ACIT, Cochin V. M/s.Lots Shipping Ltd, Ernakulam

ITA 268/COCH/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 81368 (ITAT-COCHIN)
• Duration Of Justice: 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-11-2014
• Appeal Filed By: Department
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 10-06-2014
• Court: TRIBUNAL
• Department Lawyers: K K JOHN
• Assessee Lawyers: C B M WARRIER
• Keywords: Double taxation relief
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND CHANDRA POOJ ARI, AM I.T.A. NO. 268/COCH/2014 ASSESSMENT YEAR : 2008-09 THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-1(2),KOCHI VS. M/S. LOT SHIPPING LTD. GCDA SHOPPING COMPLEX, MARINE DRIVE, ERNAKULAM, KOCHI-30. [PAN:AAACL 4062A] (REVENUE -APPELLANT) (ASSESSEE-RESPONDEN T) REVENUE BY SHRI K.K. JOHN, SR. DR ASSESSEE BY SHRI C.B.M. WARRIER, CA DATE OF HEARING 12/11/2014 DATE OF PRONOUNCEMENT 21/112014 O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER DATED 16/01/2014 PASSED BY THE CIT(A)-II, KOCHI FOR THE A SSESSMENT YEAR2008-09. 2. THE REVENUE HAS RAISE THE FOLLOWING GROUNDS: 1. THE CIT(A) OUGHT TO HAVE CONSIDERED THE FACTS M ENTIONED IN PARA 4 OF THE ASSESSMENT ORDER U/S. 143(3) DATED 24/12/20 10 THAT DIVIDEND INCOME FROM OVERSEAS SUBSIDIARY IS TAXABLE IN THE HAND OF RECIPIENT DOMESTIC COMPANY. 2. THE CIT(A) OUGHT TO HAVE SEEN THAT THE CITED S UPREME COURT CASE LAW WILL NOT HOLD GOOD FOR ANY DIVIDEND RECEIVED BY AN INDIAN I.T.A. NO.268/COCH/2014 2 COMPANY FROM A MALAYSIAN COMPANY AFTER A.Y. 2004-0 5 AND THAT THE DECISION OF HONBLE SUPREME COURT (DCIT VS. TORQO UISE INVESTMENT & FINANCE LTD. (300 ITR 12) PERTAINS TO A.Y. 1992- 93 AND IS BASED ON THE ARTICLE XI OF DTAA BETWEEN INDIA AND MALAYSIA W.E.F. 01.04.1977 WHICH WAS SUBSEQUENTLY AMENDED ON 14.08.2003. AFT ER THE AMENDMENT OF DTAA, THE SCENARIO HAS UNDERGONE COMP LETE REVERSAL IN THE CASE OF INDO-MALAYSIAN TREATY. THE ASSESSEES CASE PERTAINS TO A.Y. 2008-09. 4. THE LD. CIT(A) HAS ERRED IN RELYING ON THE DTA A BETWEEN INDIA AND MALAYSIA. IN THIS CASE, THE DTAA BETWEEN INDIA AN D UAE IS APPLICABLE. AS PER ARTICLE 10(1) OF INDO-UAE DTAA W.E.F. 22-09- 1993, DIVIDEND IS TAXABLE IN THE RECIPIENT STATE. THIS DTAA WAS FUR THER AMENDED ON 28- 11-2007 AND 12-04-2013. EVEN THE AMENDMENT DATED 2 8-11-2007 DOESNT INTERFERE WITH THE OPERATIVE PORTION OF TH E TREATY (ARTICLE 10(1), THAT GOVERNS THE COUNTRY OF TAXABILITY OF DIVIDEND. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E-COMPANY IS ENGAGED IN THE BUSINESS OF BARGE OPERATING FOR TRANSPORTATI ON OF BULK CARGO. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION W AS FILED ON 30-09-2008 DECLARING TOTAL LOSS OF RS.1,06,52,512/-. THE ASSES SING OFFICER COMPLETED THE ASSESSMENT VIDE HIS ORDER U/S. 143(3) OF THE I.T. A CT DATED 24-12-2010 AT A TOTAL INCOME OF RS.78,57,231/-. 3. ON APPEAL, THE CIT(A) BY PLACING RELIANCE ON THE JUDGMENT OF THE SUPREME COURT IN THE CASE OF DCIT VS. TORQOUISE INV ESTMENT & FINANCE LTD. (309 ITR 12) HELD THAT THE DIVIDEND INCOME DERIVED BY THE ASSESSEE FROM A COMPANY IN DUBAI WOULD NOT BE LIABLE TO BE TAXED IN THE HANDS OF THE ASSESSEE IN INDIA. AGAINST THIS, THE REVENUE IS IN APPEAL BEFORE US. I.T.A. NO.268/COCH/2014 3 4. THE LD. DR FILED A COPY OF DOUBLE TAXATION AVOIDANCE AGREEMENT (DTAA) ENTERED INTO WITH UAE AND SUBMITTED THAT AS P ER ARTICLE 10, THE ASSESSEE IS LIABLE FOR PAYMENT OF TAX ON THE DIVIDE ND RECEIVED BY THE ASSESSEE FROM SUBSIDIARY COMPANY, M/S. LOTS SHIPPING LTD., D UBAI AND THE CIT(A) HAS WRONGLY PLACED RELIANCE ON THE DTAA ENTERED INTO BY REPUBLIC OF INDIA WITH GOVERNMENT OF MALAYSIA. 5. ON THE OTHER HAND, THE LD. AR FILE A COPY OF NOT IFICATION NO. 282/2007- FTD (F.NO. 503/5/2004-FTD) DATED 28/11/2007 WHEREIN IT WAS STATED THAT THE ASSESSEE IS LIABLE FOR TAX IF IT EXCEEDED 10%. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ECORD. IN OUR OPINION, THE CIT(A) HAS WRONGLY PLACED RELIANCE ON THE DTAA ENTERED INTO BY REPUBLIC OF INDIA WITH GOVERNMENT OF MALAYSIA. ACC ORDINGLY, WE REMIT THIS ISSUE BACK TO THE FILE OF THE CIT(A) TO CONSIDER TH E DTAA ENTERED INTO WITH UAE AND DECIDE THE ISSUE AFRESH. WHILE DECIDING THE SAME, HE SHOULD TAKE NOTE OF NOTIFICATION CITED SUPRA REFERRED BY THE LD . AR. ACCORDINGLY, THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. I.T.A. NO.268/COCH/2014 4 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 21-11-2014 SD/- SD/- (N.R.S.GANESAN) (CHANDRA POOJARI) JUDICIAL MEMBER ACC OUNTANT MEMBER PLACE: KOCHI DATED: 21ST NOVEMBER, 2014 COPY TO: 1. M/S. LOTS SHIPPING LTD. GCDA SHOPPING COMPLEX, M ARINE DRIVE, ERNAKULAM, KOCHI-30. 2. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE -1(2), KOCHI. 3. THE COMMISSIONER OF INCOME-TAX(APPEALS)-II, KOCH I. 4. THE COMMISSIONER OF INCOME-TAX, KOCHI 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T., COC HIN