PACC Container Line Pte Ltd. Rep by agent J.M. Baxi & Co., Mutukur, Hyderabad V. ITO, International Taxation, Nellore, Nellore Dist.

ITA 244/HYD/2017

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6027 (ITAT-HYDERABAD)
• Duration Of Justice: 1 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 15-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revision of order; Double taxation relief; Additional evidence; Condonation of delay
• Section: 154

Judgement Text

ITA NOS 244 AND 245 OF 2017 PACC CONTAINER LINE PTE LTD (REP. BY JM BAXI & CO. NELLORE) PAGE 1 OF 7 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NOS.244 & 245/HYD/2017 (ASSESSMENT YEAR: 2014-15) M/S. PACC CONTAINER LINE PTE LIMITED SINGAPORE (REP.BY ITS INDIAN AGENT M/S.JM BAXI & CO) NELLORE PAN:AAGCP 0145 G VS INCOME TAX OFFICER (INTERNATIONAL TAXATION) NELLORE FOR ASSESSEE : SHRI A.V. RAGHURAM FOR REVENUE : SHRI A. SITARAMA RAO, DR O R D E R PER SMT. P. MADHAVI DEVI, J.M. BOTH ARE ASSESSEES APPEALS FOR THE A.Y 2014-15 AGAINST THE ORDER U/S 172(4) OF THE ACT. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A NON- RESIDENT SHIPPING COMPANY AND A RESIDENT OF SINGAPO RE. TWO OF ITS VESSELS MV PAC SCHEDER AND MV PAC ATHENA HAD DEPARTED KRISHNAPATNAM PORT ON 2.6.2013 AND 13. 9.2013 RESPECTIVELY TO HUSTON, USA CARRYING FREIGHT. A LOC AL AGENT M/S. J.M. BAXI & CO. FILED FOR AN NOC CLAIMING THAT THE FREIGHT BENEFICIARY IS THE RESIDENT OF SINGAPORE AND IN VIE W OF THE DTAA EXISTING BETWEEN INDIA AND SINGAPORE, THE ENTIRE FR EIGHT EARNED BY DATE OF HEARING : 27.03.2017 DATE OF P RONOUNCEMENT : 31.03.2017 ITA NOS 244 AND 245 OF 2017 PACC CONTAINER LINE PTE LTD (REP. BY JM BAXI & CO. NELLORE) PAGE 2 OF 7 THE FREIGHT BENEFICIARY IS EXEMPT FROM TAX IN INDIA . AT THE TIME OF OBTAINING NOC, THE LOCAL AGENT FURNISHED A COPY OF THE TAX RESIDENCY CERTIFICATE (TRC) IN RESPECT OF THE FREIG HT BENEFICIARY TO PROVE THAT IT IS A RESIDENT OF SINGAPORE. THE LOCAL AGENT HAD ALSO FILED A CERTIFICATE FROM THE FREIGHT BENEFICIARY TO ENABLE IT TO ACT AS A LOCAL AGENT ON THEIR BEHALF ALONG WITH THE GUARAN TEE BOND EXECUTED BY THE LOCAL AGENT. AFTER VERIFICATION OF THE INFORMATION FILED, THE AO PASSED AN ORDER U/S 163 DT. 31.5.2013 AND ALSO DT.12.9.2013 TREATING M/S. J.M. BAXI & CO. NELLORE AS REPRESENTATIVE ASSESSEE OF THE NON-RESIDENT FOREIGN SHIPPING COMPANY I.E. THE ASSESSEE HEREIN. ACCORDINGLY NOC W AS ISSUED TO THE LOCAL AGENT AND IT WAS ASKED TO FILE THE RETURN U/S 172(3) OF THE ACT IN RESPECT OF FREIGHT TAX PAYABLE BY THE NO N-RESIDENT FREIGHT BENEFICIARY WITHIN 30 DAYS FROM THE DATE OF DEPARTURE OF THE VESSEL FROM THE PORT. 3. THE LOCAL AGENT OF THE ASSESSEE FILED THE RETURN S FOR BOTH THE VESSELS U/S 172(3) OF THE ACT. THE AO DIRE CTED THE LOCAL AGENT TO FILE BREAKUP OF THE EXPENDITURE, NET FREIG HT PAID TO THE FREIGHT BENEFICIARY AND COPY OF THE BANK A/C SHOWIN G TRANSFER OF FUNDS TO THE FB A/C IN SINGAPORE. IN RESPONSE THERET O, THE LOCAL AGENT OF THE ASSESSEE FILED THE COPY OF THE A/C IN OCBC BANK, WHERE THE NAME OF THE BENEFICIARY ACCOUNT HOLDER IS NOT REFLECTING. AO THEREFORE, OBSERVED THAT IN THE ABSENCE OF PRIMA RY INFORMATION, THE GENUINENESS OF THE TRANSACTION CAN NOT BE ACCEPTED. HE ALSO OBSERVED THAT UNDER ARTICLE 24 O F THE DTAA BETWEEN INDIA AND SINGAPORE, THE BENEFITS OF THE TA X TREATY ARE AVAILABLE ONLY TO PERSONS WHO ARE RESIDENTS OF ONE OR BOTH THE TREATY COUNTRIES AND SHALL APPLY TO SO MUCH OF THE INCOME AS IS ITA NOS 244 AND 245 OF 2017 PACC CONTAINER LINE PTE LTD (REP. BY JM BAXI & CO. NELLORE) PAGE 3 OF 7 REMITTED TO OR RECEIVED IN THAT OTHER CONTRACTING S TATE. AO OBSERVED THAT SINCE THE LOCAL AGENT HAS FAILED TO D EMONSTRATE THAT THE INCOME SOURCED IN INDIA HAS BEEN REMITTED OR RE CEIVED IN SINGAPORE AND OFFERED THE SAME TO TAX AT SINGAPORE, HE HELD THAT THE INCOME OF THE NON-RESIDENT FREIGHT BENEFICIARY IS TAXABLE IN INDIA. HE ACCORDINGLY COMPUTED THE TAX U/S 172(4) O F THE ACT. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (A) WITH A DELAY OF 249 DAYS. THE CIT (A) REFUSED TO CONDONE THE DELAY AND DISMISSED THE ASSESSEES APPEALS AND THE ASSESSEE I S IN SECOND APPEAL BEFORE US. 4. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE ORDER U/S 172(4) OF THE ACT WAS PASSED BY THE A O FOR BOTH THE VESSELS ON 31.12.2014 AND IMMEDIATELY THEREAFTER, T HE ASSESSEE FILED AN APPLICATION U/S 154 OF THE ACT BEFORE THE AO ON 28.01.2015 AND THE AO HAD REJECTED IT ON 19.02.2015 . HE SUBMITTED THAT THEREAFTER, THE ASSESSEE HAD MADE AN APPLICATION FOR REVISION U/S 264 OF THE I.T. ACT ON 1.7.2015 WI THIN A PERIOD OF ONE YEAR AS PERMITTED UNDER THE PROVISIONS OF LAW A LONG WITH (A) TAX RESIDENCE CERTIFICATE ISSUED BY INLAND REVENUE AUTHORITY OF SINGAPORE, (B) CERTIFICATION OF INCORPORATION ON CH ANGE OF NAME OF THE COMPANY, (C) INWARD REMITTANCE CERTIFICATE ISSU ED BY THE BANKER TO THE CREDIT OF SHIPPERS BANK A/C AND (D) A DUMMY STATEMENT OF A/C CONTAINING THE NAME OF THE SHIPPIN G COMPANY I.E. THE ASSESSEE HEREIN. HE SUBMITTED THAT DURING THE COURSE OF HEARING ON 21.9.2015, THE ASSESSEE ORALLY WITHDREW THE REVISION PETITION AND THEREAFTER THE ASSESSEE FILED THE APPE AL BEFORE THE CIT (A) ON 9.11.2015 ALONG WITH A PETITION FOR CONDONAT ION OF DELAY OF 249 DAYS. THE LEARNED COUNSEL FOR THE ASSESSEE SUBM ITTED THAT ITA NOS 244 AND 245 OF 2017 PACC CONTAINER LINE PTE LTD (REP. BY JM BAXI & CO. NELLORE) PAGE 4 OF 7 THE ABOVE FACTS REVEAL THAT THE ASSESSEE HAS BEEN V IGILANT AND HAS BEEN PURSUING THE REMEDIES AVAILABLE UNDER THE ACT AND IT WAS ONLY ON THE ADVICE OF THE COUNSEL THAT THE ASSESSEE HAS FILED THE APPEAL BEFORE THE CIT (A) ALONG WITH THE ADDITIONAL EVIDENCE TO PROVE THAT THE INCOME WAS REMITTED TO THE ACCOUNT O F THE NON- RESIDENT COMPANY IN SINGAPORE. THEREFORE, THE LEARN ED COUNSEL FOR THE ASSESSEE PRAYED THAT THE DELAY BEFORE THE C IT (A) MAY BE CONDONED AND THE APPEAL BE REMITTED TO THE FILE OF THE AO FOR CONSIDERING THE BANK ACCOUNT STATEMENT ALONG WITH T HE NAME OF THE FOREIGN COMPANY ON IT FOR VERIFICATION BY THE A O. 5. THE LEARNED DR HOWEVER, OPPOSED THE CONDONATION OF THE DELAY AND SUBMITTED THAT THE ASSESSEE WAS PARAL LELY PURSUING THE PROCEEDINGS BOTH BEFORE THE CIT U/S 264 AND BEF ORE THE CIT (A) U/S 250 OF THE ACT AND THEREFORE, THE CIT (A) W AS RIGHT IN REJECTING THE ASSESSEES APPLICATION FOR CONDONATIO N OF DELAY. 6. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT THE ASSESSMENT ORDER U/S 17 2(4) WAS PASSED ON 31.12.2014 AND WITHIN A PERIOD OF ONE MON TH THEREAFTER, THE ASSESSEE HAD FILED AN APPLICATION U /S 154 OF THE ACT AND AFTER ITS REJECTION, THE APPLICATION U/S 26 4 OF THE ACT WAS FILED ON 1.7.2015. AN APPLICATION U/S 264 OF THE AC T CAN BE FILED WITHIN A PERIOD OF ONE YEAR FROM THE DATE ON WHICH THE ORDER IN QUESTION, WAS COMMUNICATED TO THE ASSESSEE OR THE D ATE ON WHICH HE OTHERWISE CAME TO KNOW OF IT, WHICHEVER IS EARLI ER. THEREFORE, IT IS CLEAR THAT THERE WAS NO DELAY IN FILING OF THE A PPLICATION U/S 264 OF THE ACT. IT IS THE CASE OF THE ASSESSEE THAT IT HAD WITHDRAWN ITS APPLICATION U/S 264 ON 21.9.2015 ORALLY AND BEFORE US HAS FILED A ITA NOS 244 AND 245 OF 2017 PACC CONTAINER LINE PTE LTD (REP. BY JM BAXI & CO. NELLORE) PAGE 5 OF 7 COPY OF THE LETTER DATED 22.3.2017, WHEREBY THE ASS ESSEE HAS WITHDRAWN THE REVISION PETITION IN WRITING. THEREFO RE, THE FINDING OF THE CIT (A) THAT THERE IS NO EVIDENCE OF THE ASS ESSEE WITHDRAWING THE APPLICATION U/S 264 APPEARS TO BE C ORRECT. HOWEVER, THE CIT (A) HAS DISMISSED THE ASSESSEES A PPLICATION FOR CONDONATION OF DELAY ON THE GROUND THAT THE ASSESSE E HAS NOT SUBSTANTIATED THE REASONS FOR DELAY IN FILING OF APPEAL AND NOT BECAUSE THE ASSESSEE HAS NOT WITHDRAWN THE APPLICAT ION U/S 264 OF THE ACT. SINCE, THE ASSESSEE HAS WITHDRAWN THE A PPLICATION IN WRITING, THE SAID OBJECTION ALSO DOES NOT SURVIVE. FURTHER, WE ARE ALSO CONVINCED THAT THE ASSESSEE WAS VIGILANT IN PU RSUING ITS REMEDIES. 7. THE HON'BLE SUPREME COURT IN THE CASE OF BASAWAR AJ & ANR. VS. THE SPECIAL LAND ACQUISITION OFFICER, AS R EPORTED IN (2013) 14 SCC 811 WHILE CONSIDERING AN APPLICATION FOR CONDONATION OF DELAY OF 5 YEARS, HAS LAID DOWN THE FOLLOWING LEGAL PARAMETERS TO BE CONSIDERED IN SUCH CIRCUMSTA NCES: 9. SUFFICIENT CAUSE IS THE CAUSE FOR WHICH DEFENDA NT COULD NOT BE BLAMED FOR HIS ABSENCE. THE MEANING OF THE WORD 'SUFFICIENT' IS 'ADEQUATE' OR 'ENOUGH', INASMU CH AS MAY BE NECESSARY TO ANSWER THE PURPOSE INTENDED. THEREFORE, THE WORD 'SUFFICIENT' EMBRACES NO MORE T HAN THAT WHICH PROVIDES A PLATITUDE, WHICH WHEN THE ACT DONE SUFFICES TO ACCOMPLISH THE PURPOSE INTENDED IN THE FACTS AND CIRCUMSTANCES EXISTING IN A CASE, DULY EXAMINED FROM THE VIEW POINT OF A REASONABLE STANDA RD OF A CAUTIOUS MAN. IN THIS CONTEXT, 'SUFFICIENT CAU SE' MEANS THAT THE PARTY SHOULD NOT HAVE ACTED IN A NEGLIGENT MANNER OR THERE WAS A WANT OF BONA FIDE O N ITS PART IN VIEW OF THE FACTS AND CIRCUMSTANCES OF A CA SE OR IT CANNOT BE ALLEGED THAT THE PARTY HAS 'NOT ACTED DILIGENTLY' OR 'REMAINED INACTIVE'. HOWEVER, THE FA CTS AND CIRCUMSTANCES OF EACH CASE MUST AFFORD SUFFICIE NT GROUND TO ENABLE THE COURT CONCERNED TO EXERCISE DISCRETION FOR THE REASON THAT WHENEVER THE COURT ITA NOS 244 AND 245 OF 2017 PACC CONTAINER LINE PTE LTD (REP. BY JM BAXI & CO. NELLORE) PAGE 6 OF 7 EXERCISES DISCRETION, IT HAS TO BE EXERCISED JUDICI OUSLY. THE APPLICANT MUST SATISFY THE COURT THAT HE WAS PREVENTED BY ANY SUFFICIENT CAUSE FROM PROSECUTIN G HIS CASE, AND UNLESS A SATISFACTORY EXPLANATION IS FURN ISHED, THE COURT SHOULD NOT ALLOW THE APPLICATION FOR CONDONATION OF DELAY. THE COURT HAS TO EXAMINE WHET HER THE MISTAKE IS BONA FIDE OR WAS MERELY A DEVICE TO COVER AN ULTERIOR PURPOSE. (SEE: MANINDRA LAND AND BUILDI NG CORPORATION LTD. V. BHOOTNATH BANERJEE & ORS., AIR 1964 SC 1336; LALA MATADIN V. A. NARAYANAN, AIR 197 0 SC 1953; PARIMAL V.VEENA @ BHARTI AIR 2011 SC 1150; AND MANIBEN DEVRAJ SHAH V. MUNICIPAL CORPORATION OF BRIHAN MUMBAI AIR 2012 SC 1629.) 10. IN ARJUN SINGH V. MOHINDRA KUMAR, AIR 1964 SC 9 93 THIS COURT EXPLAINED THE DIFFERENCE BETWEEN A GOOD CAUSE AND A SUFFICIENT CAUSE AND OBSERVED THAT E VERY SUFFICIENT CAUSE IS A GOOD CAUSE AND VICE VERSA. HOWEVER, IF ANY DIFFERENCE EXISTS IT CAN ONLY BE TH AT THE REQUIREMENT OF GOOD CAUSE IS COMPLIED WITH ON A LES SER DEGREE OF PROOF THAT THAT OF SUFFICIENT CAUSE. 11. THE EXPRESSION SUFFICIENT CAUSE SHOULD BE GIV EN A LIBERAL INTERPRETATION TO ENSURE THAT SUBSTANTIAL J USTICE IS DONE, BUT ONLY SO LONG AS NEGLIGENCE, INACTION OR L ACK OF BONA FIDES CANNOT BE IMPUTED TO THE PARTY CONCERNED , WHETHER OR NOT SUFFICIENT CAUSE HAS BEEN FURNISHED, CAN BE DECIDED ON THE FACTS OF A PARTICULAR CASE AND NO STRAITJACKET FORMULA IS POSSIBLE. (VIDE: MADANLAL V . SHYAMLAL, AIR 2002 SC 100; AND RAM NATH SAO @ RAM NATH SAHU & ORS. V. GOBARDHAN SAO & ORS., AIR 2002 SC 1201.) WE ARE OF THE OPINION THAT THE FACTS OF THE CASE BE FORE US SATISFY THE ABOVE PARAMETERS. THEREFORE, RESPECTFULLY FOLLO WING THE SAME, WE CONDONE THE DELAY OF 249 DAYS IN FILING OF THE A PPEAL BEFORE THE CIT (A). 8. THE ONLY REASON FOR BRINGING TO TAX THE INCOME O F THE FREIGHT BENEFICIARY IN INDIA BY THE AO IS THAT THE ASSESSEE HAS NOT FILED THE BANK A/C STATEMENT REFLECTING THE NAME OF THE ASSESSEE THEREIN AND TO PROVE THAT THE INCOME IS RECEIVED IN SINGAPORE. IT IS ITA NOS 244 AND 245 OF 2017 PACC CONTAINER LINE PTE LTD (REP. BY JM BAXI & CO. NELLORE) PAGE 7 OF 7 SEEN THAT THE ASSESSEE HAS NOW FILED THE CERTIFICAT E FROM THE BANKER CERTIFYING THAT THE BANK A/C IS HELD BY THE ASSESSEE COMPANY AND THE BANK A/C COPY IS ALSO IS FILED BEFO RE THE CIT (A) ALONG WITH A PETITION UNDER RULE 46A. THE BANK A/C COPY WOULD PROVE WHETHER THE ASSESSEE HAS RECEIVED THE FREIGHT CHARGES IN SINGAPORE. THEREFORE, WE ARE OF THE OPINION THAT TH E ASSESSEES APPEALS NEEDS TO BE CONSIDERED ON MERIT. IN VIEW OF THE SAME AND ALSO SINCE THE CERTIFICATE OF THE BANKER NEEDS VERI FICATION BY THE AO, WE ARE OF THE OPINION THAT IT WOULD BE IN THE F ITNESS OF THE CASE THAT THE ISSUE IS REMITTED TO THE FILE OF THE AO AND NOT THE CIT (A). THEREFORE, WE ARE ALLOWING THE ASSESSEES APPE AL BY CONDONING THE DELAY AND WE ARE SETTING ASIDE THE ISSUE ON MER ITS TO THE FILE OF THE AO FOR DE NOVO CONSIDERATION IN ACCORDANCE WITH LAW AFTER TAKING INTO THE CONSIDERATION THE BANKERS CERTIFIC ATE SUBMITTED BY THE ASSESSEE. 9. IN THE RESULT, ASSESSEES APPEALS ARE ALLOWED FO R STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST MARCH , 2017. SD/- SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 31 ST MARCH, 2017. VINODAN/SPS COPY TO: 1 K.VASANTKUMAR, A.V.RAGHURAM, P.VINOD & M.NEELIMA DEVI, ADVOCATES, 610 BABUKHAN ESTATE, BASHEERBAGH HYDERAB AD -01 2 INCOME TAX OFFICER (INTERNATIONAL TAXATION) NELLO RE 3 CIT (A)-10 HYDERABAD 4 CIT (IT & TP) HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER