M/S. NEDLLOYD BV, MUMBAI V. DDIT (I.T)-2(1), MUMBAI

ITA 2843/MUM/2007

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3260 (ITAT-MUMBAI)
• Duration Of Justice: 6 year(s) 2 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-07-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: L
• Next Hearing Date: 13-12-2016
• Assessment Year: 2003-2004
• Appeal Filed On: 12-04-2007
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: DIVESH CHOWLA
• Keywords: Double taxation relief; Question of law; Validity of assessment; Right to appeal
• Section: 148; 90

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL L BENCH, MUMBAI .. , !'# $ $ $ $ %$ $, & !'# !' BEFORE SHRI P.M. JAGTAP, AM AND SHRI AMIT SHUKLA, J M !./ I.T.A. NO. 2843/MUM/2007 ( &) * $+* &) * $+* &) * $+* &) * $+* / / / / ASSESSMENT YEAR : 2003-04 ) NEDLLOYD B V, (FORMERLY KNOWS AS P & O NEDLLOYD BV), C/O MAERSK INDIA PRIVATE LTD., C.G. HOUSE, 11 TH FLOOR, DR. ANNIE BESANT ROAD, WORLI COLONY, MUMBAI 400 030. ) ) ) ) / VS. THE DY. DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION) 2(1), IST FLOOR, SCINDIA HOUSE, BALLARD ESTATE, MUMBAI 400 038. #, !./ PAN : AAACN 4213 B ( ,- / // / APPELLANT ) .. ( ./,- / RESPONDENT ) ,- 0 1 ! / APPELLANT BY : SHRI PORUS KAKA & SHRI DIVESH CHOWLA ./,- 0 1 ! / RESPONDENT BY : SHRI MAHESH KUMAR !)$ 0 / // / DATE OF HEARING : 22-4-2013 23+ 0 / DATE OF PRONOUNCEMENT : 3-7-2013 '4 / O R D E R PER P.M. JAGTAP, A.M . .. , !'# : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF LD. CIT(A) XXXI, MUMBAI DATED 22-12-2006. ITA NO. 2843/MUM/2007 2 2. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY I NCORPORATED AND BASED IN NETHERLANDS AND IS A TAX RESIDENT OF THAT COUNTR Y. IT IS ENGAGED IN THE OPERATION OF SHIPS IN INTERNATIONAL TRAFFIC IN PART NERSHIP WITH P&O NEDLLOYD LTD., UK WITH PROFIT SHARING RATIO OF 56:44 UNDER T HE NAME AND STYLE OF P&O NEDLLOYD B.V. (PONP). IN THE RETURN OF INCOME FILED FOR THE YEAR UNDER CONSIDERATION, ITS SHARE IN THE GROSS FREIGHT COLLE CTION IN INDIA WAS SHOWN BY THE ASSESSEE AT RS. 321,61,28,297/- AND AFTER DEDUC TING IMPORT FREIGHT OF RS. 160,413,551/- CLAIMED TO BE EXEMPT, THE NET FREIGHT COLLECTION FROM INDIA WAS SHOWN AT RS. 3,055,714,746/-. IT WAS CLAIMED THAT THE ASSESSEE BEING A TAX RESIDENT OF NETHERLANDS, THE PROFIT DERIVED FROM TH E OPERATION OF SHIPS IN INTERNATIONAL TRAFFIC WAS TAXABLE ONLY IN NETHERLAN DS IN ACCORDANCE WITH ARTICLE 8-A(2) OF THE AGREEMENT FOR AVOIDANCE OF TH E DOUBLE TAXATION BETWEEN INDIA AND NETHERLANDS AND ACCORDINGLY THE INCOME RE CEIVED IN INDIA FROM THE OPERATION OF SHIPS WAS EXEMPT FROM TAX IN INDIA. I T WAS ALSO CLAIMED THAT THE IMPORT FREIGHT WAS NOT TAXABLE EVEN UNDER ARTICLE 8 -A OF THE SAID AGREEMENT. ACCORDINGLY, NIL INCOME WAS DECLARED BY THE ASSES SEE IN THE RETURN OF INCOME FILED FOR THE YEAR UNDER CONSIDERATION IN INDIA. 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, TH E A.O. EXAMINED THE CLAIM OF THE ASSESSEE FOR EXEMPTION ON ACCOUNT OF I NCOME RECEIVED IN INDIA FROM THE OPERATION OF SHIPS. ON SUCH EXAMINATION, H E FOUND THAT THE PARTNERSHIP FIRM PONP FORMED IN UK WAS NOT REGISTER ED IN THE SAID COUNTRY AS THERE WAS NO SUCH REQUIREMENT. HE HELD THAT THE SAI D PARTNERSHIP, HOWEVER, WAS A VALID PARTNERSHIP AS PER THE PROVISIONS OF IN DIAN PARTNERSHIP ACT AND WAS QUALIFIED AS PERSON U/S 2(32) OF THE INCOME T AX ACT, 1961. HE FOUND THAT AS PER THE DEED OF PARTNERSHIP, THE PROPERTY A ND ASSETS OF THE PARTNERSHIP COMPRISED OF ASSETS TRANSFERRED BY THE PARTNERS AND THE SAME WERE AVAILABLE FOR USE OF THE PARTNERSHIP IN THE BU SINESS. HE HELD THAT THE BUSINESS THUS WAS CARRIED ON BY THE PARTNERSHIP AND NOT BY THE PARTNERS EITHER INDIVIDUALLY OR JOINTLY. HE ALSO HELD THAT WHEN IT WAS AGREED BETWEEN ITA NO. 2843/MUM/2007 3 THE PARTNERS THAT THE PARTNERSHIP WOULD USE THE ASS ETS OF THE PARTNERS WHETHER FOR A CONSIDERATION OR FREE, THEN IT WOULD STILL GIVE RISE TO INCOME OF THE PARTNERSHIP AND NOT OF THE PARTNERS WHO OWN THE ASSETS. SINCE PONP BEING A PARTNERSHIP FIRM WAS NOT LIABLE TO TAXATION IN UK, HE HELD THAT IT WAS NOT A TAX RESIDENT OF UK AND THE BENEFIT OF THE TRE ATY WAS NOT AVAILABLE TO IT. HE HELD THAT THE SAID PARTNERSHIP WAS TREATED FISCA LLY TRANSPARENT IN UK AND IT WAS THEREFORE NOT LIABLE TO TAX IN THAT COUNTRY. HE NOTED EVEN THERE WAS NO RULE SPECIALLY PROVIDED IN THE CONVENTION THAT THE PARTNERSHIP OF A STATE, WHERE IT IS TREATED AS TRANSPARENT, CAN BE CONSIDER ED AS RESIDENT OF THAT STATE UNDER ARTICLE 4-A. HE FOUND THAT THE GOVERNMENT OF UK ITSELF HAS TAKEN A STAND THAT THE PARTNERSHIP IS NOT CONSIDERED AS A R ESIDENT OF THAT COUNTRY FOR THE PURPOSES OF TAX TREATY. HE HELD THAT THE TAXAB LE ENTITY IN INDIA IS A PARTNERSHIP AND NOT THE PARTNERS AND THERE WAS NO P ROVISION UNDER THE INDIAN INCOME TAX ACT TO ASSESS THE INCOME OF THE A SSESSEE IN THE HANDS OF PARTNERS BY APPLYING THE PROVISIONS OF THE TREATY. HE FOUND THAT THERE WAS A SPECIFIC PROVISION MADE IN ARTICLE-4 OF THE INDO-US A TREATY PROVIDING THAT A USA FIRM MAY BE TREATED AS A RESIDENT TO THE EXTENT ITS PARTNERS ARE LIABLE TO TAX IN USA. HE FOUND THAT SIMILAR PROVISION, HOWEV ER, WAS NOT THERE IN THE INDO-UK TREATY. HE HELD THAT THERE WAS THUS NO LEG AL AUTHORITY TO EXTEND TREATY BENEFIT TO PARTNERS IN RESPECT OF INCOME EAR NED BY THE UK PARTNERSHIP FIRM. HE HELD THAT THE PARTNERSHIP FIRM, BEING TREA TED AS FISCALLY TRANSPARENT IN UK, WAS NOT LIABLE TO TAX IN THAT STATE WITHIN T HE MEANING OF ARTICLE-4(1) AND THE SAME THEREFORE COULD NOT BE A RESIDENT OF U K FOR THE PURPOSES OF CONVENTION. HE, THEREFORE, DENIED THE BENEFIT CLAIM ED BY THE ASSESSEE UNDER THE TREATY HOLDING THAT THE PARTNERSHIP FIRM PONP WAS NOT COVERED BY THE PROVISIONS OF ARTICLE 9(5) OF THE INDIA-UK DTAA AND ARTICLE 8A OF THE INDO- NETHERLANDS TREATY AND BROUGHT THE INCOME FROM THE OPERATIONS IN INDIA TO TAX IN THE HANDS OF THE ASSESSEE U/S 172(2) OF THE ACT AT RS. 24,12,09,632/- BEING 7.5% OF THE GROSS RECEIPTS OF RS. 321,61,28,2 97/-. ITA NO. 2843/MUM/2007 4 4. AGGRIEVED BY THE ORDER OF THE A.O., APPEAL WAS P REFERRED BY THE ASSESSEE BEFORE THE LD. CIT(A) AND ELABORATE SUBMISSIONS WER E MADE ON BEHALF OF THE ASSESSEE BEFORE HIM IN SUPPORT OF ITS CASE. AFTER C ONSIDERING THE SAID SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL AVAILA BLE ON RECORD, THE LD. CIT(A) AGREED WITH THE CONCLUSION OF THE A.O. THAT ALTHOUGH THE INDIAN PARTNERSHIP IS A PERSON FOR THE PURPOSES OF INDO-UK DTAA, THE U.K. PARTNERSHIP WAS NOT A PERSON FOR THE PURPOSES OF TH E SAID DTAA AS PER ARTICLE 3(1) AND ARTICLE 3(2) AND THE UK PARTNERSHIP FIRM N OT BEING A PERSON UNDER THE INDO UK DTAA, NO BENEFIT OF THE TREATY COULD BE EXTENDED TO SUCH PERSON. HE DID NOT AGREE WITH THE CONTENTION OF THE ASSESSE E THAT IF UK PARTNERSHIP FIRM IS NOT A PERSON UNDER INDO-UK DTAA TREATY, THE SAID PARTNERSHIP CANNOT BE A PERSON EVEN AS PER SECTION 2(31) OF THE INCOME TAX ACT AND CONSEQUENTLY NO ASSESSMENT OF THE SAID FIRM CAN BE MADE IN INDIA . HE HELD THAT THE CONTENTS OF THE PARTNERSHIP DEED WERE SUFFICIENT TO ESTABLISH THAT IT WAS A GENERAL PARTNERSHIP HAVING ALL THE FEATURES OF THE PARTNERSHIP UNDER THE INDIAN PARTNERSHIP ACT, 1932. HE HELD THAT THE PROF ITS OF PONP, UK PARTNERSHIP FIRM WERE TAXABLE AS THE PROFITS OF A F IRM IN INDIA. HE HELD THAT THERE WAS NO CHOICE PROVIDED U/S 2(31) OR ELSEWHERE IN THE ACT GIVING ANY OPTION TO THE A.O. EITHER TO ASSESS THE FIRM OR ITS PARTNERS. HE HELD THAT PONP IS A PERSON WITHIN THE MEANING OF SECTION 2(31) OF THE INCOME TAX ACT WHICH IS LIABLE TO TAX SINCE THE PARTNERSHIP FIRM IS A TA XABLE ENTITY IN INDIA. HE THEREFORE AGREED WITH THE A.O. THAT THE INCOME OF U K PARTNERSHIP FIRM PONP WAS TO BE ASSESSED IN THE STATUS OF FIRM IN INDIA. HAVING HELD SO, THE LD. CIT(A) WAS OF THE VIEW THAT THE SHARE OF INCOME OF THE PARTNERS WAS EXEMPT AS PER SECTION 10(2A) OF THE ACT AND THE A.O. SHOULD H AVE ALLOWED SUCH EXEMPTION TO THE ASSESSEE FOR THE SHARE OF PROFITS FROM THE FIRM PONP. IN THIS REGARD, HE NOTED THAT THE ASSESSMENT OF P&O NEDLLOY D LTD., UK, OTHER PARTNER OF PONP WAS MADE IN CALCUTTA WHEREIN THE SHARE OF P ROFIT FROM THE FIRM OF PONP WAS HELD TO BE EXEMPT U/S 10(2A) OF THE ACT AN D PROCEEDINGS WERE INITIATED AGAINST PONP BY ISSUING NOTICE U/S 148 OF THE ACT FOR A.Y. 2003-04 ITA NO. 2843/MUM/2007 5 TO ASSESS THE INCOME OF PARTNERSHIP FIRM WHICH HAD BEEN STAYED BY THE HONBLE CALCUTTA HIGH COURT. AS REGARDS THE CLAIM OF THE ASSESSEE FOR THE BENEFIT UNDER DTAA, THE LD. CIT(A) HELD THAT THE IN COME OF THE ASSESSEE BEING EXEMPT IN INDIA AS PER THE INCOME TAX ACT, 1961, TH ERE WAS NO QUESTION OF GOING TO THE DTAA TO CLAIM ANY BENEFIT. IN THIS RE GARD, HE RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CI T VS. P.V.A.L. KULANDAGAN CHETTIAR (267 ITR 654) WHEREIN IT WAS HELD THAT THE PROVISIONS OF DTAA CANNOT IMPOSE A TAX LIABILITY WHERE THE LIABILITY IS NOT I MPOSED BY A LOCAL ACT. IT WAS HELD THAT WHERE TAX LIABILITY IS IMPOSED BY THE ACT , THE AGREEMENT MAY BE RESORTED TO EITHER FOR REDUCING THE TAX LIABILITY O R ALTOGETHER AVOIDING THE TAX LIABILITY. HE ALSO RELIED ON THE DECISION IN THE C ASE OF UNION OF INDIA VS. AZADI BACHAO ANDOLAN (263 ITR 706) WHEREIN IT WAS HELD TH AT THE EFFECT OF AN AGREEMENT ENTERED INTO BY VIRTUE OF SECTION 90 OF T HE ACT WOULD BE THAT IF NO TAX LIABILITY IS IMPOSED UNDER THIS ACT, THE QUESTI ON OF RESORTING TO THE AGREEMENT WOULD NOT ARISE. IT WAS HELD THAT NO PROV ISION OF THE AGREEMENT CAN POSSIBLY FASTEN A TAX LIABILITY WHERE THE LIABILITY IS NOT IMPOSED BY THE ACT. THE LD. CIT(A) THUS HELD THAT THE SHARE PROFIT OF T HE ASSESSEE FROM THE PARTNERSHIP FIRM OF PONP WAS EXEMPT FROM TAX IN IND IA AS PER SECTION 10(2A) OF THE ACT AS THE SAID FIRM WAS CHARGEABLE TO TAX I N INDIA IN RESPECT OF ITS INCOME. AGAINST THE ORDER OF THE LD. CIT(A), THE AS SESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 5. AT THE TIME OF HEARING OF THIS APPEAL, THE LD. D .R. RAISED A PRELIMINARY OBJECTION THAT THIS APPEAL FILED BY THE ASSESSEE BE FORE THE TRIBUNAL IS NOT MAINTAINABLE AS THE ASSESSEE CANNOT BE SAID TO BE A GGRIEVED BY THE ORDER OF THE LD. CIT(A) IMPUGNED IN THE SAID APPEAL. HE SUB MITTED THAT THE LD. CIT(A) VIDE HIS IMPUGNED ORDER HAS IN FACT ALLOWED FULL RE LIEF TO THE ASSESSEE BY HOLDING THAT THE INCOME OF THE ASSESSEE FROM THE PA RTNERSHIP FIRM OF PONP FROM THE SHIPPING OPERATIONS IN INDIA IS EXEMPT U/S 10(2A) OF THE INDIAN INCOME TAX ACT BEING SHARE OF PROFIT FROM THE PARTN ERSHIP FIRM. HE CONTENDED ITA NO. 2843/MUM/2007 6 THAT NO TAX THUS IS PAYABLE BY THE ASSESSEE IN INDI A AS A RESULT OF THE ORDER OF THE LD. CIT(A) AND IT CANNOT BE SAID THAT THE ASSES SEE IS AGGRIEVED BY THE SAID ORDER. HE CONTENDED THAT THE PRESENT APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A) THUS IS NOT MAINTAINABLE AN D IT IS LIABLE TO BE DISMISSED AT THE THRESHOLD. 6. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER H AND, SUBMITTED THAT AS PER SECTION 253 OF THE ACT, ANY ASSESSEE AGGRIEVED BY THE ORDER SPECIFIED IN THE SAID SECTION CAN FILE APPEAL BEFORE THE TRIBUNA L. HE SUBMITTED THAT THE CLAIM OF THE ASSESSEE FOR BENEFIT UNDER TREATY HAS BEEN DENIED AND THE ASSESSEE THUS IS AGGRIEVED BY THE ORDER OF THE LD. CIT(A) GIVING IT A RIGHT TO FILE APPEAL BEFORE THE TRIBUNAL. HE CONTENDED THAT WHEN PARTNERSHIP FIRM IS HELD TO BE ASSESSABLE TO TAX IN INDIA BY THE ORDER OF TH E LD. CIT(A), THE ASSESSEE BEING A PARTNER WILL BE CALLED UPON TO PAY TAX AND THE LD. D.R. IS NOT CORRECT TO SUBMIT THAT THE ASSESSEE IS NOT LIABLE TO PAY TAX A S A RESULT OF THE ORDER OF THE LD. CIT(A). HE REFERRED TO SECTION 188-A OF THE ACT WHICH PROVIDES THAT THE PARTNERS ARE JOINTLY AND SEVERALLY LIABLE FOR PAYME NT OF THE FIRMS TAX. HE ALSO RELIED ON THE DECISION OF THE TRIBUNAL IN THE CASE OF MAMATHA MOTELS VS. ACIT (2004) 91 ITD 412 (COCHIN) AND THE DECISION OF HON BLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF AMIN CHAND AND SONS VS. C IT (1982) 133 ITR 439. HE ALSO PLACED RELIANCE ON THE DECISION OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF J&T JAIN VS. CIT 41 ITR 700 WHEREIN IT WAS HELD THAT SUBSISTENCE OF DEMAND IS NOT ESSENTIAL FOR MAINTAINABILITY OF A PPEAL BEFORE THE TRIBUNAL. HE CITED THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF KIKABHAI ABDULALI VS. ITAT (1957) 32 ITR 762 WHEREIN IT WAS HELD THAT THE RIGHT TO APPEAL TO THE TRIBUNAL FROM AN ORDER PASSED BY THE AAC OR THE RIGHT TO APPLY FOR A REFERENCE OF A QUESTION OF LAW ARISING OUT AN ORDER OF THE TRIBUNAL IS NOT CONFINED TECHNICALLY TO THE PARTY TO THE APPEAL BUT IS A MUCH WIDER RIGHT WHICH MAY BE EXERCISED BY ANY PERSON WHO BECOMES LI ABLE TO PAY TAX BY ANY ORDER AGAINST WHICH THE APPEAL IS PREFERRED. HE CON TENDED THAT THE PRESENT ITA NO. 2843/MUM/2007 7 APPEAL FILED BY THE ASSESSEE BEFORE THE TRIBUNAL IS MAINTAINABLE AS PER THE PROVISIONS OF SECTION 253(1) OF THE ACT. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON THIS PRELIMINARY ISSUE AND ALSO CAREFULLY PERUSED THE RELEVANT JUDICIAL PRONOU NCEMENTS ON THIS POINT INCLUDING THE CASE LAWS CITED BY THE LD. COUNSEL FO R THE ASSESSEE. SECTION 253(1) READ WITH CLAUSE (A) THEREOF CONTEMPLATES TH AT ANY ASSESSEE AGGRIEVED BY ANY OF THE ORDERS MENTIONED THEREIN MAY APPEAL T O THE TRIBUNAL. THERE CAN BE NO QUARREL WITH THE PROPOSITION PUT FORTH BY THE LD. COUNSEL FOR THE ASSESSEE, WHICH IS ALSO SUPPORTED BY THE JUDICIAL P RONOUNCEMENTS CITED BY HIM, THAT IF THE PARTNERSHIP FIRM IS ASSESSED, PART NERS CAN BE CALLED UPON TO PAY THE TAX OF THE PARTNERSHIP FIRM. SECTION 188-A OF THE ACT ALSO PROVIDES THAT THE PARTNERS ARE JOINTLY AND SEVERALLY LIABLE TO PAY THE FIRMS TAX. THE QUESTION IN THE PRESENT CASE, HOWEVER, IS WHETHER A NY INCOME HAS BEEN ASSESSED IN THE HANDS OF THE PARTNERSHIP FIRM AS A RESULT OF THE ORDER OF THE LD. CIT(A) WHICH IS IMPUGNED BY THE ASSESSEE IN THE PRESENT APPEAL AND THE ANSWER TO THIS QUESTION IS CLEARLY NEGATIVE. IT IS NO DOUBT TRUE THAT THE LD. CIT(A) IN THE SAID ORDER HAS AGREED WITH THE A.O. T HAT THE UK PARTNERSHIP FIRM BEING FISCALLY TRANSPARENT IN UK IS NOT TAXABLE IN THAT COUNTRY BUT IS TAXABLE IN INDIA BEING A PERSON UNDER THE INDIAN INCOME T AX ACT. HOWEVER, THIS DECISION OF THE LD. CIT(A) IS GIVEN WHILE DECIDING THE CASE OF THE ASSESSEE AND NOT THAT OF THE PARTNERSHIP FIRM. AS A MATTER OF F ACT, THE CASE OF THE PARTNERSHIP FIRM WAS NOT BEFORE THE LD. CIT(A) AT A LL AND THE DECISION OF THE LD. CIT(A) RENDERED WHILE DECIDING THE CASE OF THE ASSE SSEE CANNOT RESULT IN THE ASSESSMENT OF THE FIRM GIVING RISE TO ANY TAX LIABI LITY. AS NOTED BY THE LD. CIT(A) IN HIS IMPUGNED ORDER, THE PROCEEDINGS AGAIN ST THE PARTNERSHIP FIRM WERE ALREADY INITIATED SEPARATELY BY THE CONCERNED A.O. BY ISSUE OF NOTICE U/S 148 OF THE ACT AND ANY ASSESSMENT OF INCOME OF THE PARTNERSHIP FIRM IN INDIA GIVING RISE TO ANY TAX LIABILITY CAN RESULT FROM TH E SAID PROCEEDINGS ALONE AND NOT AS A RESULT OF THE ORDER OF THE LD. CIT(A). IF THE OUTCOME OF THE SAID ITA NO. 2843/MUM/2007 8 PROCEEDINGS WHICH, AS INFORMED TO US DURING THE COU RSE OF HEARING, HAVE BEEN STAYED BY THE HONBLE CALCUTTA HIGH COURT, RESULT I N THE ASSESSMENT OF ANY INCOME IN THE HANDS OF THE PARTNERSHIP FIRM IN INDI A GIVING RISE TO ANY TAX LIABILITY, THE ASSESSEE CAN CERTAINLY BE SAID TO BE AGGRIEVED BY SUCH OUTCOME AS HE CAN BE CALLED UPON TO PAY THE TAX OF THE PART NERSHIP FIRM IN THE CAPACITY AS A PARTNER. HOWEVER, THE ORDER PASSED BY THE A.O . IN THE CASE OF THE ASSESSEE AS WELL AS THE PROCEEDINGS EMANATING FROM THE SAID ORDER INCLUDING THE ORDER OF THE LD. CIT(A) CANNOT RESULT IN THE AS SESSMENT OF PARTNERSHIP FIRM GIVING RISE TO ANY TAX LIABILITY PAYABLE EITHER BY THE PARTNERSHIP FIRM OR THE PARTNERS THEREOF INCLUDING THE ASSESSEE. 8. IN THE CASE OF J&T JAIN VS CIT (SUPRA) RELIED UP ON BY THE LD. COUNSEL FOR THE ASSESSEE, THE ISSUE RELATING TO MAINTAINABILITY OF THE APPEAL BEFORE THE TRIBUNAL WAS RAISED IN AN ALTOGETHER DIFFERENT CONT EXT. IN THAT CASE, THE APPEAL HAD BEEN PREFERRED BY THE ASSESSEE BEFORE TH E TRIBUNAL AGAINST THE ORDER PASSED BY THE AAC. BY THE SAID ORDER, THE AAC HAD OVERRULED THE FINDINGS OF THE ITO ON THE ISSUE OF ADDITION MADE O N ACCOUNT OF CASH CREDITS BUT DID NOT CONSIDER IT NECESSARY TO DECIDE THE LEG AL ISSUE RAISED BY THE ASSESSEE RELATING TO THE VALIDITY OF ASSESSMENT MAD E BY THE ITO. WHEN THE ASSESSEE WENT UP TO THE TRIBUNAL AND RAISED THIS LE GAL ISSUE, THE TRIBUNAL DISMISSED THE APPEAL OF THE ASSESSEE AS NOT MAINTAI NABLE ON THE GROUND THAT THE DEMAND RAISED AGAINST THE ASSESSEE STOOD ALREAD Y CANCELLED BY THE ORDER PASSED BY THE AAC. THE HONBLE ALLAHABAD HIGH COUR T, HOWEVER, HELD THAT THE PRINCIPAL GROUND IN THE APPEAL FILED BY THE ASS ESSEE BEFORE THE TRIBUNAL WAS RELATED TO THE VALIDITY OF THE PROCEEDINGS AND IT WAS NECESSARY FOR THE TRIBUNAL TO DECIDE THE SAME. IT WAS HELD THAT THE TRIBUNAL MISDIRECTED ITSELF IN LAW IN TAKING A VIEW THAT SUBSISTING DEMAND WAS ESSENTIAL FOR MAINTAINABILITY OF APPEAL BEFORE THE TRIBUNAL. THE ISSUE INVOLVED BEFORE THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF J&T JAI N (SUPRA) AS WELL AS THE RELEVANT FACTS INVOLVED THUS WERE ALTOGETHER DIFFER ENT THAN THAT OF THE PRESENT ITA NO. 2843/MUM/2007 9 CASE AND THE RELIANCE OF THE LD. COUNSEL FOR THE AS SESSEE ON THE SAID DECISION, IN OUR OPINION, IS COMPLETELY MISPLACED. 9. THE LD. COUNSEL FOR THE ASSESSEE HAS ALSO RELIED ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF KIKABHAI A BDULALI (SUPRA) IN SUPPORT OF ASSESSEES CASE. IN THE SAID CASE, A FI RM BY NAME GOKALDAS DAYALJI WAS ASSESSED TO TAX AS AN UNREGISTERED FIRM AND GOK ALDAS APPEALED TO THE AAC CONTENDING THAT THE ASSESSMENT SHOULD HAVE BEEN ON HIMSELF AS AN INDIVIDUAL AND NOT ON THE FIRM. THIS CONTENTION WAS BASED ON HIS ALLEGATION THAT THE FIRM WAS A PROPRIETARY CONCERN AND NOT A P ARTNERSHIP FIRM. THE APPEAL PREFERRED BY GOKALDAS WAS DISMISSED. THEREAF TER THE PROPERTY OF THE PETITIONER (WHO HAD FILED THE PETITION BEFORE THE H ONBLE BOMBAY HIGH COURT) WAS ATTACHED AS HIS NAME WAS APPEARING AS A PARTNER ALONG WITH GOKALDAS AND OTHERS IN A PARTNERSHIP DEED TO RECOVER THE FIR MS TAX. THE SAID PETITIONER THEREUPON PREFERRED AN APPEAL BEFORE THE TRIBUNAL D ENYING HIS LIABILITY TO ASSESS AND CONTENDING THAT HE WAS NOT A PARTNER IN THAT FIRM. THE TRIBUNAL CONSIDERED THE SAID APPEAL AS MAINTAINABLE AND ALSO ALLOWED THE SAME ON MERIT HOLDING THAT THE PETITIONER WAS NOT A PARTNER . THE LD. CIT THEN MADE AN APPLICATION FOR A REFERENCE TO THE HONBLE BOMBAY H IGH COURT ON THE QUESTION OF LAW WHETHER THERE WAS ANY EVIDENCE BEFORE THE TR IBUNAL TO HOLD THAT THE PETITIONER WAS NOT A PARTNER. THE SAID APPLICATION WAS REJECTED BY THE HONBLE BOMBAY HIGH COURT. THEREAFTER GOKALDAS APPLIED FOR A REFERENCE TO THE TRIBUNAL TO REFER THE QUESTION OF LAW AS TO WHETHER THE APPEAL PREFERRED BY THE PETITIONER WAS COMPETENT. THE TRIBUNAL GRANTED THE SAID APPLICATION AS A RESULT OF WHICH THE PETITIONER WENT BEFORE THE HON BLE BOMBAY HIGH COURT UNDER ARTICLES 226 & 227 OF THE CONSTITUTION URGING THAT IT WAS NOT COMPETENT TO THE TRIBUNAL IN LAW TO MAKE THE REFERENCE ON THE APPLICATION FILED BY GOKALDAS. THE ISSUE RAISED BEFORE THE HONBLE BOMB AY HIGH COURT THEREFORE WAS WHETHER THE APPLICATION FILED BY GOKALDAS FOR A REFERENCE TO THE TRIBUNAL WAS MAINTAINABLE OR NOT. IN THIS CONTEXT, THE HONB LE BOMBAY HIGH COURT ITA NO. 2843/MUM/2007 10 REFERRED TO THE DEFINITION OF ASSESSEE GIVEN IN T HE ACT AND HELD THAT AS PER THE SAID DEFINITION GIVEN BY THE ACT ITSELF, ANY PE RSON BY WHOM INCOME-TAX OR ANY OTHER SUM OF MONEY IS PAYABLE UNDER THIS ACT HA S A RIGHT TO MAKE AN APPLICATION FOR A REFERENCE. IT WAS HELD THAT SHRI GOKALDAS AS A PARTNER OR A PROPRIETOR OF THE FIRM WAS LIABLE TO PAY TAX ASSESS ED UPON THE FIRM AND MOREOVER THE EFFECT OF THE JUDGMENT OF THE TRIBUNAL WAS THAT THE PETITIONER WAS RELIEVED OF HIS LIABILITY ON ACCOUNT OF TAX PAY ABLE BY THE FIRM THEREBY INCREASING THE LIABILITY OF GOKALDAS TO THAT EXTENT . IT WAS HELD THAT SHRI GOKALDAS THUS RIGHTLY FELT AGGRIEVED BY THE DECISIO N OF THE TRIBUNAL AS HIS RIGHTS WERE VITALLY AFFECTED AND WAS LIABLE TO PAY TAX AS A RESULT OF THE SAID ORDER. IT WAS HELD THAT ALTHOUGH SHRI GOKALDAS ACC EPTED THE DECISION OF THE AAC HOLDING THAT INCOME TAX WAS PAYABLE BY ALL THE PARTNERS OF THE FIRM, HE BECOME AGGRIEVED ONLY AS A RESULT OF THE DECISION O F THE TRIBUNAL AND THEREFORE WAS COMPETENT TO FILE A REFERENCE BEFORE THE TRIBUN AL EVEN THOUGH HE WAS TECHNICALLY NOT A PARTY TO THE APPEAL. 10. A CAREFUL PERUSAL OF THE DECISION OF THE HONBL E BOMBAY HIGH COURT IN THE CASE OF KIKABHAI ABDULALI (SUPRA) SHOWS THAT TH E TERM ASSESSEE AGGRIEVED USED IN SECTION 253(1), IS INTERPRETED A ND EXPLAINED AS ANY PERSON BY WHOM INCOME TAX OR ANY OTHER SUM OF MONEY IS PAY ABLE AS A RESULT OF THE ORDER WHICH IS SOUGHT TO BE APPEALED AGAINST. IN T HE CASE OF CIT VS. AMBALA FLOUR MILLS (1970) 78 ITR 256, THE HONBLE SUPREME COURT RULED THAT IF A PERSON IS FASTENED WITH THE LIABILITY TO TAX, HE HA S A RIGHT OF APPEAL SO AS TO CHALLENGE THE LIABILITY WITH WHICH HE IS SOUGHT TO BE FASTENED. IN THE CASE OF CIT VS. N. CH. R. ROW AND CO. (1983) 144 ITR 557, T HE HONBLE CALCUTTA HIGH COURT HELD THAT THE RIGHT TO APPEAL BY THE TRIBUNAL FROM AN ORDER PASSED BY THE AAC WAS NOT CONFINED TECHNICALLY TO THE PARTY W HO WAS A PARTY TO THE APPEAL BUT IS A MUCH WIDER RIGHT WHICH MIGHT BE EX ERCISED BY ANY PERSON WHO WAS LIABLE TO PAY TAX BY ANY ORDER AGAINST WHIC H THE APPEAL WAS PREFERRED. ITA NO. 2843/MUM/2007 11 11. IN THE CASE OF MICO EMPLOYEES ASSOCIATION VS. A CIT (2007) 292 ITR 567 (KARN) THERE WAS A DISPUTE BETWEEN MICO EMPLOYEES A SSOCIATION AND THE DEPARTMENT REGARDING TDS VIS--VIS SERVICE OF EMPLO YEES AND THE APPEAL FILED BY THE EMPLOYEES ASSOCIATION WAS HELD TO BE NOT MAI NTAINABLE BY THE HONBLE KARNATAKA HIGH COURT HOLDING THAT ONLY AN ASSESSEE WHOSE LIABILITY TO PAY TAX IN TERMS OF AN ORDER IS PROVIDED TO THE RIGHT OF AP PEAL U/S 253. IT WAS HELD THAT THOUGH THE EMPLOYEES ASSOCIATION MIGHT BE AN A GGRIEVED PARTY TO CERTAIN EXTENT, IT WAS NOT AN ASSESSEE IN TERMS OF DEFINITI ON GIVEN IN SECTION 2(7) OF THE ACT WHICH WOULD MEAN A PERSON ANY TAX OR A SUM OF M ONEY IS PAYABLE. IT WAS HELD THAT IN TERMS OF THE STATUTE ONLY THE ASSESSEE WHO IS LIABLE TO PAY TAX IN TERMS OF THE ORDER ALONE IS PROVIDED WITH RIGHT TO APPEAL THOUGH TO A CERTAIN EXTENT ASSOCIATION MAY BE AN AGGRIEVED PARTY BUT AS SOCIATION IS NOT AN ASSESSEE. IT WAS HELD THAT NO APPEAL THEREFORE COU LD HAVE BEEN FILED BY THE ASSOCIATION IN TERMS OF THIS ACT. 12. THE LEGAL POSITION EMANATING FROM THE JUDICIAL PRONOUNCEMENTS DISCUSSED ABOVE IS THAT THE TERM ASSESSEE AGGRIEVE D USED IN SECTION 253(1) BEING A PERSON COMPETENT TO FILE AN APPEAL BEFORE T HE TRIBUNAL IS THE PERSON WHO IS AN AGGRIEVED PARTY LIABLE TO PAY TAX IN TERM S OF THE ORDER AGAINST WHICH THE APPEAL IS TO BE PREFERRED. AS ALREADY DISCUSSED BY US THERE IS NO TAX PAYABLE BY THE ASSESSEE IN THE PRESENT CASE AS A RE SULT OF THE IMPUGNED ORDER PASSED BY THE LD. CIT(A) EVEN AS A PARTNER OF THE F IRM AS THE SAID ORDER OF THE LD. CIT(A) HAS NOT GIVEN RISE TO ANY TAX LIABILITY OF THE PARTNERSHIP FIRM. IN OUR CONSIDERED OPINION, THIS APPEAL FILED BY THE PERSON , WHO IS NOT THE ASSESSEE AGGRIEVED AS ENVISAGED IN SECTION 253(1, IS NOT MA INTAINABLE AND THE SAME IS LIABLE TO BE DISMISSED AT THE THRESHOLD. WE ORDER ACCORDINGLY. ITA NO. 2843/MUM/2007 12 13. KEEPING IN OUR DECISION RENDERED ABOVE DISMISSI NG THE PRESENT APPEAL TREATING THE SAME AS NOT MAINTAINABLE, WE DO NOT CO NSIDER IT NECESSARY OR EXPEDIENT TO GO INTO THE MERITS OF THE ISSUES RAISE D THEREIN. 14. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS DISMISSED. 5 6 &) *5 0 5 0 78 ORDER PRONOUNCED IN THE OPEN COURT ON 3-7-2013. '4 0 23+ 9')6 3-7-2013 3 0 SD/- SD/- (AMIT SHUKLA) (P.M. JAGTAP ) & !'# JUDICIAL MEMBER !'# / ACCOUNTANT MEMBER MUMBAI ; 9') DATED 3-7-2013. $.&).!./ RK , SR. PS '4 0 .&:% ;%+ '4 0 .&:% ;%+ '4 0 .&:% ;%+ '4 0 .&:% ;%+/ COPY OF THE ORDER FORWARDED TO : 1. ,- / THE APPELLANT 2. ./,- / THE RESPONDENT. 3. < () / THE CIT (A) - XXXI, MUMBAI 4. < /ADDL DIT (INTERNATIONAL TAXATION), RG.2 MUMBAI 5. %$? .&&) , , / DR, ITAT, MUMBAI L BENCH 6. @* A / GUARD FILE. '4)! '4)! '4)! '4)! / BY ORDER, !/% .& //TRUE COPY// B B B B / // /!7 !7 !7 !7 ( DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI