ACIT, CHENNAI V. M/s. Buhari Holding P. Ltd., CHENNAI

ITA 2147/CHNY/2013

• Counselvise Citation: 214721714 RSA 2013
• Duration Of Justice: 1 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 30-01-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 11-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N MADHAVAN
• Assessee Lawyers: N C PRABHAKAR
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI . , . . , ! ' [BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMB ER AND SHRI S. S. GODARA, JUDICIAL MEMBER] ./ I.T.A.NOS.2145 TO 2148/MDS/2013 / ASSESSMENT YEARS : 2006-07 TO 2008-09 & 2010-11 THE ASSTT. COMMISSIONER OF INCOME-TAX COMPANY CIRCLE I(2) CHENNAI VS. M/S BUHARI HOLDING P. LTD BUHARIA TOWERS, 7 TH FLOOR NO.4, MOORES ROAD CHENNAI 600 006 [PAN AAACB 2679 M] ( #$ / APPELLANT) ( %&#$ /RESPONDENT) / APPELLANT BY : SHRI N. MADHAVAN, JCIT /RESPONDENT BY : SHRI N.C. PRABHAKAR, ADVOCATE / DATE OF HEARING : 30-01-2014 ! / DATE OF PRONOUNCEMENT : 31-01-2014 ' / O R D E R PER S.S.GODARA, JUDICIAL MEMBER THESE APPEALS FILED BY THE REVENUE FOR ASSESSMENT YEARS 2006-07, 2007-08, 2008-09 AND 2010-11, ARE DIRECTED AGAINST A COMMON ORDER OF THE COMMISSIONER OF INCOME-TAX (APP EALS)-I I.T.A.NOS. 2145 TO 2148/13 :- 2 -: CHENNAI, DATED 25.9.2013, PASSED IN APPEAL NOS.701/ 08-09/A.I, 204/12-13/A.I, 900/10-11/A.I AND 205/12/13/A.I, IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961 (IN SHO RT THE ACT). FOR ASSESSMENT YEAR 2007-08 THE PROCEEDINGS ARE U/S 14 3(3) R.W.S 147 OF THE ACT. 2. THE FOLLOWING COMMON GROUNDS HAVE BEEN RAISED IN AL L CASES: 2.1. THE CIT(A) ERRED IN HOLDING THAT THE ASSESSEE COMPANY IS ELIGIBLE FOR TONNAGE TAX CLAIM. 2.2. THE CIT(A) FAILED TO APPRECIATE THAT TO BE ELI GIBLE FOR TONNAGE TAX SCHEME, THE ASSESSEE HAS TO NOT ONLY OBTAIN THE APPROVAL OF ADDI.CIT, BUT ALSO FULFILL THE STIPULATIONS LAID DO WN UNDER CHAPTER XIIG OF THE IT ACT. 2.3 THE CIT(A) OUGHT TO HAVE APPRECIATED THAT MERE OBTAINING APPROVAL U/S.115VP WOULD NOT PRECLUDE THE ASSESSING OFFICER FROM EXAMINING WHETHER THE OTHER CONDITIONS LAID DOWN UN DER CHAPTER XIIG ARE FULFILLED. 2.4. THE CIT(A) FAILED TO APPRECIATE THE FACT THAT THE ASSESSEE IS ONLY AFRACTIONAL OWNER OF THE SHIP AND DOES NOT SAT ISFY PROVISIONS OF SECTION 115VC(C). SIMILARLY, THE ASSESSEE ALSO D OES NOT FULFILL THE PROVISIONS OF SECTION 115VD IN THE SENSE IT IS NOT A QUALIFYING SHIP. 2.5 THE CIT(A) FAILED TO APPRECIATE THAT THE ASSESS EE MISREPRESENTED BEFORE THE ADDI.CIT THAT IT OWNS ONE QUALIFYING SHIP AND WITHHELD THE FACT THAT IT ONLY HAVE FRACTI ONAL OWNERSHIP AND THE MANAGEMENT AND OPERATION OF THE SHIP IS DON E BY ANOTHER CO-OWNER. 2.6 THE CIT(A) OUGHT TO HAVE APPRECIATED THAT THOUG H SECTION 115VH RECOGNIZES FRACTIONAL OWNERSHIP AND JOINT OPE RATION, THE OPERATION OF THE SHIP WAS DONE BY WEST ASIA MARITIM E LTD. AND THE I.T.A.NOS. 2145 TO 2148/13 :- 3 -: ASSESSEE COMPANY IS SHARING PROFITS WITHOUT ACTUAL OPERATION AND THEREFORE OUGHT TO HAVE UPHELD THE ADDITION. 3. IN THE COURSE OF HEARING, THE REVENUE VEHEMENTLY RE ITERATES THE PLEADINGS AND SUBMITS THAT THE IMPUGNED DISALLO WANCE QUA ELIGIBILITY OF THE ASSESSEE-COMPANY FOR THE BENEFIT OF TONNAGE TAX OUGHT NOT TO HAVE BEEN DELETED BY THE CIT(A). ACCO RDINGLY, IT PRAYS FOR ACCEPTANCE OF THE APPEALS. 4. THE ASSESSEE SUPPORTS THE ORDER OF THE CIT(A) BY FI LING A COPY OF THE ORDER PASSED BY THE TRIBUNAL DATED 18 .9.2013 IN I.T.A.NO. 1406/MDS/2013 FOR ASSESSMENT YEAR 2009-10 IN ITS OW N CASE AND PRAYS FOR UPHOLDING THE CIT(A)S FINDINGS UNDER CHALLENGE . 5. WE HAVE HEARD BOTH PARTIES AND PERUSED THE CASE FIL E. A COMBINED PERUSAL OF THE GROUNDS RAISED IN THE APPEA LS REVEALS THAT THE IDENTICAL ISSUE INVOLVED IN ALL CASES IS AS TO WH ETHER THE CIT(A) HAS RIGHTLY HELD THE ASSESSEE ELIGIBLE FOR THE TONNAG E TAX SCHEME BENEFITS OR NOT. IN THESE CIRCUMSTANCES, WE TAKE UP I.T.A.N O. 2145/MDS/2013 AS THE LEAD CASE. 6. THE ASSESSEE, A COMPANY, IS IN THE BUSINESS OF F INANCING, LEASING, RENTAL, INVESTMENTS AND SHIPPING BUSINESS. FOR THE IMPUGNED ASSESSMENT YEAR, IT HAD FILED ITS RETURN ON 27.10.2 006 DECLARING TOTAL I.T.A.NOS. 2145 TO 2148/13 :- 4 -: INCOME OF ` 30,07,372/- AFTER EXCLUDING INCOME FROM SHIPPING B USINESS AND AT ` 5,72,904/- U/S 115VG OF THE ACT BY CLAIMING BENEF IT OF THE TONNAGE TAX SCHEME. THE SAME WAS SUMMARILY PROCE SSED. 7. IN THE COURSE OF SCRUTINY, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE OWNS A SHIP GEM OF ENNORE WHICH TRA NSPORTED THERMAL COAL FROM PARADEEP TO ENNORE PORT WHICH OTHERWISE WOULD BE CARRIED THROUGH LAND. IN HIS VIEW, THIS ATTRACTED SECTION 115VD OF THE ACT AS THE SAME EXCLUDED A SEA GOING SHIP OR VESSEL IF TH E MAIN PURPOSE FOR WHICH IT IS USED IS THE PROVISION OF GOODS OR SERVI CES OF A KIND NORMALLY PROVIDED ON LAND. THEREFORE, THE ASSESSING OFFIC ER OBSERVED THAT THE ASSESSEE COULD NOT BE HELD ENTITLED FOR THE TONNAGE TAX SCHEME AND DENIED THE CLAIM IN ASSESSMENT ORDER DATED 31.12.20 08. 8. THE ASSESSEE CARRIED THE MATTER IN APPEAL. BY PLA CING RELIANCE ON THE ORDER OF THE TRIBUNAL FOR ASSESSM ENT YEAR 2009-10, THE CIT(A) HAS HELD THE ASSESSEE ELIGIBLE FOR THE BENE FIT OF TONNAGE TAX SCHEME, AS UNDER: 4.2 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE C ASE AND THE SUBMISSIONS OF THE LEARNED AR. I HAVE ALSO GONE THR OUGH THE APPROVAL GIVEN BY THE ADDL. CIT U/S.115VP (3) IN HIS LETTER DATED 28.1.2005. I FIND THAT THE APPELLANT IS ONE OF THE CO-OWNERS OF THE SHIP M.V.GEM OF ENNORE ALONG WITH THREE OTHER CO-OWNERS HAVING THE FOLLOWING SHARE. I) EAST COAST TERMINAL OPERATIONS & PORT SERVICES L TD. 50% I.T.A.NOS. 2145 TO 2148/13 :- 5 -: II) WEST ASIA MARITIME LTD 20% III) FOUR M MARITIME PVT. LTD 10% IV) BUHARIHOLDINGS PVT. LTD (APPELLANT) 20% SIMILAR ISSUE HAS BEEN DEALT WITH BY MY PREDECESSOR S IN THE APPELLANT'S CO-OWNER'S CASE AND ALSO IN THE APPELLA NT'S OWN CASE (FOR 2009-10) WHEREIN IT HAS BEEN HELD THAT THE APPELLAN T IS ELIGIBLE FOR TONNAGE TAX SCHEME RELYING ON THE DECISION OF THE THIRD MEMBER, ITAT, CHENNAI, IN ITA NO. 1195/MDS/2010 DATED '17 TH JUNE 2011 IN THE CASE OF M/S. WEST ASIA MARITIME LTD, FOR THE ASSESS MENT YEAR 2006- 07 HOLDING THAT: ''30. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, I AGREE WITH THE VIEW OF THE LEARNED ACCOUNTANT MEMBER TO HOLD THAT THE SHIP OPERATED BY THE ASSESSEE 'M. V. GEM OF ENNORE' TRANSPORTING THERMAL COAL FROM ONE LOCATION TO ANOTHER LOCATION WITHIN T HE COUNTRY, IS A QUALIFYING SHIP UNDER SEC. 115VD OF THE INCOME TAX ACT, 1961 AND THE ASSESSEE IS ENTITLED FOR THE BENEFIT OF TONNAGE TAX SCHEME PROVIDED UNDER CHAPTER XII-C OF THE INCOME TAX ACT, 1961'. . IN THE SAID CO-OWNER'S CASE IT WAS HELD THAT (I) THE APPELLANT IS HELD TO BE THE OWNER OF THE SHIP EVEN THOUGH HE WAS A PA RT OWNER (II) THAT THE APPELLANT IS NOT CARRYING OUT THE OPERATIONS WH ICH ARE CARRIED OUT ON THE LAND. AS THE SAME SHIP IS CO-OWNED BY THE P RESENT APPELLANT HAVING 20% OF THE SHARE, RESPECTFULLY FOLLOWING THE SAID DECISION, I HOLD THAT M.V.GEM OF ENNORE IS A QUALIFYING SHIP U/ S 115VD OF THE ACT. THE AO IS ACCORDINGLY DIRECTED TO ALLOW THE BENEFIT OF TONNAGE TAX SCHEME U/S 115VG OF THE ACT. THIS GROUND IS ALLOWED . THEREFORE, THE REVENUE IS IN APPEAL. 9. AFTER GIVING OUR THOUGHTFUL CONSIDERATION TO THE G ROUNDS RAISED IN THE APPEAL, FINDINGS OF THE CIT(A) AND AR GUMENTS OF BOTH PARTIES, WE FIND THAT IN ASSESSMENT YEAR 2009-10, T HE TRIBUNAL (SUPRA)HAS DECIDED THE VERY ISSUE IN FAVOUR OF THE ASSESSEE. THE REVENUE SUBMITS AS PER GROUND NO.2.6 THAT SINCE THE SHIP WAS NOT OPERATED BY THE ASSESSEE ITSELF BUT BY WEST ASIA M ARITIME LIMITED, SO, I.T.A.NOS. 2145 TO 2148/13 :- 6 -: IT CANNOT BE TAKEN AS ENTITLED FOR THE AFORESAID BE NEFIT OF TONNAGE TAX. THIS ARGUMENT, IN OUR VIEW, DOES NOT MERIT ACCEPTAN CE. AFTER GOING THROUGH THE RELEVANT PROVISION, IT NOWHERE COMES OU T THAT IN CASE OF A JOINTLY OWNED SHIP BY TWO OR MORE COMPANIES, THE SA ME HAS TO BE OPERATED SPECIFICALLY BY EACH OF THE CO-OWNERS/ ASS ESSEES. THEREFORE, THIS GROUND ALSO FAILS. NEEDLESS TO SAY, IN ASSES SMENT YEAR 2009-10 THE ISSUE HAS BEEN DECIDED IN ASSESSEES FAVOUR. FOR THE IMPUGNED ASSESSMENT YEAR AS WELL, NO JUSTIFIABLE GROUND IS T HERE TO ADOPT A DIFFERENT VIEW. ACCORDINGLY, THE CIT(A)S FINDINGS ARE AFFIRMED AND THE APPEAL I.T.A.NO.2145/MDS/2013 IS DISMISSED. 10. SAME ORDER TO FOLLOW IN I.T.A.NOS.2146 TO 2148/MDS /2013. 11. TO SUM UP, ALL THE APPEALS OF THE REVENUE ARE DIS MISSED. ORDER PRONOUNCED ON FRIDAY, THE 31 ST OF JANUARY, 2014, AT CHENNAI. SD/- SD/- (A. MOHAN ALANKAMONY) ACCOUNTANT MEMBER (S. S. GODARA) JUDICIAL MEMBER DATED: 31 ST JANUARY, 2014 RD COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR I.T.A.NOS. 2145 TO 2148/13 :- 7 -: