Jaisu Shiping Co.Pvt.Ltd., Gandhidham V. The ADIT(Intl.Taxn.), Ahmedabad

ITA 2782/AHD/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73112 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 3 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 10-03-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 10-12-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Business income; Depreciation; Opportunity of being heard; Permanent establishment; Reassessment proceedings
• Section: 234B; 201(1); 148

Judgement Text

, , , , , , , , IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D BENCH, AHMEDABAD .., ! '# '# '# '# $ %&, ! BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER APPEAL(S) BY APPELLANT VS. RESPONDENT SL. NO(S) ITA NO(S) ASSESSMENT YEAR(S) APPELLANT RESPONDENT 1. 2782/AHD/2012 2008-09 JAISU SHIPPING CO.PVT.LTD. KEWALRAMANI HOUSE DINSHAW BLDG.ROAD NR.P & C BLDG. KANDLA PORT- 370210 PAN: AAACJ 6998 H ADIT (INTL. TAXN.) AHMEDABAD 2. 2783/AHD/2012 2009-10 ASSESSEE REVENUE 3. 13/AHD/2013 2008-09 REVENUE ASSESSEE 4. 14/AHD/2013 2009-10 REVENUE ASSESSEE ASSESSEE BY : -NONE- REVENUE BY : SHRI VIMALENDU VERMA, CIT-DR $'' ( & / / / / DATE OF HEARING : 11/03/2014 *+, ( & / DATE OF PRONOUNCEMENT : 28/03/2014 - / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THESE ARE CROSS-APPEALS BY THE ASSESSEE AND REVEN UE ARE DIRECTED AGAINST THE ORDER OF THE LD.COMMISSIONER OF INCOME TAX(APPEALS)- GANDHINAGAR (CIT(A) FOR SHORT) DATED 12/10/2012 P ERTAINING TO ASSESSMENT YEARS (AYS) 2008-09 & 2009-10. SINCE C OMMON ISSUES ARE INVOLVED, THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY ITA NOS.2782&2783/AHD/2012(BY ASSESSEE) AND ITA NOS.13&14/AHD/2013 (BY REVENUE) JAISU SHIPPING CO.PVT.LTD. VS.ADIT (INTL TAXN) ASST.YEARS 2008-09 & 2009-10 - 2 - WAY OF THIS CONSOLIDATED ORDER FOR THE SAKE OF CONV ENIENCE. THE ASSESSEE AND REVENUE HAVE RAISED THE FOLLOWING COMMON GROUND S IN ITS RESPECTIVE APPEALS:- (A) ASSESSEES APPEALS, I.E. ITA NOS.2782 & 2783/A HD/2012 FOR AYS 2008- 09 & 2009-10 (COMMON GROUNDS): ALL THE GROUNDS OF APPEAL ARE INDEPENDENT OF AND WI THOUT PREJUDICE TO EACH OTHER VALIDITY OF REASSESSMENT PROCEEDINGS 1. ON FACTS AND IN CIRCUMSTANCES OF THE CASE, THE LEARNED CIT (A) HAS ERRED IN NOT HOLDING THAT THE ORDER PASSED BY THE ASSESSING OFFI CER IS BAD IN LAW AND NEEDS TO QUASHED. 1.1. THE LEARNED CIT (A) HAS ERRED IN UPHOLDING THE ORDER OF THE LEARNED AO TREATING THE APPELLANT AS REPRESENTATIVE ASSESSEE OF M/S MIL LER DREDGING CO. INC UNDER SECTION 163 AND 160 R.W.S 161 OF THE ACT, EVEN THOU GH NO SPEAKING ORDER HAS BEEN PASSED WHICH IS MANDATORY UNDER THE CURRENT SCHEME OF THE INCOME-TAX ACT, 1961 ('THE ACT'). 1.2. THE LEARNED CIT(A) OUGHT TO HAVE HELD THAT THE LEARNED AO HAS ERRED IN ISSUING NOTICE UNDER SECTION 148 OF ACT TREATING APPELLANT AS A REPRESENTATIVE ASSESSEE OF M/S MILLER DREDGING CO. INC WITHOUT PASSING A SPEAK ING ORDER UNDER SECTION 163(2) TO THAT EFFECT. ACCORDINGLY THE NOTICE UNDER SECTIO N 148 IS INVALID AND NOT TENABLE IN LAW. IN THIS REGARD THE LEARNED CIT(A) HAS ALSO ERR ED IN STATING THAT RATIO LAID DOWN BY HONBLE GUJARAT HIGH COURT IN CASE OF CIT V MUKESH B. S HAH 233 CTR 412, WOULD NOT BE APPLICABLE IN INSTANT CASE. 1.3. THE LEARNED CIT(A) OUGHT TO HAVE HELD THAT THE LEARNED AO HAS ERRED IN RECORDING REASONS AFTER SERVING A NOTICE UNDER SECTION 148 TO THE APP ELLANT FOR REOPENING THE ASSESSMENT. ACCORDINGLY THE LEARNED C IT(A) HAS ERRED IN NOT HOLDING THAT THE NOTICE ISSUED BY THE ASSESSING OFFICER IS BAD IN LAW AND WITHOUT JURISDICTION. 1.4. THE LEARNED CIT (A) OUGHT TO HAVE HELD THAT TH E LEARNED AO HAS ERRED IN PASSING A CRYPTIC ORDER WITHOUT PROPERLY ADDRESSING THE OBJ ECTIONS OF ASSESSEE AGAINST THE REOPENING OF ASSESSMENT PROCEEDINGS, AND HAS MISERA BLY FAILED TO HEED VARIOUS JUDICIAL PRECEDENTS, WHILE PROCEEDING WITH THE RE-O PENING OF ASSESSMENT. THE IMPUGNED ORDER NEEDS TO BE QUASHED AS IT IS BAD-IN- LAW ON ACCOUNT OF SUCH VIOLATION. HENCE THE LEARNED CIT(A) HAS ERRED IN MAINTAINING T HE LEGALITY OF REASSESSMENT PROCEEDINGS INITIATED BY THE LEARNED AO AND THE IMP UGNED ORDER AS THE SAME IS BAD IN LAW AND HENCE SHOULD BE QUASHED. ITA NOS.2782&2783/AHD/2012(BY ASSESSEE) AND ITA NOS.13&14/AHD/2013 (BY REVENUE) JAISU SHIPPING CO.PVT.LTD. VS.ADIT (INTL TAXN) ASST.YEARS 2008-09 & 2009-10 - 3 - ONLY NET INCOME TAXABLE 2. WITHOUT PREJUDICE TO ABOVE IN LAW AND IN THE FA CTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE, THE LEARNED CIT(A) HAS ERRED NOT GIVING ANY FINDING ON THE FOLLOWING GROUNDS SPECIFICALLY RAISED BEFORE HIM: 2.1. THAT LEARNED AO ERRED IN TAXING ENTIRE RECEIPT OF NON-RESIDENT AS TAXABLE INCOME IN THE HANDS OF APPELLANT. THE LEARNED AO OUGHT TO HAVE ALLOWED THE EXPENSES INCURRED BY PEERS ENGAGED IN SIMILAR LINE OF OPERAT ION AS THAT OF M/S MILLER DREDGING CO. INC. 2.2. THAT THE LEARNED AO HAS ERRED IN VIOLATING THE PROVISIONS OF EXPLANATION 3 OF SECTION 9(1)(I) WHEREIN IT HAS BEEN STATED THAT 'ON LY SO MUCH OF INCOME AS ATTRIBUTABLE TO THE OPERATIONS IN INDIA SHALL BE DEEMED TO ACCRU E ARISE IN INDIA' AND THE CARDINAL PRINCIPLE OF TAXATIONS THAT ONLY 'NET INCOME' AFTER ALLOWING FOR EXPENSES IS TAXED UNDER THE ACT. THE LEARNED ASSESSING OFFICER HAS AL SO ERRED IN NOT FOLLOWING RULE 10 OF THE INCOME TAX RULES, 1962 WHICH LAYS DOWN MECHA NISM OF ASCERTAINING INCOME OF NON- RESIDENTS WHEN IT CANNOT BE DEFINITELY ASCERTA INED. 2.3. THAT THE LEARNED AO ERRED IN NOT PROVIDING FOR REASONABLE EXPENSES SUCH AS DEPRECIATION, MOBILIZATION OR DE-MOBILIZATION CHARG ES WHICH ARE INCURRED BY INDUSTRY PEERS IN EARNING OF HIRE CHARGES OF DREDGERS. EVEN THE APPELLANT EXPLICITLY ASKED FOR AN OPPORTUNITY TO PROVIDE SUCH DATA WHICH WAS TURNE D DOWN WITHOUT EXAMINING THE VERACITY OF APPELLANTS' PLEA. VALIDITY OF NOTICE ISSUED UNDER SECTION 163(2) 3. ON FACTS AND IN LAW AND IN CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED IN THE NOT APPRECIATING THE FACT THAT ONCE IT IS HELD THAT M/S MILLER DREDGING CO. INC DOES NOT HAVE ANY BUSINESS CONNECTION OR SOURCE OF INCOME IN INDIA THEN NOTICE ISSUED UNDER SECTION 163(2) ON THE PRETEXT OF BUSIN ESS CONNECTION BECOMES REDUNDANT AND THE ENTIRE PROCEEDINGS INITIATED THEREAFTER BEC OMES UNWARRANTED AND IS NOT TENABLE IN LAW. 4. ON FACTS AND IN CIRCUMSTANCES OF THE CASE, THE L EARNED CIT (A) ERRED IN NOT TREATING ENTIRE PROCEEDINGS AS UNWARRANTED IN LAW AS PROCEED ING UNDER THE GROUP OF SECTION 160 TO 163 AND 195 TO 201 OF THE ACT ARE MUTUALLY E XCLUSIVE. ONCE A PERSON IS ADJUDGED AS ASSESSEE IN DEFAULT UNDER SECTION 201(1 ) R.W.S 201(1A) THE SAME PERSON CANNOT BE TREATED AS REPRESENTATIVE ASSESSEE OF A N ON-RESIDENT FOR SAME STREAM OF INCOME FOR WHICH IT WAS HELD AS ASSESSEE IN DEFAULT UNDER SECTION 201(1) R.W.S 201(1A), AS THE SAME WOULD RESULT IN DOUBLE TAXATIO N OF SAME INCOME WHICH IS NOT AS PER THE PREMISE OF THE ACT. ITA NOS.2782&2783/AHD/2012(BY ASSESSEE) AND ITA NOS.13&14/AHD/2013 (BY REVENUE) JAISU SHIPPING CO.PVT.LTD. VS.ADIT (INTL TAXN) ASST.YEARS 2008-09 & 2009-10 - 4 - LEVYING INTEREST UNDER SECTION 234B AND 234C OF TH E ACT 5. WITHOUT PREJUDICE TO THE ABOVE, ON FADS AND IN C IRCUMSTANCES OF THE CASE NO INTEREST UNDER SECTION 234B & 234C OF THE ACT CAN B E LEVIED WHEN TAX AND INTEREST HAS BEEN LEVIED ON JAISU SHIPPING COMPANY PRIVATE L IMITED UNDER SECTION 201(1) R.W.T 201(1A) OF THE INCOME TAX ACT. ACCORDINGLY NO LIABILITY TO PAY ADVANCE TAX ARISES UNDER SECTION 209 OF THE ACT. THE APPELLANT ACCORDINGLY DENIES AND LEVY OF INTEREST U/S 234B AND 234C OF THE ACT AND HENCE IT MAY BE DELETED. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND AND /OR WITHDRAW ANY GROUND OR GROUNDS OF ABOVE APPEAL EITHER BEFORE OR DURING THE COURSE OF HEARING OF THE APPEAL. (B) REVENUES APPEALS, I.E. ITA NOS.13 & 14AHD/20 13 FOR AYS 2008-09 AND 2009-10 (COMMON GROUNDS):- I) THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT THE FOREIGN COMPANY DID NOT HAVE ANY BUSINESS CONNECTIO N IN INDIA. II) THE LD.CIT(A) HAS FURTHER ERRED IN LAW AND ON F ACTS IN NOT APPRECIATING THE FACT THAT THE ENTIRE ASSETS OF THE FOREIGN COMPANY WAS OPERATING IN INDIAN TERRITORY AND THE INCOME SO GEN ERATED AROSE IN INDIA U/S.5(2)(B) R.W.S.9(1) IN THE FORM OF BUSINES S INCOME AND WAS TAXABLE IN INDIA. III) THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS I N DIRECTING TO TREAT THE INCOME AS ROYALTY AND TAX THE SAME AS SUCH. IV) THE APPELLANT CRAVES LEAVE TO ADD/ALTER/MODIFY /DELETE ANY OF THE GROUNDS OF APPEAL AT THE TIME OF HEARING. 2. ON THE PREVIOUS DATE OF HEARING I.E. ON 10/03/2014 , IT WAS NOTICED BY THE BENCH THAT NO ONE IS APPEARING ON BEHALF OF THE ASSESSEE. IT WAS ALSO NOTED BY THE BENCH THAT HEARING OF THIS APPEAL IS B EING ADJOURNED CONTINUOUSLY FROM 13/01/2013. IT WAS ALSO OBSERVED FROM THE ORDER-SHEET ENTRY NOS.6 TO 9, I.E. ON 31.1.2013, 28.3.13, 28.5. 13 AND 01.8.13 THAT EARLIER EITHER MS.URVASHI SHODHAN ADVOCATE OR SOMEO NE ON HER BEHALF WAS APPEARING, BUT SUDDENLY SINCE 1.10.2013 NOBODY IS APPEARING FOR AND ON BEHALF OF ASSESSEE. THE BENCH ASKED THE DR TO SERVE THE NOTICE ITA NOS.2782&2783/AHD/2012(BY ASSESSEE) AND ITA NOS.13&14/AHD/2013 (BY REVENUE) JAISU SHIPPING CO.PVT.LTD. VS.ADIT (INTL TAXN) ASST.YEARS 2008-09 & 2009-10 - 5 - ON THE ASSESSEE AND THE DEPARTMENT HAS FILED A LETT ER OF DY.DIRECTOR OF INCOME-TAX (INTERNATIONAL TAXATION)-II, DATED 9/02/ 2014 STATING THAT NOTICE HAS BEEN DULY SERVED UPON THE ASSESSEE ON 11.2.14 A ND ALSO ENCLOSED XEROX COPY OF THE NOTICE ISSUED BY THE TRIBUNAL DUL Y STAMPED AND SIGNED BY SHRI DINESH RAO OF M/S.JAISU SHIPPING CO.PVT.LTD . IN SPITE OF THIS, NONE APPEARED ON 10.03.2014. STILL, THE BENCH HA S GIVEN ONE MORE OPPORTUNITY TO THE ASSESSEE. THE BENCH ENQUIRED AB OUT MS.URVASHI SHODHAN ADVOCATE, SHRI PARIN SHAH, ADVOCATE FROM TH E OFFICE OF MS.URVASHI SHODHAN ADVOCATE APPEARED AND SUBMITTED THAT THEY HAVE WITHDRAWN THEMSELVES FROM THESE APPEALS. THEREAFTE R, IN WRITING ALSO, THEY HAVE CONFIRMED THEIR WITHDRAWAL OF VAKALAT F ROM THESE APPEALS. HENCE, WE PROCEED TO DECIDE THESE APPEALS EX-PARTE QUA THE ASSESSEE UNDER ABOVE CIRCUMSTANCES. 2.1. BRIEF FACTS OF THE CASE ARE THAT THE ASST.DIR ECTOR OF INCOME-TAX (INTERNATIONAL TAXATION) SOUGHT TO TREAT THE ASSESS EE AS REPRESENTATIVE ASSESSEE OF M/S.MILLER DREDGING CO.INC. AND ISSUED NOTICES U/S.163(2) & 148 OF THE ACT TO ASSESS THE INCOME OF M/S.MILLER D REDGING CO.INC TREATING JAISU SHIPPING CO.PVT.LTD. AS REPRESENTATI VE ASSESSEE AND WENT ON TO PASS THE IMPUGNED ASSESSMENT ORDERS. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL(S) BEFORE THE LD.CIT(A) FOR BOTH THE YEARS. BEFORE THE LD.CIT(A), THE ASSESSEE RAISED T WO OBJECTIONS REGARDING VALIDITY OF REASSESSMENT PROCEEDINGS AS WELL AS T HE VALIDITY OF THE ACTION OF THE AO IN TREATING THE ASSESSEE AS REPRESENTATIV E ASSESSEE OF M/S.MILLER DREDGING CO.INC. IN ADDITION TO THAT, THE ASSESSEE RAISED OBJECTION ON THIS ASPECT ALSO, THAT THE AO HAD VIOL ATED THE PROVISIONS OF ITA NOS.2782&2783/AHD/2012(BY ASSESSEE) AND ITA NOS.13&14/AHD/2013 (BY REVENUE) JAISU SHIPPING CO.PVT.LTD. VS.ADIT (INTL TAXN) ASST.YEARS 2008-09 & 2009-10 - 6 - EXPLANATION 3 OF SECTION 9(1)(I) OF THE ACT, WHEREI N IT HAS BEEN STATED THAT 'ONLY SO MUCH OF INCOME AS ATTRIBUTABLE TO THE OPER ATIONS IN INDIA SHALL BE DEEMED TO ACCRUE ARISE IN INDIA'. IT WAS THE ST AND OF THE ASSESSEE THAT THIS COMPANY M/S.MILLER DREDGING CO.INC. DOES NOT H AVE ANY BUSINESS CONNECTION OR BUSINESS ESTABLISHMENT IN INDIA. 3. AFTER HEARING THE ASSESSEE, THE LD.CIT(A) HAS DE CIDED AGAINST THE ASSESSEE ON THE ASPECT OF VALIDITY OF RE-ASSESSMENT PROCEEDINGS AS WELL AS VALIDATION OF THE ACTION OF THE AO IN TREATING THE ASSESSEE-COMPANY AS REPRESENTATIVE OF M/S.MILLER DREDGING CO.INC. (MDC I). THE LD.CIT(A) ALSO HELD THAT THE FOREIGN COMPANY (NON-RESIDENT), I.E. MDCI DID NOT HAVE ANY BUSINESS CONNECTION OR ANY SOURCE OF INCOM E IN INDIA AND, THEREFORE, THE PAYMENTS RECEIVED BY THE FOREIGN COM PANY CAN NEVER PARTAKE THE CHARACTER OF BUSINESS INCOME CHARGEABLE TO TAX UNDER ANY OF THE PROVISIONS OF THE I.T.ACT. HE HELD THAT THESE PAYMENTS ARE IN THE NATURE OF ROYALTY AS PER THE AMENDED PROVISIONS OF SEC.9(1)(VI) OF THE ACT. 4. NOW, THE REVENUE IS IN APPEAL BEFORE US ON THIS ASPECT THAT THE LD.CIT(A) HAS ERRED IN HOLDING THAT FOREIGN COMPANY DID NOT HAVE ANY BUSINESS CONNECTION IN INDIA. IT IS ALSO THE OBJE CTION OF THE REVENUE THAT THE LD.CIT(A) HAS FURTHER ERRED IN HOLDING THAT THE ENTIRE ASSETS OF THE FOREIGN COMPANY WAS NOT OPERATING IN INDIAN TERRITO RY AND, HENCE, INCOME IS NOT TAXABLE AS BUSINESS INCOME IN INDIA. WHERE AS THE GRIEVANCE OF THE ASSESSEE IS THAT LD.CIT(A) HAD WRONGLY REJECTED THE CLAIM OF THE ASSESSEE REGARDING VALIDITY OF REASSESSMENT PROCEEDINGS AND TREATING THE ASSESSEE AS REPRESENTATIVES OF M/S.MDCI. ON MERIT, THE OBJE CTION OF THE ASSESSEE ITA NOS.2782&2783/AHD/2012(BY ASSESSEE) AND ITA NOS.13&14/AHD/2013 (BY REVENUE) JAISU SHIPPING CO.PVT.LTD. VS.ADIT (INTL TAXN) ASST.YEARS 2008-09 & 2009-10 - 7 - IS THIS THAT THE LD.CIT(A) SHOULD HAVE GIVEN A FIND ING THAT THE AO ERRED IN TAXING THE ENTIRE RECEIPTS OF NON-RESIDENT AS TAXAB LE IN THE HANDS OF THE ASSESSEE. IT IS THE CLAIM OF THE ASSESSEE THAT THE AO SHOULD HAVE ALLOWED THE EXPENSES INCURRED BY PEERS ENGAGED IN SIMILAR L INE OF OPERATION AS THAT OF M/S.MILLER DREDGING CO.INC. IN EFFECT, THE ASSESSEE HAS MAINLY TWO OBJECTIONS; FIRSTLY THAT THE VALIDITY OF RE-ASS ESSMENT PROCEEDINGS AS WELL TREATING THE ASSESSEE AS REPRESENTATIVES ASSES SEE OF M/S.MILLER DREDGING CO.INC. AND SECONDLY THAT EVEN IF IT IS HE LD THAT SOME INCOME IS ASSESSABLE IN THE HANDS OF THE ASSESSEE, THEN IT SH OULD BE NET INCOME AFTER ALLOWING VARIOUS EXPENSES, SUCH AS DEPRECIATION, MO BILIZATION OR DE- MOBILIZATION CHARGES WHICH ARE INCURRED BY INDUSTRY PEERS. THE GRIEVANCE OF THE REVENUE IS THAT IT SHOULD BE HELD THAT THE FOREIGN COMPANY HAD BUSINESS CONNECTION IN INDIA AND THE EN TIRE ASSETS OF THE FOREIGN COMPANY WAS OPERATING IN INDIAN TERRITORY A ND, THEREFORE, THE INCOME GENERATED SHOULD BE ASSESSED IN INDIA AS BUS INESS INCOME. 5. THE LD.DR OF THE REVENUE SUPPORTED THE ASSESSMEN T ORDERS. REGARDING THE ASSESSEES APPEALS, HE ALSO SUPPORTED THE ORDER OF THE LD.CIT(A). 6. THE DECISION OF LD.CIT(A) ON THE ISSUES RAISED BY THE ASSESSEE IN ITS APPEALS, I.E. REGARDING VALIDITY OF RE-ASSESSME NT PROCEEDINGS AND TREATING THE ASSESSEE AS REPRESENTATIVE ASSESSEE IS CONTAINED IN PARA-4.2 OF HIS ORDER WHICH IS REPRODUCED HEREINBELOW FOR THE S AKE OF READY REFERENCE:- ITA NOS.2782&2783/AHD/2012(BY ASSESSEE) AND ITA NOS.13&14/AHD/2013 (BY REVENUE) JAISU SHIPPING CO.PVT.LTD. VS.ADIT (INTL TAXN) ASST.YEARS 2008-09 & 2009-10 - 8 - 4.2. I HAVE GONE THROUGH THE FACTS OF THE CASE AN D THE SUBMISSIONS OF THE APPELLANT. THE ISSUANCE OF NOTI CE U/S.163(2) BY THE ADIT (INTL.TAXN.), GANDHIDHAM-KUTCH DATED 23/3/201 1 AND ITS SUBSEQUENT WITHDRAWAL DOES NOT IN ANY WAY RENDER TH E VALID PROCEEDINGS INITIATED BY ADIT (INTL.TAXN.), AHMEDABAD SEPARATEL Y ILLEGAL. THE INCONVENIENCE TO THE APPELLANT COULD AT THE MOST BE HELD DESIRED TO BE AVOIDABLE. HOWEVER, THE ERROR WAS IMMEDIATELY FOUN D OUT AND REDRESSED AND PROCEEDINGS CONTINUED ONLY FROM VALID JURISDICT ION. AS FAR AS THE ORDER U/S.163(2) AND REASONS FOR ISSUING NOTICE U/S .148 ARE CONCERNED; THESE HAVE DONE BY WAY OF A SINGLE OFFICE NOTE DA TED 28/3/2011 AND HAVE BEEN SUPPLIED TO THE APPELLANT AS SOON AS REQU ESTED THROUGH LETTER DATED 17/10/2011. IT IS TRUE THAT THE ORDER U/S.16 3(2) IS AN APPEALABLE ONE, BUT UNLIKE IN THE CASE RELIED UPON BY THE APPE LLANT I.E. CIT VS. MUKESH B.SHAH 233 CTR 412 ; SPECIFIC OPPORTUNITY OF BEING HEARD HAS BEEN GIVEN TO THE APPELLANT AND THE ORDER HAS BEEN GIVEN AS SOON AS REQUESTED. I FIND THAT IN THE REASONS FOR TREATING THE APPELLANT AS REPRESENTATIVE ASSESSEE, THE AO HAS RELIED ON THE O RDER PASSED U/S.201 RWS 201(1A) TREATING THE APPELLANT AS ASSESSEE IN D EFAULT. IN THAT ORDER, WITHOUT PREJUDICE TO THE ASSISTANT DIRECTOR OF INCO ME TAX (INTERNATIONAL TAXATION) HOLDING THAT THE NON-RESIDENT MILLER DRED GING CO.INC HAD BUSINESS CONNECTION IN INDIA; ALSO WENT ON TO H OLD THAT THE TIME HIRE CHARGES WERE IN THE NATURE OF ROYALTY UNDER PROVI SIONS OF SECTION 9(1)(VI) AS WELL. THEREFORE, AS PER THE PROVISIONS OF SECTION 163, THE AO HAS RIGHTLY TREATED M/S.JAISU SHIPPING CO.PVT.LTD. AS THE REPRESENTATIVE ASSESSEE, AS IN BOTH THE FOLLOWING CIRCUMSTANCES IT CAN BE HELD TO BE SO: 163. (1) FOR THE PURPOSES OF THIS ACT, AGENT, IN RELATION TO A NON- RESIDENT, INCLUDES ANY PERSON IN INDIA (A) ; OR (B) WHO HAS ANY BUSINESS CONNECTION WITH THE NON-RESIDE NT; OR (C) FROM OR THROUGH WHOM THE NON-RESIDENT IS IN RECEIPT OF ANY INCOME, WHETHER DIRECTLY OR INDIRECTLY; OR (D) .. THE NOTICE U/S.148 WAS SERVED ON THE ASSESSEE ON 28 /3/2011, ONLY. THE APPELLANT ALSO ADMITS THAT. AS THE TIME OF RECORDING THE REASONS WHICH ARE ALSO DATED 28/3/2011 IS NOT ASCER TAINABLE; I ITA NOS.2782&2783/AHD/2012(BY ASSESSEE) AND ITA NOS.13&14/AHD/2013 (BY REVENUE) JAISU SHIPPING CO.PVT.LTD. VS.ADIT (INTL TAXN) ASST.YEARS 2008-09 & 2009-10 - 9 - HAVE NO REASON TO HOLD THAT AT LEAST SERVICE WAS NO T SUBSEQUENT TO RECORDING OF THE REASONS. THE DATE ON THE NOTICE A PPEARS TO BE A TYPING MISTAKE. THE PROCEEDINGS CANNOT BE HELD TO BE VITIATED UNDER THESE CIRCUMSTANCES. THE OTHER ISSUES RAISED ARE MERELY TECHNICAL IN NATURE AND ARE DISMISSED. THEREFORE, THE FIRST 4 GROUNDS OF APPEAL IN BOTH THE APPEALS ARE DISMISSED . 6.1. FROM THE ABOVE PARAGRAPH OF THE ORDER OF THE L D.CIT(A), WE FIND THAT THE DECISION OF THE LD.CIT(A) REGARDING HOLDIN G THE ASSESSEE AS A REPRESENTATIVE ASSESSEE IS AS PER THE PROVISIONS OF SECTION 163(1) OF THE ACT AND THE DECISION REGARDING VALIDITY OF RE-ASSES SMENT PROCEEDINGS IS ON THIS BASIS THAT THE NOTICE U/S.148 WAS SERVED ON THE ASSESSEE ON 28/3/2011 AND REASON WERE ALSO RECORDED ON THE SAME DATE BUT AT THE TIME OF RECORDING THE REASONS AND SERVICE OF NOTICE IS N OT ASCERTAINABLE, BUT HE DID NOT FIND ANY REASON TO HOLD THAT THE SERVICE OF NOTICE WAS NOT SUBSEQUENT TO THE RECORDING OF THE REASONS. HE ALS O GIVEN A FINDING THAT THE DATE ON THE NOTICE APPEARS TO BE A TYPING MISTA KE AND, THEREFORE, THE PROCEEDING CANNOT BE HELD TO BE INITIATED UNDER THE SE CIRCUMSTANCES. 6.2. WE DO NOT FIND ANY INFIRMITY IN THESE FINDINGS OF THE LD.CIT(A) AND HENCE, WE DECLINE TO INTERFERE WITH THE ORDER OF TH E LD.CIT(A) ON THIS ISSUE. ACCORDINGLY, GROUND NOS.1 TO 1.4 ARE REJECT ED IN ASSESSEES APPEAL(S). 7. REGARDING GROUND NO.2 OF THE ASSESSEE AS PER W HICH THE ASSESSEE IS ASKING FOR NETTING OF EXPENSES, MAINLY, WE WOULD LI KE TO OBSERVE THAT EVEN AS PER THE GROUNDS ALSO, THE ASSESSEE IS NOT C ONTENDING THAT ANY EXPENSES WERE, IN FACT, INCURRED BY THE ASSESSEE-LE SSOR BECAUSE IN THE ITA NOS.2782&2783/AHD/2012(BY ASSESSEE) AND ITA NOS.13&14/AHD/2013 (BY REVENUE) JAISU SHIPPING CO.PVT.LTD. VS.ADIT (INTL TAXN) ASST.YEARS 2008-09 & 2009-10 - 10 - GROUNDS ALSO, THE CLAIM OF THE ASSESSEE IS THIS THA T DEDUCTION SHOULD BE ALLOWED FOR REASONABLE EXPENSES INCURRED BY PEERS E NGAGED IN SIMILAR LINE OF OPERATION AS THAT OF M/S MILLER DREDGING CO . INC. WE WOULD LIKE TO OBSERVE THAT THE DEDUCTION ON ACCOUNT OF EXPENSE IS ALLOWABLE TO THE EXTENT OF EXPENSE IS ACTUALLY BEEN INCURRED BY THE ASSESSEE AND NOT ON THE BASIS OF COMPARABLE EXPENSES INCURRED BY SOME DIFFE RENT ASSESSEES ENGAGED IN SAME TYPE OF BUSINESS. HENCE, WE DO NOT FIND ANY MERIT IN THE GROUND ALSO. THEREFORE, GROUND NO.2 OF ASSESSEES APPEAL IS REJECTED. 8. NOW, WE TAKE UP GROUND NOS.3 & 4 RAISED BY THE A SSESSEE. GROUND NO.3 IS VALIDITY OF NOTICE ISSUED UNDER SECTION 163 (2) AND THE SAME IS COVERED BY OUR DECISION IN ASSESSEES APPEAL IN GRO UND NOS.1 TO 1.4(SUPRA). 9. GROUND NO.4 OF ASSESSEES APPEAL(S) IS AGAINST I N DEFAULT U/S.201(1) R.W.S.201(1A) OF THE ACT. 9.1. THE LD.CIT-DR SUPPORTED THE ORDER OF LD.CIT(A ) AND SUBMITTED THAT THERE IS NO BAR UNDER THE LAW THAT A REPRESENT ATIVE OF ASSESSEE CANNOT BE TREATED AS ASSESSEE IN DEFAULT, SINCE NO ONE APP EARED ON BEHALF OF THE ASSESSEE, DESPITE SERVICE OF NOTICE. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE HAS NOTHING TO SAY ON THIS M ATTER. CONSEQUENTLY, THIS GROUND OF ASSESSEES APPEAL IS REJECTED. ITA NOS.2782&2783/AHD/2012(BY ASSESSEE) AND ITA NOS.13&14/AHD/2013 (BY REVENUE) JAISU SHIPPING CO.PVT.LTD. VS.ADIT (INTL TAXN) ASST.YEARS 2008-09 & 2009-10 - 11 - 10. GROUND NO.5 OF ASSESSEES APPEAL(S) IS AGAINST LEVY OF INTEREST U/S.234B AND 234C OF THE ACT. THE ISSUE IS CONSEQU ENTIAL IN NATURE DOES NOT NEED SEPARATE ADJUDICATION. REVENUES APPEALS: 11. THE DECISION OF THE LD.CIT(A) ON MERIT REGARDIN G BUSINESS CONNECTION OR NOT AND TAXABILITY OF BUSINESS INCOME OR NOT IS CONTAINED ON PAGE NOS.26 TO 30 OF HIS ORDER, WHICH ARE REPROD UCED HEREINBELOW:- IN THE INSTANT CASE, THE LESSEE HAS FULL CONTROL O VER THE EQUIPMENT AND THE STAFF AND THE OPERATION OF THE EQUIPMENT. IT IS SIM ILAR TO (EVEN MORE CLEAR CASE AS THE PAYMENT IS NOT ASSURED MINIMUM BUT IS FIXED IRRESPE CTIVE OF THE ACTUAL USAGE) CASE (II) CITED BY HON'BLE KARNATAKA HIGH COURT AS REPRODUCED ABOVE. THE TRANSFER OF RIGHT TO USE THE DREDGER ITSELF, IS CLEARLY TRANSFERRED FOR A PERIOD (NOT OUTRIGHT SALE); AND THEREFORE THE PAYMENT WOULD BE OF THE NATURE OF ROY ALTY. THE CAPTAIN (ALTHOUGH APPOINTED BY THE OWNERS) SHALL BE UNDER THE ORDERS AND DIRECTIONS OF THE CHARACTERS AS REGARDS EMPLOYMENT AND AGENCY. IN SO MUCH SO THA T IF DISSATISFIED WITH HIS SERVICES, THE LESSEE CAN GET HIM CHANGED AS PER THE AGREEMENT ITSELF. THIS FACT, IN FACT HAS BEEN EMPHASIZED BY THE AO HIMSELF AT PAGE-1 OF THE ORDERS WHERE HE SAYS THAT 'THE ASSESSEE HAS TAKEN THESE DREDGERS FROM ABOVE C OMPANY ON LONG TERM CHARTER ALONG WITH THE CREW WHICH WAS CARRYING OUT ITS COM MAND DREDGING OPERATIONS AS ASSESSEE'S BUSINESS OPERATION AT VARIOUS PLACES IN INDIA MAINLY,' HE HAS REITERATED THIS IN PARAS,3 OF HIS ORDERS WHEREIN HE HAS HELD T HAT '...., AS PER AGREEMENT ENTERED INTO BY THE ASSESSEE, IT HAS ACQUIRED RIGHT TO CONT ROL AND COMMAND THE DREDGER FOR THE PURPOSE OF ITS BUSINESS AS PER HIS REQUIREMENT. THE ASSESSEE HAS COMPLETE CONTROL ON THE MANPOWER WORKING ON THE DREDGER, INCLUDING ITS CAPTAIN TO DIRECT THEM TO CARRY OUT SPECIFIC ACTIVITIES AS REQUIRED FOR ITS BUSINES S. ' NOT ONLY THIS, THE OTHER CRITERIA WHICH MAY HAVE TA KEN THE ACTIVITY OF THE LESSEE INTO THE ZONE OF PROVIDING SERVICE (DOING DREDGING ITSELF ON BEHALF OF ASSESSEE AS REFERRED TO IN OECD COMMENTARY) ARE NOT SATISFIED I N THIS CASE. ONCE THE HIRED DREDGER IS PLACED AT THE DISPOSAL OF THE APPELLANT, THE PAYMENT TO THE LESSOR DOES NOT DEPEND AT ALL ON THE DREDGING ACTIVITY UNDERTAKEN. EVEN IF THE DREDGER DOES NOT WORK FOR A SINGLE HOUR, THE PAYMENT TO THE LESSOR WOULD BE SAME. FURTHER, THE EQUIPMENT HAS BEEN GIVEN ONLY TO ONE USER I.E. THE ASSESSEE A ND THE LESSOR OR HIS CREW IS NOT NEGOTIATING AND GIVING THE DREDGER TO OTHERS IN IND IA DURING THIS TIME. ONCE THE ACTIVITY OF M/S. MILLER DREDGING CO., IS NOT A BUSI NESS ACTIVITY, NOT EVEN BEING A SERVICE, THERE IS NO QUESTION OF IT BEING TAXED UND ER THE HEAD BUSINESS EVEN IF THERE ITA NOS.2782&2783/AHD/2012(BY ASSESSEE) AND ITA NOS.13&14/AHD/2013 (BY REVENUE) JAISU SHIPPING CO.PVT.LTD. VS.ADIT (INTL TAXN) ASST.YEARS 2008-09 & 2009-10 - 12 - WAS A BUSINESS CONNECTION, IN THIS CASE, EVEN THERE IS NO BUSINESS CONNECTION WHEN THERE IS NO EXISTING PLACE OF BUSINESS, EVEN NON-FI XED AND NO ACTIVITY OF THE NATURE OF BUSINESS IS BEING CARRIED ON EITHER BY THE PAYEE I. E. M/S. MILLER DREDGING CO., OR ITS CREW AS ALLEGED BY THE AO. THERE IS NO COMMON INTER EST BETWEEN THE APPELLANT COMPANY AND THE FOREIGN COMPANY, THEIR TRANSACTIONS ARE NOT EVEN DOUBTED LESS PROVED TO BE NOT AT ARM'S LENGTH, AND THE TWO DO NO T HAVE A REVENUE SHARING AGREEMENT OR ARRANGEMENT. WITH THESE OBSERVATIONS, I HOLD THAT THE FOREIGN COMPANY DID NOT HAVE ANY BUSINESS CONNECTION OR ANY SOURCE OF BUSINESS INCOME IN INDIA AND, THEREFORE, THE PAYMENTS RECEIVED BY THE FOREIGN COM PANY CAN NEVER PARTAKE THE CHARACTER OF BUSINESS INCOME CHARGEABLE TO TAX UNDE R ANY OF THE PROVISIONS OF THE IT. ACT. TO THAT EXTENT, THEREFORE, THE ORDERS OF THE A DIT ARE REVERSED. COMING TO THE NEXT QUESTION AS TO WHETHER THE PAYME NTS CAN BE SAID TO BE IN THE NATURE OF ROYALTY INCOME, AFTER CONSIDERING THE ENTIRE FACTS AND CIRCUMSTANCES, THE PROVISIONS OF AW AND THE CASES CITED, I AM OF THE F IRM VIEW THAT THESE PAYMENTS ARE IN THE NATURE OF ROYALTY AS PER THE AMENDED PROVISIONS OF SEC. 9(L)(VI). THE DECISION OF ITAT, COCHIN IN THE CASE OF M/S. KIN SHIP SERVICES INDIA PVT LTD IS NOT GOOD LAW AS THE AMENDED PROVISIONS OF SEC, 9(L)(VI) RW EXPLANAT ION 2 CLAUSE (IVA) WERE NOT BOUGHT TO ITS NOTICE AND IT FAILED TO CONSIDER THAT NOW TH E USE OR RIGHT TO USE ANY INDUSTRIAL, COMMERCIAL SCIENTIFIC EQUIPMENT IS COVERED UNDER RO YALTY. AS PER THE DISCUSSION ABOVE, THEREFORE, IT IS HELD THAT THE APPELLANT COM PANY WAS UNDER AN OBLIGATION TO DEDUCT TAX AT SOURCE APPLICABLE TO ROYALTY PAYMENTS ., PARTICULARLY AS PER THE AMENDED PROVISIONS WHEREIN NOW THE NON-RESIDENT NEED NOT HA VE RESIDENCE OR PLACE OF BUSINESS OR BUSINESS CONNECTION IN INDIA NOR SERVICES ARE NE CESSARILY TO BE RENDERED IN INDIA FOR THE ROYALTY TO BE DEEMED TAXABLE IN INDIA U/S 9 (L)(VI).' THEREFORE, FOLLOWING THE ABOVE ORDERS, IT IS HELD T HAT - THE FOREIGN COMPANY I,E. MILLER DREDGING CO. (NONRE SIDENT) DID NOT HAVE ANY BUSINESS CONNECTION OR ANY SOURCE OF BUSINESS INCOM E IN INDIA AND, - THEREFORE, THE PAYMENTS RECEIVED BY THE FOREIGN COM PANY CAN NEVER PARTAKE THE CHARACTER OF BUSINESS INCOME CHARGEABLE TO TAX UNDER ANY OF THE PROVISIONS OF THE IT. ACT. THAT THESE PAYMENTS ARE IN THE NATURE OF ROYALTY AS PER THE AMENDED PROVISIONS OF SEC. 9(L)(VI) BECAUSE AS PER THE AMENDED PROVISIONS OF SEC. 9(L)(VI) RW EXPLANATION 2 CLAUSE (IVA): THE USE OR RIGHT TO USE ANY INDUSTRIAL, COMMERCIAL SCIENTIFIC EQUIPMENT IS COVERED UNDER ROYALTY. AS P ER THE AMENDED PROVISIONS, THE NON-RESIDENT NEED NOT HAVE RESIDENCE OR PLACE O F BUSINESS OR BUSINESS CONNECTION IN INDIA NOR SERVICES ARE NECESSARILY TO BE RENDERED IN INDIA FOR THE ROYALTY TO BE DEEMED TAXABLE IN INDIA U/S 9(L)( VI). THERE IS NO QUESTION OF APPLICATION OF SECTION 44 DA OF THE ACT AS IT DOES NOT CARRY ON BUSINESS IN INDIA THROUGH A PERMANENT ESTABLISHMENT SITUATED TH EREIN. THEREFORE, THE INCOME AS ROYALTY IS ASSESSABLE FOR THE 2 ASSESSMENT YEARS IN APPEAL. NEXT ISSUE IN QUESTION, WHICH ARIS ES PURSUANT TO MY FINDING RECORDED ABOVE TO THE EFFECT THAT THE PAYMENTS MADE BY THE APPELLANT COMPANY ITA NOS.2782&2783/AHD/2012(BY ASSESSEE) AND ITA NOS.13&14/AHD/2013 (BY REVENUE) JAISU SHIPPING CO.PVT.LTD. VS.ADIT (INTL TAXN) ASST.YEARS 2008-09 & 2009-10 - 13 - TO THE FOREIGN COMPANY ARE IN THE NATURE OF ROYALTY , IS AT WHAT IS INCOME OR INCOME TAX ASSESSABLE, THIS ISSUE WAS ALSO DECIDED IN THE COMBINED ORDER M APPEAL NQS,CIT(A)/GNR/56 TO 63/2011-12 DATED 21/11/ 2011 AS FOLLOWS (RELEVANT PARTS TO ASS 2008-09 AND 2009-10): ' FOR DECIDING THIS QUESTION WE HAVE TO REFER TO TH E PROVISIONS 'OF SECTION 115A OF THE IT. ACT. OBVIOUSLY, THE CONDITI ONS LAID DOWN U/S.115A HAVE TO BE FULFILLED. THE FIRST CONDITION IS THAT THE AGREEMENT ENTERED INTO BY A FOREIGN COMPANY WITH THE INDIAN C ONCERN IS APPROVED BY THE CENTRAL GOVERNMENT. IN THE PRESENT CASE, THE RELEVANT AGREEMENTS HAVE BEEN INVARIABLY APPROVED BY THE CEN TRAL GOVERNMENT (THE DIRECTOR GENERAL OF SHIPPING). THE EXTENDED P ERIODS OF THE AGREEMENTS HAVE ALSO BEEN DULY APPROVED BY THE DIRE CTOR GENERAL OF SHIPPING ON BEHALF OF THE GOVT. OF INDIA. THUS, THI S PRIMARY CONDITION IS FULFILLED. COMING TO THE APPLICABLE RATE, SECTIO N 115A LAYS DOWN THAT WHERE THE AGREEMENT IS MADE AFTER 31ST MAY, 1997 BU T BEFORE 1ST JUNE, 2005, THE RATE OF 20% SHOULD BE APPLIED AND WHERE T HE ROYALTY IS RECEIVED IN PURSUANCE OF AN AGREEMENT MADE ON OR AF TER 1ST JUNE, 2005, RATE OF 10% IS TO BE APPLIED. ACCORDINGLY, TH E AFORESAID CUTOFF DATE HAS TO BE TAKEN NOTE OF FOR THE PURPOSE OF DET ERMINING THE RATE OF TAX. THE DATE 1ST JUNE, 2005 FALLS IN THE F.Y, 2005 -06 RELEVANT TO THE A.Y. 2006-07. IN RESPECT OF F.YS. 2006-07 TO 2009-1 0, THE RATE OF 10% WILL BE APPLICABLE PROVIDED THE DATE ON WHICH THE R ELEVANT AGREEMENTS ARE SIGNED ARE AFTER THE CUTOFF DATE OF 1ST JUNE, 2 005 AS CLAIMED BY THE APPELLANT. HOWEVER, THE AO IS DIRECTED TO VERIFY TH IS ASPECT WHILE GIVING THE EFFECT TO THIS ORDER. DEDUCTION FOR ANY EXPENDITURE FROM THE ROYALTY CLAIMED IS NEITHER CLAIMED NOR IS TO BE ALL OWED FOR WORKING OUT THE LIABILITY.' FOLLOWING THE ABOVE ORDER, THE TAX ON THE INCOMES ( ROYALTY) TAXABLE AS REPRESENTATIVE ASSESSEE FOR THE TWO YEARS IS TO BE COMPUTED @10 PERCENT (OR 20% IF CLAIM OF DATE OF AGREEMENT IS FOUND WRONG I. E., PRIOR TO THE CUTOFF DATE OF 1ST JUNE, 2005) WITHOUT ALLOWING ANY DEDUCTION F OR ANY EXPENDITURE FROM THE, ROYALTY PAYABLE/PAID AFTER VERIFYING THE DATES OF AGREEMENTS. 11.1. FROM THE ABOVE PARAGRAPH OF THE ORDER OF THE LD.CIT(A), WE FIND THAT THE DECISION OF THE LD.CIT(A) BASED ON THIS PR ESUMPTION THAT EVEN IF DREDGER IS NOT WORKING THE LESSOR WOULD GET THE AMO UNT OF PAYMENT FROM THE LESSEE. BUT THERE IS A FALLACY IN THIS ARGUME NT BECAUSE THE LESSOR WILL GET THE SAME AMOUNT OF PAYMENT FROM THE LESSEE IF T HE ASSESSEE MAINTAINS ITA NOS.2782&2783/AHD/2012(BY ASSESSEE) AND ITA NOS.13&14/AHD/2013 (BY REVENUE) JAISU SHIPPING CO.PVT.LTD. VS.ADIT (INTL TAXN) ASST.YEARS 2008-09 & 2009-10 - 14 - THE DREDGER IN WORKING CONDITION THROUGHOUT ALONGWI TH ITS OPERATOR AND OTHER INFRASTRUCTURE. IF IT IS FOUND THAT ANY POIN T OF TIME, THE DREDGER IS HAVING ANY DEFECT OR IT IS NOT HAVING WITHOUT OPERA TOR OR OTHER INFRASTRUCTURE, THE ASSESSEE-LESSOR WILL NOT GET AN Y PAYMENT FROM THE LESSEE FOR SUCH PERIOD. HENCE, IT HAS TO BE ACCEPT ED THAT THE ASSESSEE- LESSOR IS GETTING PAYMENT FOR DREDGING ACTIVITY AND NOT OTHERWISE. SIMPLY BECAUSE THE LESSEE HAS SOME CONTROL OVER THE OPERATOR, ETC. IT CANNOT BE SAID THAT THE ASSESSEE-LESSOR IS NOT ENGA GED IN DREDGING ACTIVITY. IN FACT, THE ASSESSEE-LESSOR IS DOING AC TIVITY AS PER THE REQUIREMENT OF THE LESSEE AND, HENCE, WE REVERSE TH E ORDER OF THE LD.CIT(A) ON THIS ISSUE AND RESTORE THAT OF THE AO. REGARDING THE JUDGEMENT OF HONBLE KARNATAKA HIGH COURT IN THE CA SE OF LAKSHMI AUDIO VISUAL INC. VS. ACIT REPORTED AT (2001) 124 S TC 426 (KAR.) ON WHICH HEAVY RELIANCE WAS PLACED BY LD.CIT(A), WE W OULD LIKE TO OBSERVE THAT THIS JUDGEMENT OF HONBLE KARNATAKA HIGH COURT IS IN RESPECT OF SALES-TAX AND NOT IN CONNECTION WITH INCOME-TAX PRO CEEDINGS. HERE, THE DECIDING POINT IS NOT THIS AS TO WHETHER THE SALE O F EQUIPMENT HAS TAKEN PLACE OR NOT. HERE, WE ARE CONCERNED WITH THE NATU RE OF ACTIVITY AND EQUIPMENT OF THE ASSESSEE-LESSOR AND AS PER ABOVE D ISCUSSION NOW WE FIND THAT THE ASSESSEE-LESSOR IS DOING DREDGER ACTI VITY AS PER THE REQUIREMENT OF THE LESSEE AND FOR THAT PURPOSE THE LESSEE IS ENTITLED TO GIVE SOME DIRECTIONS TO THE OPERATOR AND NOTHING MO RE AND, THEREFORE IT HAS TO BE ACCEPTED THAT THE ASSESSEE-LESSOR IS ENGA GED IN BUSINESS ACTIVITY IN INDIA. AS PER OUR DISCUSSION, WE ALLOW THE GROU ND RAISED BY THE REVENUE IN BOTH THE YEARS. ITA NOS.2782&2783/AHD/2012(BY ASSESSEE) AND ITA NOS.13&14/AHD/2013 (BY REVENUE) JAISU SHIPPING CO.PVT.LTD. VS.ADIT (INTL TAXN) ASST.YEARS 2008-09 & 2009-10 - 15 - 13. IN THE RESULT, REVENUES APPEALS FOR AYS 2008-0 9 & 2009-10 ARE ALLOWED, WHEREAS ASSESSEES APPEALS FOR AYS 2008-09 & 2009-10 ARE DISMISSED. ORDER PRONOUNCED IN COURT ON THE DATE MENTIONED HER EINABOVE AT CAPTION PAGE SD/- SD/- ( .. ) ($ %&) ! ! ( N.S. SAINI ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 28/ 03 /2014 0.., '.../ T.C. NAIR, SR. PS - ( 1&2 32,& - ( 1&2 32,& - ( 1&2 32,& - ( 1&2 32,&/ COPY OF THE ORDER FORWARDED TO : 1. 45 / THE APPELLANT 2. 1645 / THE RESPONDENT. 3. ## & $7 / CONCERNED CIT 4. $7() / THE CIT(A)-GANDHINAGAR 5. 2'%8 1& , , / DR, ITAT, AHMEDABAD 6. 89 :' / GUARD FILE. -$ -$ -$ -$ / BY ORDER, 62& 1& //TRUE COPY// ; ;; ;/ // / #< #< #< #< ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 19.3.14 (DICTATION-PAD 24-PA GES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 20.3.14 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH FAIR ORDER PLACED BEFORE OTHER MEMBER 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.28.3.14 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 28.3.14 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER