NORWEGIAN SHIP & OFFSHORE SERVICES AS, MUMBAI V. DCIT (IT) 3(3)(1), MUMBAI

ITA 1715/MUM/2015

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 1385 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 8 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-12-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: I
• Assessment Year: 2011-2012
• Appeal Filed On: 24-03-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: V SREEKAR
• Keywords: Business income; Transfer pricing; Double taxation relief; Liquidation
• Section: 143(3); 234B; 144C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH I, MUMBAI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ITA NO.1715/MUM/2015(A.Y.2011-12) ITA NO.2136/MUM/2016(A.Y.2012-13) NORWEGIAN SHIP & OFFSHORE SERVICES AS 407/411, OBEROI CHAMBERS II, 645/646 NEW LINK ROAD, ANDHERI (W), MUMBAI 400 053 PAN:AADCN 1870B ...... APPELLAN T VS. DCIT (INTERNATIONAL TAXATION)-3(3)(1), ROOM NO.11, SCINDIA HOUSE, BALLARD ESTATE, MUMBAI 400 038 ..... RESPONDENT APPELLANT BY : NONE RESPONDENT BY : SHRI V. SREEKAR DATE OF HEARING : 07/11/2019 DATE OF PRONOUNCEMENT : 12/1 2 /2019 ORDER PER VIKAS AWASTHY, JM: THESE APPEALS HAVE BEEN FILED BY THE ASSESSEE FOR THE ASSESSMENT YEARS 2011-12 & 2012-13 ASSAILING THE ASSESSMENT OR DERS PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) R.W.S. 144C (13) OF THE INCOME TAX ACT,1961 (IN SHORT THE ACT) FOR THE RESPECTIVE AS SESSMENT YEARS. SINCE THE ISSUES INVOLVED IN THESE APPEALS ARE IDENTICAL, THESE APPEALS ARE TAKEN UP TOGETHER FOR ADJUDICATION AND ARE DISPOSED OF BY THIS COMPOSITE ORDER. 2 ITA NO.1715/MUM/2015(A.Y.2011-12) ITA NO.2136/MUM/2016(A.Y.2012-13) 2. A PERUSAL OF THE APPEAL FILES SHOWS THAT NO ONE IS APPEARING TO REPRESENT THE ASSESSEE SINCE 18/07/2018. AS IS EVI DENT FROM THE ACKNOWLEDGEMENT AVAILABLE ON THE APPEAL FILE, NOTIC E OF HEARING OF THE APPEALS WERE SERVED TO THE ASSESSEE ON SEVERAL OCCA SIONS. FROM THE RECORDS IT APPEAR THAT DURING PENDENCY OF THESE APP EALS, THE ASSESSEE COMPANY HAS GONE UNDER LIQUIDATION. ON 22/7/201 9 THE NOTICE WAS ISSUED TO THE LIQUIDATION BOARD THROUGH THE OFFICE OF DEPARTMENTAL REPRESENTATIVE FOR 27/08/2019. AS PER THE ACKNOWLE DGMENT AVAILABLE ON RECORD THE NOTICE WAS SERVED ON 01/08/2019. SINCE, THE BENCH DID NOT FUNCTION ON 27/08/2019, THE APPEALS WERE ADJOURNED TO 09/10/2019. FRESH NOTICE TO LIQUIDATION BOARD WAS ISSUED THROUG H OFFICE OF DEPARTMENTAL REPRESENTATIVE. DESPITE SERVICE OF NOTICE, NONE APPEARED ON BEHALF OF THE ASSESSEE. IT SEEMS THAT THE ASSES SEE/LIQUIDATION BOARD IS NOT KEEN TO PURSUE THE PRESENT APPEALS. UNDER THES E CIRCUMSTANCES WE PROCEED TO DECIDE THE APPEALS OF THE ASSESSEE WITH THE ASSISTANCE OF LD.DEPARTMENTAL REPRESENTATIVE AND THE MATERIAL AV AILABLE ON RECORD. ITA NO.1715/MUM/2015(A.Y.2011-12) 3. SHRI V. SREEKAR REPRESENTING THE DEPARTMENT SUBM ITTED THAT THE ASSESSEE IS A FOREIGN COMPANY INCORPORATED IN NORWA Y. THE ASSESSEE COMPANY ENTERED INTO AN AGREEMENT WITH AKER BORGESR AD OPERATIONS(ABO), NORWAY TO PROVIDE MARITIME AND TECHNICAL STAFF FOR THE OPERATION OF FLOATING PRODUCTION SHIPS(FPSO) D HIRUBHAI 1 GIVEN TO RELIANCE INDUSTRIES LIMITED(RIL) BY AKER FLOATING PRODUCTION (NORWAY) 3 ITA NO.1715/MUM/2015(A.Y.2011-12) ITA NO.2136/MUM/2016(A.Y.2012-13) (AFO). RIL IS OPERATING THE VESSEL FOR EXPLORATION OF OIL ON INDIA WATERS. THE ASSESSEE PROVIDED STAFF OF QUALIFIED OFFICERS AND CREW FOR THE OPERATION OF FPSO DHIRUBHAI 1 IN INDIA FOR EXPLOR ATION OF OIL IN INDIAN WATERS. ABO PAID FIXED MONTHLY REMUNERATION FOR PROVIDING SERVICES AS MANAGEMENT FEE TO THE ASSESSEE. THE ISSUE IN THE PRESENT APPEAL IS WHETHER THE AMOUNT RECEIVED BY THE ASSESSEE AS COMP ENSATION FOR PROVIDING CREW FOR THE SHIP CONSTITUTES FTS. THE DRP AND ASSESSING OFFICER HAS HELD SUCH PAYMENTS AS FEE FOR TECHNIC AL SERVICES UNDER ARTICLE-13 OF THE INDO-NORWAY DOUBLE TAXATION AVOID ANCE AGREEMENT(DTAA). THE LD.DEPARTMENTAL REPRESENTATIVE CONTENDED THAT THE SECOND ISSUE IN APPEAL IS WITH RESPECT TO PERMANENT ESTAB LISHMENT(PE) OF THE FOREIGN COMPANY IN INDIA. THE DRP AND THE ASSESSIN G OFFICER HAVE HELD THAT THE ASSESSEE HAS PE IN INDIA AS PER PROVISIONS OF ARTICLE-5 OF THE INDO- NORWAY DTAA AND, HENCE, THE INCOME OF THE ASSESSEE IS EXIGIBLE TO TAX AS BUSINESS INCOME UNDER ARTICLE-7 OF INDO-NORWAY DT AA. THE OTHER ISSUES THAT HAVE EMERGED IN THE APPEAL IS APPLICABILITY OF TRANSFER PRICING (TP) PROVISIONS AND CHARGING OF INTEREST UNDER SECTION 234B OF THE ACT. THE LD.DEPARTMENTAL REPRESENTATIV E VEHEMENTLY SUPPORTED THE FINDINGS OF DRP AND ASSESSING OFFICER AND PRAYED FOR DISMISSING THE APPEALS OF THE ASSESSEE. 4. WE HAVE HEARD THE SUBMISSIONS MADE BY LD.DEPARTM ENTAL REPRESENTATIVE AND HAVE PERUSED THE MATERIAL AVAILA BLE ON RECORD. THE ASSESSEE IN APPEAL HAS PRIMARILY RAISED THREE ISSUE S CHALLENGING THE 4 ITA NO.1715/MUM/2015(A.Y.2011-12) ITA NO.2136/MUM/2016(A.Y.2012-13) ADDITIONS MADE IN ASSESSMENT ORDER VIZ; (I) PAYMENT S RECEIVED BY ASSESSEE FOR SUPPLY OF CREW HELD AS FEE FOR TECHNICAL SER VICES; (II) THE ASSESSEE IS HAVING PE IN INDIA, CONSEQUENTLY, THE INCOME OF THE ASSESSEE IS EXIGIBLE TO TAX AS BUSINESS INCOMEUNDER ARTICLE-7 OF INDO-NOR WAY DTAA; AND (III)CHARGING OF INTEREST UNDER SECTION 234B OF THE ACT. 5. NO MATERIAL HAS BEEN PLACED ON RECORD BEFORE US TO SHOW THAT THE FINDINGS OF ASSESSING OFFICER/DRP ARE PERVERSE. IN THE ABSENCE OF ANY CONTRARY MATERIAL, WE DO NOT FIND ANY REASON TO INT ERFERE WITH THE IMPUGNED ASSESSMENT ORDER. ACCORDINGLY, THE SAME IS UPHELD. 6. IN THE RESULT, APPEALS OF THE ASSESSEE IS DISMI SSED. ITA NO.2136/MUM/2016(A.Y.2012-13) 7. IN THE APPEAL FOR ASSESSMENT YEAR 2012-13 THE GR OUNDS RAISED BY THE ASSESSEE ARE SIMILAR. THEREFORE, THE FINDINGS GIVEN BY US WHILE DECIDING THE APPEAL OF ASSESSEE FOR ASSESSMENT YEAR 2011-12 WOULD MUTATIS MUTANDIS APPLY TO ASSESSMENT YEAR 2012-13, AS WELL. 8. THE ASSESSEE IN ASSESSMENT YEAR 2012-13 HAS RAIS ED ANOTHER GROUND ASSAILING LEVY OF PENALTY UNDER SECTION 271 AND 271 BA OF THE ACT. THIS GROUND OF APPEAL BY THE ASSESSEE IS PREMATURE AT T HIS STAGE. ACCORDINGLY, THE SAME IS DISMISSED, AS SUCH. 5 ITA NO.1715/MUM/2015(A.Y.2011-12) ITA NO.2136/MUM/2016(A.Y.2012-13) 9. IN THE RESULT, APPEAL OF THE ASSESSEE FOR ASSESS MENT YEAR 2012-13 IS DISMISSED. 10. TO SUM UP BOTH THE APPEALS OF ASSESSEE ARE DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THURSDAY, T HE 12TH DAY OF DECEMBER, 2019. SD/- SD/- (G. MANJUNATHA) (VIKAS AWASTHY) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 12/12/2019 VM , SR. PS(O/S) 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