The ITO, (International Taxation), GANDHIDHAM V. M/s. Ben Line Agencies (I) Pvt. Ltd., GANDHIDHAM

ITA 297/RJT/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1292 (ITAT-RAJKOT)
• Duration Of Justice: 2 year(s) 10 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-05-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 08-02-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 13-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C S ANJARIA
• Keywords: Double taxation relief; Principle of natural justice; Additional evidence; Tax effect; Benefit of exemption
• Section: 90; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, RAJKOT BENCH, RAJKOT [CONDUCTED THROUGH E-COURT AT AHMEDABAD] BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ./ ITA NO. 297/RJT/2013 & CO NO. 13/RJT/2013 / ASSESSMENT YEAR: 2011-12 INCOME TAX OFFICER (INTERNATIONAL TAXATION), GANDHIDHAM VS. M/S. BEN LINE AGENCIES (INDIA) PVT. LTD., PLOT NO.443, 2 ND FLOOR, SECTOR - 1A, NEAR OSLO CIRCLE, GAYATRI MANDIR ROAD, GANDHIDHAM AGENT OF: UNITED AFRICA FEEDER LINE LTD PAN : AACCB 7195 G [ / (APPELLANT) / (RESPONDENT) & CROSS-OBJECTOR REVENUE BY : SHRI C.S. ANJARIA, DR ASSESSEE BY : SHRI KALPESH DOSHI, CA / DATE OF HEARING : 08/02/2016 / DATE OF PRONOUNCEMENT: 02/05/2016 / O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER: THIS APPEAL BY THE REVENUE AND CROSS-OBJECTION THER EOF BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE COMM ISSIONER OF INCOME TAX (APPEALS), GANDHINAGAR, DATED 28.03.2013 FOR ASSESS MENT YEAR 2011-12. 2. THE REVENUE HAS RAISED FOLLOWING GROUNDS IN ITS APPEAL:- I. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS W HILE DECIDING THE APPLICABILITY OF ARTICLE 8 OF INDIA-MAURITIUS DTAA, WITHOUT CONSIDERING THE ISSUE OF PLACE OF EFFECTIVE MANAGEMENT HENCE THE ORDER SUFFERS WITH SERIOUS ERROR TO THAT EXTENT. ITA NO. 297RJT/2013 & CO NO.13/RJT/2013 ITO (INT. TXN) VS. BEN LINE AGENCIES (I) PVT LTD AY : 2011-12 - 2 II. THE LD. CIT(A) HAS FURTHER ERRED IN LAW AND ON FACTS IN ADMITTING ADDITIONAL EVIDENCES WHICH WERE NOT FURNISHED BEFOR E THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOR REMAND PROCEED INGS. III. LD. CIT(A) HAS FURTHER ERRED IN LAW AND ON FAC TS WHILE INTERPRETING PARAGRAPH 5 OF ARTICLE 8 OF INDIA-MAURITIUS TREATY, WHERE THE TERM OPERATION OF SHIPS OR AIRCRAFT HAS BEEN DEFINED, AND HAS WRONGLY TREATED THE ACTIVITY OF TAKING SLOTS ON HIRE AS DIRECTLY CONNEC TED WITH SUCH TRANSPORTATION ACTIVITY. IV. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE LD. CIT(A) MAY BE CANCELLED AND THAT OF THE ASSESSING OFFICER BE RESTORED TO TH E ABOVE EXTENT. V. THE APPELLANT CRAVES LEAVE TO ADD/ALTER/MODIFY/D ELETE ANY OF THE GROUNDS OF APPEAL AT THE TIME OF HEARING. 3. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS IN ITS CROSS-OBJECTIONS:- 1. THAT, THE APPEAL FILED BY THE LEARNED A.O. IS NOT M AINTAINABLE AS THE TAX EFFECT ON EACH OF ASSESSMENT OF VESSELS ARE LESS TH AN RS.3,00,000/-. 2. THAT, THE LEARNED AO HAS WRONGLY STATED GROUND NO.1 AS THE SAID ISSUE HAS NEITHER BEEN RAISED DURING THE COURSE OF ASSESS MENT PROCEEDINGS NOR DURING THE COURSE OF APPEAL PROCEEDINGS BEFORE CIT( A). 3. THAT, THE LEARNED AO HAS WRONGLY RAISED GROUND NO.2 AS THE LEARNED CIT(A) HAS GIVEN SUFFICIENT OPPORTUNITY UNDER RULE 46A IN THE REMAND PROCEEDINGS AND THE LEARNED AO HAS ALSO FILED 3 REM AND REPORTS. 4. THAT, THE LEARNED CIT(A) HAS CONSIDERED VARIOUS ISS UES AND HAS DULY APPRECIATED THE POSITION OF LAW AND FACTS. 4. BRIEFLY STATED FACTS, AS CULLED OUT FROM THE RECORDS, ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY REGISTERED UNDER COMPANIES A CT AND IS AN AGENT OF THE FOREIGN SHIPPING COMPANY M/S. UNITED AFRICA FEEDE R LINE LIMITED, MAURITIUS. THE ASSESSEE HAS FILED VOYAGE FINAL RETURNS U /S 172(3) OF THE ACT FOR VARIOUS VESSELS DURING THE YEAR UNDER CONSIDERATION IN RESPECT OF FREIGHT BENEFICIARY M/S. UNITED AFRICA FEEDER LINE LIMITED, CLA IMING 100% EXEMPTION UNDER DTAA BETWEEN INDIA AND MAURITIUS. THE ASSESSING OFFICER DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND FRAMED ASSESSM ENT U/S 172(4) OF THE ITA NO. 297RJT/2013 & CO NO.13/RJT/2013 ITO (INT. TXN) VS. BEN LINE AGENCIES (I) PVT LTD AY : 2011-12 - 3 ACT ON 27.12.2011, WHEREBY HE ASSESSED INCOME AT RS.25,78,027/- BEING 7.50% OF THE FREIGHT INCOME OF RS.3,43,73,690/- EARNED FROM 12 VOYAGES. AG GRIEVED BY THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE PREF ERRED AN APPEAL BEFORE THE LD. CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS OF T HE ASSESSEE, GRANTED RELIEF TO THE ASSESSEE. 5. AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVENUE IS NOW IN APPEAL BEFORE US. 6. THE LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDER OF THE LD. ASSESSING OFFICER AND THE LD. AUTHORIZED REPRESENTATIV E SUPPORTED THE ORDER OF THE LD. CIT(A). 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MA TERIAL ON RECORD. THE REVENUE HAS RAISED FIVE GROUNDS IN ITS APPEAL, BUT THE SOLITARY GRIEVANCE IN ALL THESE GROUNDS RELATES TO DELETION OF ADDITION OF R S.10,88,701/- BY THE LD. CIT(A), WHICH WAS MADE BY LD. ASSESSING OFFICER BY NOT ALLOWING THE BENEFIT OF EXEMPTION BY VIRTUE OF ARTICLE 8 OF THE DTA AGREEMENT BETWEEN INDIA AND MAURITIUS. DURING THE COURSE OF ASSESSMENT PROCEEDING S, IT WAS OBSERVED BY THE LD. ASSESSING OFFICER THAT THE APPELLANT IS CLAIMI NG THAT THE FREIGHT BENEFICIARY FIRST TRANSPORTS THE GOODS FROM INDIA IN A FEEDER VESSEL AVAILING THE SLOT HIRE FACILITY ON SUCH VESSEL TO A HUB-PORT AND TH EREAFTER, THESE GOODS ARE SHIFTED INTO A BIGGER VESSEL, I.E., MOTHER VESSEL, WHICH IS OWNED OR CHARTERED BY THE APPELLANT, WHICH FURTHER TRANSPORTS THE GOODS TO TH E FINAL DESTINATION. THE LD. ASSESSING OFFICER THEREAFTER QUESTIONED THE ASSESS EE THAT AS THE GOODS ARE NOT TRANSPORTED FROM INDIA BY THE APPELLANTS VERY OWN ED SHIP, RATHER THEY ARE TRANSPORTED THROUGH FEEDER VESSEL, THEN WHY THE ASSESS EE SHOULD NOT BE DEBARRED FROM CLAIMING THE BENEFIT OF EXEMPTION ENUME RATED IN THE TREATY BETWEEN INDIA AND MAURITIUS, APPEARING IN ARTICLE 8. TO TH IS, THE ASSESSEE SUBMITTED THAT THE PRINCIPAL IS A RESIDENT OF MAURITI US AND HAVING PLACE OF EFFECTIVE CONTROL AND MANAGEMENT AT MAURITIUS, WHICH IS EVIDENT FROM THE TAX ITA NO. 297RJT/2013 & CO NO.13/RJT/2013 ITO (INT. TXN) VS. BEN LINE AGENCIES (I) PVT LTD AY : 2011-12 - 4 RESIDENCY CERTIFICATE ISSUED BY MAURITIUS REVENUE AUT HORITY, MAURITIUS, WHICH WAS PRODUCED BEFORE THE LOWER AUTHORITIES. THE LD. AUT HORIZED REPRESENTATIVE DURING THE COURSE OF ASSESSMENT PROCEEDINGS ALSO MENT IONED ABOUT THE MODUS OPERANDI OF MOVEMENT OF GOODS WHEREIN GOODS ARE LOADED AT KANDL A PORT IN THE FEEDER VESSEL WHICH FURTHER SAILS TO A HUB PORT NAMELY JEBEL ALI AND FROM THIS HUB PORT GOODS ARE LOADED INTO THE MOTHER VESSEL, I.E., C OURIER 805 WHICH SAILS TO THE SECOND HUB PORT NAMELY MUTSAMUDU AND FINALLY G OODS ARE TRANSPORTED TO THE FINAL DESTINATION, I.E., ANTSIRANANA. THE SAME MOD US OPERANDI HAS BEEN APPLIED FOR ALL THE IMPUGNED 12 VOYAGES AND TO SUBSTANTI ATE ITS CLAIM, COPY OF VOYAGE TIME CHARTER PARTY AGREEMENTS IN RESPECT OF ALL THE MOTHER VESSELS WERE SUBMITTED BEFORE THE LD. ASSESSING OFFICER. FURTHER, THE BILL OF LADING ARE ISSUED IN THE APPELLANTS NAME ONLY, I.E., UNITED AFRICA FEEDER L INE LIMITED, MAURITIUS. THE LD. AUTHORIZED REPRESENTATIVE ALSO SUBMITTED BEFOR E THE LD. ASSESSING OFFICER THAT IN SLOT CHARTER THE SHIP OWNER RENTS OUT THE PIECE OF THE SPACE ON THE SHIP FOR WHICH IT RECEIVES HIRE, WHICH IS PAYABLE IRRESPECTIVE OF THE FACT WHETHER THE SAME HAS BEEN USED OR NOT. THEREFORE, ONE CAN SAY THAT A SLOT CHARTER IS SIMPLY AN EXAMPLE OF VOYAGE CHARTER OF A PART OF THE SHIP AND MOREOVER, IN THE PRESENT CASE GOODS HAVE ULTIMATELY BEE N TRANSPORTED TO THE FINAL DESTINATION IN THE SHIP CHARTERED BY THE APPELLANT ONLY . 8. THE LD. AUTHORIZED REPRESENTATIVES SUBMISSION BEFOR E THE LD. ASSESSING OFFICER WAS THAT AS PER ARTICLE 8 OF THE TREATY BETWEE N INDIA AND MAURITIUS, THE PROFIT FROM THE OPERATION OF SHIPS ARE TAXABLE ONLY IN MAURITIUS AND FOR THIS REASON NEITHER THE ASSESSEE NOR THEIR PRINCIPAL IS LIAB LE TO INCOME-TAX IN INDIA ON FREIGHT INCOME DERIVED FROM THE OPERATION OF SHIPS. HOWEVER, THIS SUBMISSION WAS NOT FOUND TENABLE BY THE LD. ASSESSING OFFICER BE CAUSE THE CONTAINERS LOADED ON THE VESSEL WERE FEW IN NUMBER AND NOT FOR T HE ENTIRE SHIP, BECAUSE THE VESSEL WAS NOT OWNED OR CHARTERED BY THE ASSESSEE. THE LD. ASSESSING OFFICER ALSO OBSERVED IN HIS ORDER THAT WHEN A NON-RES IDENT OWNS OR CHARTERS A SHIP AND GOODS ARE SHIPPED AT A PORT IN INDIA, THEN THE P ROVISIONS OF SECTION 172 ITA NO. 297RJT/2013 & CO NO.13/RJT/2013 ITO (INT. TXN) VS. BEN LINE AGENCIES (I) PVT LTD AY : 2011-12 - 5 IN CONSONANCE WITH THE DTA AGREEMENT OF INDIA WITH THE COUNTRY OF THE SHIP OWNER/CHARTERER HAS TO BE LOOKED INTO AND THEREFORE, T HE BENEFIT OF DTA AGREEMENT WILL IN ANY CASE NOT BE AVAILABLE TO THE SLOT CHARTERER, SINCE THE VESSEL IS NEITHER OWNED OR CHARTERED. 9. FROM THE ABOVE DISCUSSION, WE ARE ABLE TO INFER THAT TH E BASIC REASON FOR WHICH LD. ASSESSING OFFICER DENIED THE BENEFIT OF AR TICLE 8 OF TREATY BETWEEN INDIA AND MAURITIUS WAS FOR THE REASON THAT MOVEMENT OF GOODS STARTING FROM INDIA WAS NOT IN THE VESSEL OWNED BY THE PRINCIPAL BUT THROUGH A FEEDER VESSEL AVAILING THE SLOT HIRE FACILITY FROM THE PORT IN INDIA TO A HUB PORT. WE FIND THAT THE LD. CIT(A) HAS DEALT WITH THE ISSUE ELABORATELY AND H AS ALSO DISTINGUISHED THE FACTS DISCUSSED IN THE CASE OF DIRECTOR OF INCOME -TAX (INTERNATIONAL TAXATION) VS. BALAJI SHIPPING UK LTD, REPORTED IN 253 CTR 460 (BOMBAY), WHICH D ISCUSSED ABOUT THE INDIA-UK TREATY AND COMPARED THE SAME WITH THE INDIA-MAURITIUS TREATY AND HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSES SEE BY OBSERVING AS UNDER:- 4.2 DURING THE COURSE OF APPELLATE PROCEEDINGS, THE ASSES SEE HAS FILED DETAILS/SUBMISSIONS ON 18/12/2012, SOME OF THE EVIDENCES WE RE NOT PRODUCED BEFORE THE AO DURING THE COURSE OF ASSESSMENT PROCEEDIN GS. THE APPELLANT IS CLAIMING THAT THE FREIGHT BENEFICIARY FIRST TRANSPORTS THE GOODS FROM INDIA IN A FEEDER VESSEL, AVAILING THE SLOT HIRE FACILITY ON SUCH VESS ELS TO A HUB PORT. AT THE HUB PORT THE GOODS ARE SHIFTED INTO A BIGGER VESSEL I.E. THE MOTHER VESSEL WHICH IS OWNED OR CHARTERED BY THE APPELLANT, WHICH TRANSPORTS THE GO ODS TO ITS FINAL DESTINATION. IT IS SEEN FROM THE ASSESSMENT ORDER THAT T HE SAME STAND WAS TAKEN BEFORE THE AO ALSO. CERTAIN EVIDENCES WERE ALSO FILED. THE EVIDENCES WITH REGARD TO OTHER FREIGHT BILLS WAS ALSO OFFERED TO BE PRODUCED B EFORE THE AO, IF DEEMED REQUIRED BY THE AO. HOWEVER, NO SUCH REQUISITION WAS MADE. IN THE LIGHT OF THE ABOVE, THE EVIDENCES PRODUCED WERE ADMI TTED UNDER RULE 46A AS THE AO DIDN'T REQUIRE THE APPELLANT TO PRODUCE THEM I NSPITE OF THE OFFER AND THESE ARE REQUIRED TO EXAMINE THE APPELLANT'S CLAIM ON THE GROUNDS OF APPEAL. THE COPY OF THE SUBMISSIONS AND EVIDENCES WERE FORWARDED TO THE A O FOR HIS PERUSAL AND COMMENTS. 4.2.1 IN HIS REMAND REPORT, THE AO SUBMITTED THAT WHILE ISSUING THE SHOW-CAUSE NOTICE ON 25.11.2011, THE ASSESSEE WAS REQUESTED TO PRODU CE ALL SUCH ITA NO. 297RJT/2013 & CO NO.13/RJT/2013 ITO (INT. TXN) VS. BEN LINE AGENCIES (I) PVT LTD AY : 2011-12 - 6 DOCUMENTS AS WAS REQUIRED TO PROVE ITS BONAFIDE BUSINES S ACTIVITIES FROM SHIPPING AND TO AVAIL OF THE EXEMPTION CLAIMED. THAT THE A SSESSEE DID NOT COMPLY WITH THIS OFFER CANNOT BE CONSTRUED AS THAT THE ASSESSIN G OFFICER DID NOT AFFORD OPPORTUNITY TO THE ASSESSEE TO PROVIDE THE DETAILS. FURTH ER, IT WAS SUBMITTED THAT THE APPELLANT HAS SUBMITTED DETAILS OF TRANSHIPMENT CL AIMED OBTAINED FROM THE WEBSITE WWW.DUBAITRADE.AE. HE HAS FURTHER CONTENDED THAT ALTHOUGH IT IS OBSERVED THAT THE SAID WEBSITE OFFERS DATA RELATED TO THE T RADE OF PORT ACTIVITIES; HOWEVER, HOW FAR CAN THE DATA BE CONSIDERED AUTHENTIC CANNO T BE CERTIFIED BY HIS OFFICE. THE DATA PROVIDED BY THE ASSESSEE IN RESPECT OF T HE CONTAINERS ONWARD LOADING IN ITS OWN VESSELS IS NOT ACCESSIBLE INDEPENDENT LY. AS SUCH, THE CLAIM OF THE ASSESSEE IS NOT ACCEPTABLE. THE FACT THAT THE DATA PROVIDED BY THE ASSESSEE IN RESPECT O F THE ONWARD LADING OF THE CONTAINERS AS PROVIDED BY THE APPELLANT F ROM THE WEBSITE WAS NOT INDEPENDENTLY ACCESSIBLE; WAS CONFRONTED TO THE APPELLAN T. IN RESPONSE, THE APPELLANT HAS IN SUPPORT OF THE ABOVE, PRODUCED COPIES OF CERTIFICATES CERTIFYING THE LOADING AND UNLOADING ISSUED BY DP WORLD WHICH IS THE AGEN CY OPERATING THE DUBAI PORT. IN THE INTEREST OF NATURAL JUSTICE, THESE WERE A LSO FORWARDED TO THE AO. THE AO HAS SUBMITTED THAT THE DATA IS STILL NOT INDEPENDENTLY VERIF IABLE. 4.3 AS DISCUSSED EARLIER, THE EVIDENCES ARE ADMITTED UNDER R ULE 46A. AT THE COST OF REPETITION IT IS NOTED THAT CLEAR FROM THE ASSESSM ENT ORDER THAT THE SAME STAND WAS TAKEN BEFORE THE AO ALSO AND CERTAIN EVIDENCES WERE ALSO FILED. THE EVIDENCES WITH REGARD TO OTHER FREIGHT BILLS WAS ALSO OFFERED TO BE PRODUCED BEFORE THE AO, IF DEEMED REQUIRED BY THE AO. HOWEVER, NO SUCH REQUISITION WAS MADE. THE FACTS AND CIRCUMSTANCES, THE EVIDENCES SUBMITTED, THE LAW AND DTAA PERTINENT TO THE ISSUES ARE BEING DISCUSSED AND DECIDED I N THE SUBSEQUENT PARAGRAPHS. 4.4 AFTER THOROUGH CONSIDERATION OF ALL RELEVANT FACTS AND LAW, THE FOLLOWING PERTINENT OBSERVATIONS ARE MADE: - THE AO'S CONTENTION IS THAT THE FREIGHT INCOME EARNED ON THE ABOVE VOYAGES IS NOT FROM THE VESSELS WHICH ARE FULLY CHARTERED OR OWNED BY THE APPELLANT AND THEREFORE THE BENEFITS OF THE TREATY BETWEEN INDIA AND MAU RITIUS WOULD NOT BE AVAILABLE TO SUCH FREIGHT INCOME AND HENCE THE SAME WOULD B E LIABLE TO TAX IN INDIA. - THE MODUS OPERANDI CLAIMED BY THE APPELLANT IN RESPECT OF THE ABOVE VOYAGES, PERTAINING TO TRANSPORTATION OF GOODS AND CARGO, IS AS UNDER : THE GOODS ARE TRANSPORTED BY THE PRINCIPAL, B Y AVAILING OF THE SLOT HIRE FACILITY OBTAINED BY IT ON THE SHIP OF ANOTHER (FEEDER VE SSELS) FROM A PORT IN INDIA UPTO A HUB PORT ABROAD. ITA NO. 297RJT/2013 & CO NO.13/RJT/2013 ITO (INT. TXN) VS. BEN LINE AGENCIES (I) PVT LTD AY : 2011-12 - 7 THEN FROM THE HUB PORT THE GOODS ARE TRANSPORTED TO THE IR FINAL DESTINATION UPON A SHIP OWNED OR CHARTERED OR OTHERWISE CONTROLLED BY I T (MOTHER VESSELS). - THE CLAIM OF TRANSPORTATION BY SLOT CHARTERING BEING ONLY AS FEEDER VESSELS AND SUBSEQUENT USE OF OWN / CHARTERED SHIPS FOR COMPLETION OF THE TRANSPORTATION MADE BY THE APPELLANT IS DOUBTED BY THE AO ON THE PRETEXT T HAT (I) THE DATA HAS BEEN TAKEN FROM WEBSITE AND IS NOT VERIFIABLE (II) THE SUPPORTING CERTIFICATES FILED SUBSEQUENTLY FROM DP WORLD WHICH IS T HE AGENCY OPERATING FROM THE DUBAI PORT ARE ALSO NOT INDEPENDENTLY VERIFIABLE. I DO NOT AGREE WITH THE AO THAT THE EVIDENCES CAN BE REJEC TED JUST BECAUSE THESE ARE NOT EASILY VERIFIABLE SITTING FROM INDIA. THESE CLAI MS WERE MADE EVEN IN THE ASSESSMENT PROCEEDINGS. INTERNATIONAL DATA / INFORMATI ON/CERTIFICATES ARE REQUIRED TO BE GIVEN/ARE GIVEN BY THE ASSESSEES BEFORE THE INCOME -TAX AUTHORITIES IN SO MANY CASES. EVEN THE RESIDENCY CERTIFICATES, THE INCOME- TAX RETURNS FILED IN OTHER COUNTRIES CANNOT BE CONFIRMED SITTING IN INDIA WITHOUT GETTING IT VERIFIED THROUGH OUR FOREIGN TAX WING. IT IS NOT THE CASE THAT AFT ER ENQUIRY THE EVIDENCES HAVE BEEN PROVED WRONG. EVEN THE BANK ACCOUNTS ARE ONLY COMP UTERIZED COPIES WHICH ARE RELIED ON. NO DISCREPANCY OR REASON TO DOUBT THE EVIDENCES HAVE BEEN POINTED OUT. THE ASSESSEES FILE EVIDENCES AND CAN BE PROS ECUTED IF THESE ARE FOUND FABRICATED. I DO NOT FIND ANY REASON NOT TO BELIEVE THE APPELLANT AND THE CERTIFICATES ON SUCH GROUNDS. THE EVIDENCES ARE OVERWHELMIN G IN SUPPORT OF THE APPELLANT'S CLAIM. THE BILL OF LADING PROVES THAT THE GO ODS WERE NOT FINALLY TO BE TRANSPORTED TO DUBAI BUT WERE DESTINED FOR DIFFERENT P ORTS FOR DISCHARGE. THE APPELLANT HAS PROVED THAT THE VESSELS CLAIMED USE FOR FU RTHER TRANSPORTATION WERE OWNED / CHARTERED BY IT. ONCE THE FACTUAL ASPECT IS CLEAR, WE HAVE TO EXAMINE THAT WHETHER THE TRANSPORTATION BY SHIPS PARTLY BY USE OF VESSELS SLOT CHA RTERED BY IT AND SUBSEQUENTLY BY SHIPS OWNED / CHARTERED BY THE FREIGHT BENEFI CIARY WOULD BE TAXABLE ONLY IN MAURITIUS IN VIEW OF ARTICLE 8 OF THE INDI A-MAURITIUS DTAA. THE APPELLANT HAS RELIED ON THE JUDGMENT OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF BALAJI SHIPPING UK LIMITED 253 CTR 460. I HAVE GONE THROUGH THE JUDGMENT AND THE TERMS OF THE TWO TREATIES I.E. INDIA-MAUR ITIUS TREATY AND INDIA-UK TREATY. THERE IS A BASIC DIFFERENCE BETWEEN THE T WO. WHILE THE PHRASE 'OPERATION OF SHIPS' IS NOT DEFINED IN THE INDIA-UK TREATY , IT IS DEFINED IN ARTICLE 8 OF THE INDIA-MAURITIUS TREATY AS FOLLOWS: '5. THE TERM 'OPERATION OF SHIPS OR AIRCRAFT' SHALL MEAN B USINESS OF TRANSPORTATION OF PERSONS, MAIL, LIVESTOCK OR GOODS, CARRIED ON BY THE OWNERS OR LESSEES OR CHARTERERS OF THE SHIPS OR AIRCRAFT, IN CLUDING THE SALE OF TICKETS FOR SUCH TRANSPORTATION ON BEHALF OF F: OTHER ENTERPRISES, THE INCIDENTAL LEASE OF SHIPS OR AIRCRAFT AND ANY OTHER ACTIVITY DIRECTLY CONNECTE D WITH SUCH TRANSPORTATION' ITA NO. 297RJT/2013 & CO NO.13/RJT/2013 ITO (INT. TXN) VS. BEN LINE AGENCIES (I) PVT LTD AY : 2011-12 - 8 IN THIS WAY, THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IS NOT EXACTLY APPLICABLE TO THE ASSESSEE'S CASE. CLEARLY, IF THE EN TIRE TRANSPORTATION WAS CARRIED OUT BY SLOT CHARTERED VESSELS AND NOT EVEN PARTLY BY SHIPS T HAT WERE OWNED OR LEASED OR CHARTERED BY THE FREIGHT BENEFICIARY; THE TR EATY BENEFIT WOULD NOT HAVE BEEN AVAILABLE. HOWEVER, IN THE PRESENT CASE, THE PART TRANSPORTATION IS BY SHIPS OWNED / CHARTERED BY UNITED AFRICA FEEDER LINE, MAU RITIUS. THE DEFINITION OF SHIPS IS INCLUSIVE AND INCLUDES ANY OTHER A CTIVITY DIRECTLY CONNECTED WITH SUCH TRANSPORTATION. IN THIS WAY, THE INCOME OF THE FIRST SCENARIO DISCUSSED IN THE CASE OF BALAJI SHIPPING UK LTD BY THE HON'BLE BOM BAY HIGH COURT WOULD ALSO BE COVERED BY THE INDIA-MAURITIUS TREATY. THIS IS THE SITUATION WHERE GOODS ARE TRANSPORTED BY AN ENTERPRISE BY AVAILING OF SLOT HIRE FACILITY OBTAINED ON SHIP OF ANOTHER FROM A PORT IN INDIA UPTO A HUB PORT ABROAD AND FROM THERE TO FINAL DESTINATION UPON A SHIP OWNED OR CHARTERED OR CONTROLLED B Y ASSESSEE. IN THIS PARTICULAR TREATY, THERE IS A REQUIREMENT THAT 'ANY O THER ACTIVITY DIRECTLY CONNECTED WITH SUCH TRANSPORTATION' UNLIKE OTHER TREATIES WHERE IT IS NOT DEFINED AND EVEN ACTIVITIES INDIRECTLY CONNECTED MAY BE COVERED AS DISCUSSED IN OECD COMMENTARY. BUT, IN THE PRESENT CASE THE ENTIRE ACTIVITIES OF TAKING SLOTS ON HIRE ARE DIRECTLY CONNECTED TO SHIPMENT THROUGH OWN / CHARTERED SHIPS AND THEREFORE, THIS 'NCOME IS ALSO CLEARLY COVERED IN THE DEFINITI ON. THEREFORE, THE INCOME OF FREIGHT IN THE HANDS OF FREIGHT B ENEFICIARY I.E. UNITED AFRICA FEEDERLINE LTD, MAURITIUS FROM THESE 12 VOYAGES BE ING PART OF LONGER TRANSPORT COVERED UNDER ARTICLE 8 OF THE DTAA IS HELD TAXA BLE ONLY IN MAURITIUS AND NOT IN INDIA. IN VIEW OF THE DECISION OF THE HON'BLE GU JARAT HIGH COURT IN THE CASE .OF ARABIAN EXPRESS LINE LTD 212 UR 31; SECTION 90 HAVING THE OVERRIDING EFFECT; THE INCOME BEING NOT TAXABLE IN INDIA CANNOT BE BROUGHT TO TAX UNDER SECTION 172(4). THE GROUNDS OF APPEAL ARE ALLOWED AND THE INCOME TAXABLE U/S 172(4) IS HELD TO BE NIL IN THESE CASES. WE ARE, THEREFORE, OF THE VIEW THAT THE TERM OPERATION OF SHIPS OR AIRCRAFT MENTIONED IN ARTICLE 8 OF THE INDIA-MAURITIUS TREATY SHALL MEAN BUSINESS OF TRANSPORTATION OF PERSONS, MAIL, LIVESTOCK OR GOO DS, CARRIED ON BY THE OWNERS OR LESSEES OR CHARTERERS OF THE SHIPS OR AIRCR AFT, INCLUDING THE SALE OF TICKETS FOR SUCH TRANSPORTATION ON BEHALF OF OTHER ENT ERPRISES, THE INCIDENTAL LEASE OF SHIPS OR AIRCRAFT AND ANY OTHER ACTIVITY DIRECTL Y CONNECTED WITH SUCH TRANSPORTATION. THE PHRASE ANY OTHER ACTIVITY DIRECTLY C ONNECTED WITH SUCH TRANSPORTATION INCLUDES THE ACTIVITY OF TAKING SLOTS O N HIRE FROM THE INDIAN PORT TO A HUB PORT WILL BE COVERED IN THIS TREATY AND THERE FORE THE LD. CIT(A) HAS RIGHTLY ALLOWED THE APPEAL OF THE ASSESSEE BY GIVING B ENEFIT OF TREATY BETWEEN ITA NO. 297RJT/2013 & CO NO.13/RJT/2013 ITO (INT. TXN) VS. BEN LINE AGENCIES (I) PVT LTD AY : 2011-12 - 9 INDIA AND MAURITIUS TO THE APPELLANT. ACCORDINGLY, THE AP PEAL FILED BY THE REVENUE IS DISMISSED. 10. AS THE APPEAL FILED BY THE REVENUE ITSELF WAS DISMIS SED AS INDICATED ABOVE AND THE CROSS OBJECTION ARISES ONLY AS A RESULT OF THAT APPEAL, THE CROSS OBJECTION FILED BY THE ASSESSEE HAS BECOME INFRUCTUOU S. HENCE, THE CROSS- OBJECTION FILED BY THE ASSESSEE IS DISMISSED BEING INFRUCTU OUS. 11. IN THE RESULT, THE APPEAL OF THE REVENUE AND THE CROS S-OBJECTION OF THE ASSESSEE, BOTH ARE DISMISSED ORDER PRONOUNCED IN THE COURT ON 2 ND MAY, 2016 AT AHMEDABAD. SD/- SD/- (RAJPAL YADAV) JUDICIAL MEMBER (MANISH BORAD) ACCOUNTANT MEMBER AHMEDABAD; DATED, 2/5 /2016 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. !'!#$ % / CONCERNED CIT 4. % ) ( / THE CIT(A)- 5. () #$ , #$+ , ,-. /DR,ITAT, AHMEDABAD, 6. )/0 1 / GUARD FILE. / BY ORDER, TRUE COPY 2 !, (ASSTT.REGISTRAR) #$+ ITAT, AHMEDABAD 1. DATE OF DICTATION 18.04.2016.. 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER : 19.04.2016 3. OTHER MEMBER .. 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S . 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT .. 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P.S./P.S . 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 2/5/2016 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