DCIT -(IT)-2(2)(2), MUMBAI V. HAPAG LLOYD AG, MUMBAI

ITA 1624/MUM/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2434 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-07-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2006-2007
• Appeal Filed On: 19-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JASBIR S CHOUHAN
• Keywords: Double taxation relief

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH I, MUMBAI BEFORE SHRI G.S.PANNU, ACCOUNTANT MEMBER AND SHRI AMARJIT SINGH, JUDICIAL MEMBER. ITA NO. 1624/MUM/2015, A.Y. 2006-07 ITA NO. 1625/MUM/2015, A.Y. 2008-09 ITA NO. 1626/MUM/2015, A.Y. 2009-10 ITA NO. 1627/MUM/2015, A.Y. 2010-11 ITA NO. 1628/MUM/2015, A.Y. 2011-12 DY. COMMISSIONER OF INCOME-TAX(IT)-2(2)(2), ROOM NO.136, 1 ST FLOOR, SCINDIA HOUSE, N.M.ROAD, BALLARD ESTATE, MUMBAI 400 038 ... APPELLANT VS. M/S. HAPAG LLOYD AG, C/O. HAPAG-LLOYD INDIA PVT. LTD. 1501, ONE INDIABULLS CENTRE, TOWER 2, WING B, 15 TH FLOOR, JUPITER MILLS, SENAPATI BAPAT ROAD, ELPHINSTONE,MUMBAI 400013 .... RESPONDENT APPELLANT BY : SHRI JASBIR S. CHOUHAN RESPONDENT BY : SHRI NISHANT THAKKAR DATE OF HEARING : 19/07/2016 DATE OF PRONOUNCEMENT : 22/07/2016 ORDER PER G.S.PANNU,A.M: THE CAPTIONED FIVE APPEALS BY THE REVENUE ARE DI RECTED AGAINST A COMMON ORDER OF THE DRP-1 PERTAINING TO ASSESSMEN T YEARS 2006-07, 2008-09, 2009-10, 2010-11 AND 2011-12, IN TERMS OF WHICH SEPARATE ORDERS HAVE BEEN PASSED BY THE ASSESSING OFFICER U NDER SECTION 143(3)R.W.S 144C(13) R.W.S. 147 OF THE INCOME TAX ACT, 1961 (IN SHORT 2 ITA NO. 1624 TO 1628/MUM/2015 THE ACT) ALL DATED 19/01/2015. SINCE THE ISSUE INVOLVED IN THESE APPEALS IS IDENTICAL, THEREFORE, THEY HAVE BEEN H EARD TOGETHER AND A CONSOLIDATED ORDER IS BEING PASSED FOR THE SAKE OF CONVENIENCE AND BREVITY. 2. SINCE THE ISSUE INVOLVED IN ALL THE APPEALS IS I DENTICAL, WE MAY TAKE UP FOR DISCUSSION THE FACTS RELATING TO THE AS SESSMENT YEAR 2006-07, WHERE VIDE ITA NO.1624/MUM/2015 THE ONLY GROUND O F APPEAL RAISED BY THE REVENUE READS AS UNDER:- 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. DRP ERRED IN ALLOWING THE APPLICABI LITY OF BENEFITS OF ARTICLE 8 OF DTAA BETWEEN INDIA AND GERMANY ON FREI GHT INCOME OF RS.70,35,73,353/- WITHOUT APPRECIATING THE FACT THA T THE REVENUE HAD FILED APPEAL IN HIGH COURT AGAINST THE ORDER OF TRIBUNALS ORDER IN THE CASE OF THE ASSESSEE FOR AY 2007-08 (I ITA NO.8854/MUM/2010). 3. BRIEFLY PUT, THE RELEVANT FACTS ARE THAT THE RES PONDENT ASSESSEE IS A FOREIGN SHIPPING COMPANY WHICH IS A TAX RESIDENT OF GERMANY. IT IS IN THE BUSINESS OF OPERATION OF SHIPS AND IT TRANSPORT S CARGO FROM/TO PORTS IN INDIA. FOR THE PURPOSES OF CARGO TRANSPORTATION IT USES OWN/CHARTERED/POOLED VESSELS INCLUDING SLOT ARRANGE MENTS WITH OTHER VESSELS. THE FACTUAL MATRIX REVEALS THAT SOMETIME S THE VESSELS OF THE ASSESSEE- COMPANY OR ITS CONSORTIUM PARTNERS DO NOT COME TO THE INDIAN PORTS. IN SUCH SITUATIONS, ASSESSEE COMPA NY ENGAGES FEEDER VESSELS TO TRANSPORT CARGO FROM THE ORIGINATING POR T TO THE HUB PORT (I.E. THE INTERMEDIARY PORT WHERE VESSELS OWNED/CHARTERED /POOLED BY ASSESSEE- COMPANY ARE ANCHORED). FROM THE HUB TO T HE DESTINATION PORT, THE CARGO IS TRANSPORTED ON VESSELS OWNED/CHA RTERED/POOLED BY THE ASSESSEE- COMPANY. IN THE COURSE OF SUCH BUSIN ESS OPERATIONS, 3 ITA NO. 1624 TO 1628/MUM/2015 ASSESSEE- COMPANY TRANSPORTS CARGO ON SLOT ARRAN GEMENTS FROM ORIGIN PORT TO THE DESTINATION PORT. 3.1 IN THE RETURN OF INCOME FILED FOR ASSESSMENT YE AR 2006-07, THE ASSESSEE-COMPANY CLAIMED THAT THE ENTIRE INCOME IN INDIA COMPRISED OF PROFITS DERIVED FROM OPERATION OF SHIPS IN INTERNA TIONAL TRAFFIC AND SUCH INCOME WAS NOT TAXABLE IN INDIA IN INDIA IN TERMS O F ARTICLE-8 OF THE DOUBLE TAXATION AVOIDANCE AGREEMENT (DTAA) BETWEEN INDIA AND GERMANY. IT WAS FURTHER ASSERTED THAT SUCH INCOME WAS TAXABLE IN GERMANY ONLY I.E. WHERE THE PLACE OF EFFECTIVE MANA GEMENT IS SITUATED. IN THIS MANNER, THE TOTAL INCOME WAS RETURNED AT N IL. THE CLAIM OF THE ASSESSING OFFICER WAS THAT THOUGH IN PRINCIPLE ASSE SSEE WAS ELIGIBLE FOR THE BENEFITS UNDER ARTICLE-8 OF THE INDIA-GERMANY, DTAA, BUT THE PROFITS RELATING TO THE GOODS TRANSPORTED THROUGH F EEDER VESSELS WOULD NOT QUALIFY FOR THE BENEFITS OF ARTICLE -8 OF THE T REATY. THE DRP HAS OBSERVED THAT IN A SIMILAR SITUATION IN ASSESSMENT YEAR 2007-08, THE TRIBUNAL IN ASSESSEES OWN CASE VIDE ITA NO.8854/ MUM/2010 DATED 14/08/2013, FOLLOWING THE JUDGMENT OF THE HON'BLE B OMBAY HIGH COURT IN THE CASE OF DIT (IT) VS. BALAJI SHIPPING U.K. L TD., 77 DTR 361 (BOM) HELD THAT THE BENEFITS OF THE DTAA BETWEEN INDIA AN D GERMANY WOULD BE AVAILABLE TO THE ASSESSEE EVEN IN RESPECT OF REV ENUES EARNED FROM FEEDER VESSELS OBTAINED BY THE ASSESSEE BY SLOT HIR E ARRANGEMENTS. IN VIEW OF THE AFORESAID DECISION OF THE TRIBUNAL DATE D 14/08/2013, THE DRP DIRECTED THE ASSESSING OFFICER TO APPLY THE DEC ISION OF THE TRIBUNAL IN THE CAPTIONED ASSESSMENT YEARS AS WELL WHILE COM PLETING THE FINAL ASSESSMENT. THE REVENUE HAS CHALLENGED THE AFORESA ID DIRECTIONS OF THE DRP IN THE PRESENT APPEAL. 4 ITA NO. 1624 TO 1628/MUM/2015 4. OSTENSIBLY, THE DIRECTION OF THE DRP, WHICH HAS BEEN SOUGHT TO BE CHALLENGED BY THE REVENUE BEFORE US, ARE BASED ON T HE ORDER OF THE TRIBUNAL DATED 14/08/2013(SUPRA) IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2007-08, WHICH CONTINUES TO SUBSIST . AS A CONSEQUENCE, WE FIND NO REASON TO INTERFERE IN THE DIRECTIONS MADE BY THE DRP. THE ONLY PLEA OF THE REVENUE, AS MANIFEST ED IN THE ABOVE STATED GROUND OF APPEAL, IS THAT AN APPEAL HAS BEEN PREFERRED IN THE HIGH COURT AGAINST THE ORDER OF THE TRIBUNAL FOR AS SESSMENT YEAR 2007- 08. SO HOWEVER, MERE FILING OF AN APPEAL DOES NOT DISTRACT FROM THE FACT THAT THE ORDER OF THE TRIBUNAL DATED 14/08/2013 (SU PRA) CONTINUES TO HOLD THE FIELD INASMUCH AS THE SAME HAS NOT BEEN A LTERED BY ANY HIGHER AUTHORITY. AS A CONSEQUENCE, WE FIND NO MERIT IN T HE APPEAL OF THE REVENUE, WHICH IS HEREBY DISMISSED. 5. SINCE THE FACTS AND CIRCUMSTANCES IN THE APPEALS OF THE REVENUE FOR ASSESSMENT YEARS 2008-09, 2009-10, 2010-11 AND 2011-12 ARE PARI- MATERIA TO THOSE CONSIDERED BY US IN THE APPEAL FOR ASSE SSMENT YEAR 2006-07, OUR DECISION IN THE REVENUES APPEAL FOR ASSESSMENT YEAR 2006-07 SHALL APPLY MUTATIS MUTANDIS IN OTHER CAPTIONED APPEALS ASSESSMENT YEARS ALSO. 6. RESULTANTLY, ALL THE CAPTIONED APPEALS OF THE RE VENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22/07/2016 SD/- SD/- (AMARJIT SINGH) (G.S. PANNU) JUDICIAL MEMBER ACCOU NTANT MEMBER MUMBAI, DATED 22 /07/2016 5 ITA NO. 1624 TO 1628/MUM/2015 VM , SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT , 2. THE RESPONDENT. 3. THE CIT(A)- 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI