(A)-10/ADIT(IT)-3(1) /IT-437/10-11(2008-09) DATED 13.07.2011 HAS HELD THAT THE APPELLANTS AGENT IE., SAMSARA SHIPPING PVT. LTD. WAS AN AGENT OF INDEPENDENT STATUS THEREBY ITSELF DISQUALI FYING IT FROM TREATMENT AS A PE OF THE APPELLANT IN INDIA. IN THE SAID ORDER, THE CIT(A) W HILE RULING THAT SSPL DOES NOT CONSTITUTE AN AGENCY PE OF THE APPELLANT IN INDIA H ELD AS FOLLOW: IN THE CASE OF THE APPELLANT, IT HAS BEEN DEMONST RATED BY THE AR THAT ONLY 3.11% OF THE RECEIPTS OF THE AGENT ARE DERIVED FROM THE APPELLANT. AS WAS POINTED OUT BY THE AR REPEATEDLY, A 3% SHARE IN GROSS REVEN UES DOES NOT AT ALL INDICATE THAT THE AGENT WAS WHOLLY OR ALMOST WHOLLY DEVOTED WITH REGARD TO THE APPELLANTS BUSINESS. LASTLY, AS POINTED OUT BY THE AR, THE TRA NSACTIONS BETWEEN THE AGENT AND THE PRINCIPAL WERE AT ARMS LENGTH. I FIND NOTH ING IN THE FACTS PRESENTED BEFORE ME AS ALSO THE ASSESSMENT ORDER, WHICH WOULD INDICA TE THAT THE DEALINGS BETWEEN THESE TWO PARTIES WERE NOT AT ARMS LENGTH. I ALSO FIND THAT THIS GROUND HAS BEEN SIMILARLY HEL D IN FAVOR OF THE APPLICANT BY ONE OF MY LD. PREDECESSORS WHILE DEALING WITH THE APPEA L FOR AY 2004-05 IN HIS ORDER NO. CIT(A)-33/INTL. TAX/IT/106-H/06-07, IN THE CASE OF THIS VERY SAME APPELLANT. HENCE, I HOLD THAT M/S SAMSARA SHIPPING PVT. LTD WA S AN AGENT OF INDEPENDENT STATUS, THEREBY DISQUALIFYING IT FROM TREATMENT AS PE OF THE APPELLANT IN INDIA IN SO FAR AS THE PROVISIONS OF ARTICLE 5(5) OF THE DTAA ARE CONCERNED, THE SAME ARE SEEN TO BE APPLICABLE IN THE CASE OF A DEPENDEN T AGENT. AS HAS ALREADY BEEN HELD THAT THIS IS A CASE OF AN INDEPENDENT AGENT, T HE PROVISIONS OF ARTICLE 5(5) ARE HENCE SEEN NOT TO COME INTO PLAY. 4.6 SIMILARLY, IN THE APPEALS FOR AY 2009-10 AND AY 2010-11 IN THE APPELLANTS OWN CASE, VID ORDERS DATED 27.08.2013, MY PREDECESSOR C IT(A) HAS HELD THAT THE APPELLANTS AGENT IN INDIA WAS AN AGENT OF INDEPENDENT STATUS T HEREBY ITSELF DISQUALIFYING IT FROM TREATMENT AS A PE OF THE APPELLANT IN INDIA. 4 ITA NO.1543/MUM/2016 HOYER GLOBAL TRANSPORT B.V. ASSESSMENT YEAR 2011-12 4.7 THE SIMILAR SET OF FACTS EVEN PREVAIL IN THE PR ESENT A.Y. THEREFORE, I AM OF THE CONSIDERED VIEW THAT SAMSARA SHIPPING PVT.LTD. WAS AN AGENT OF INDEPENDENT STATUS AND IS DISQUALIFIED FROM TREATMENT AS PE OF THE APP ELLANT IN INDIA. THE APPELLANT DOES NOT HAVE PE IN INDIA, THEREFORE, THE INCOME ARISING TO THE APPELLANT BEING NON-RESIDENT WILL NOT BE TAXABLE IN TERMS OF ARTICLE 7 OF INDIA- NETHERLANDS TAX TREATY R.W. ARTICLE 5(5) AND ARTICLE 5(6) OF THE SAID DTAA IN VIEW SECTION 9 0(2) OF THE INCOME TAX ACT,1961. FURTHER, AS PER ARTICLE 5(6) OF THE DTAA, INDEPENDE NT STATUS OF THE AGENT IS TO BE IGNORED IF THE TRANSACTION BETWEEN THE AGENT AND TH E PRINCIPLE IS NOT AT ARMS LENGTH, WHICH IS NOT THE CASE IN THE PRESENT AY. THUS, THE MAIN CRITERIA FOR INVOKING ARTICLE 5(6) OF THE DTAA IS NOT SATISFIED. HENCE, THE PROVISIONS OF ARTICLE 5(6) OF THE DTAA SHALL NOT APPLY IN THE PRESENT CASE OF THE APPELLANT. IN VIEW OF THE AFORESTATED FACTS OF THE APPELLANTS CASE AND TAKING NOTE OF THE DECISIONS A S ENUMERATED IN THE APPELLANTS SUBMISSION AND TAKING NOTE OF THE FACTS AVAILABLE O N RECORD, I CONSIDER IT PROPER AND APPROPRIATE TO HOLD THAT THE APPELLANT WAS NOT HAVI NG ANY PE INCLUDING AGENCY PE IN INDIA. ACCORDINGLY, NO PART OF THE APPELLANTS INCO ME IS TAXABLE IN INDIA. HENCE, THE ACTION OF THE A.O OF TAXING THE RECEIPTS PER ORDER DATED 25.04.2014 WAS NOT JUSTIFIED AND CORRECT. ACCORDINGLY, THE ADDITION SO MADE BY THE A .O IS DELETED AND THESE GROUNDS OF APPEAL ARE ALLOWED. AGGRIEVED, THE REVENUE IS IN FURTHER APPEAL BEFORE US. 3. THE LD. COUNSEL FOR ASSESSEE [AR], AT THE OUTSET , DREW OUR ATTENTION TO FACT THE MATTER FOR AY 2002-03, 2009-10 & 2010-1 1 REACHED UP-TO LEVEL OF THIS TRIBUNAL VIDE ITA NOS. 7555-57/MUM/2013 DATED 21/09/2016 WHERE THE MATTER HAS BEEN DECIDED BY THE TRIBUNAL IN ASSESSEE S FAVOUR. THE COPY OF THE ORDER HAS BEEN PLACED BEFORE US. THE LD. DEPART MENTAL REPRESENTATIVE FAIRLY CONCEDED THE SAME. 4. UPON PERUSAL OF THE CITED ORDER OF TRIBUNAL IN A SSESSEES OWN CASE FOR THOSE YEARS, WE FIND THAT THE TRIBUNAL, ON SIMILAR FACTS, AT PARAGRAPH NO.14 HAS DECIDED THE MATTER IN ASSESSEES FAVOR BY MAKIN G FOLLOWING OBSERVATIONS:- 14. THEREFORE, UNDER ARTICLE 5(6) OF THE DTAA, PATV OLK CANNOT CONSTITUTE AN AGENCY PE OF DEPENDENT STATUS OF THE ASSESSEE IN INDIA; RA THER PATVOLK IS INDEPENDENT AGENT OF THE ASSESSEE IN INDIA. WE UPHOLD THE ORDER S OF THE CIT(A) AND THESE APPEALS OF THE REVENUE ARE DISMISSED. 5 ITA NO.1543/MUM/2016 HOYER GLOBAL TRANSPORT B.V. ASSESSMENT YEAR 2011-12 THE REVENUE COULD NOT CONTROVERT THE FACTUAL MATRIX IN ANY MANNER AND COULD NOT BRING ON RECORD ANY CONTRARY JUDGMENT. IN VIEW OF THE SAME, RESPECTFULLY FOLLOWING THE EARLIER ORDER, WE DISMIS S REVENUES APPEAL AND CONFIRM THE STAND OF LD. CIT(A). 5. RESULTANTLY, THE REVENUES APPEAL STANDS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH JANUARY, 2018. SD/- SD/- (C. N. PRASAD) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED :24 . 01.2018 SR.PS:- THIRUMALESH ! / COPY OF THE ORDER FORWARDED TO : 1. '$ / THE APPELLANT 2. %'$ / THE RESPONDENT 3. - ( ) / THE CIT(A) 4. - / CIT CONCERNED 5. '/ , / , / DR, ITAT, MUMBAI 6. 01 / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI