TLPL Shipping & Logistcs Pvt. Ltd., Gandhidham-Kutch V. The Income Tax Officer, Intl. Taxn., Gandhidham-Kutch

ITA 306/AHD/2016

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1888 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-04-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 18-04-2016
• Assessment Year: 2012-2013
• Appeal Filed On: 05-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Recovery proceedings; Double taxation relief
• Section: 234B

Judgement Text

ITA NO 306/AHD/16 ASSESSMENT YEAR: 2012 - 13 PAGE 1 OF 7 IN THE INCOME TAX APPELLATE TRIBUNAL, AHMEDABAD SMC BENCH, AHMEDBAD [CORAM : PRAMOD KUMAR, ACCOUNTANT MEMBER ] ITA NO 306/AHD/16 AS SESSMENT Y EAR : 2012 - 13 K CARGO GLOBAL AGENCIES, INDONESIA . ....... .APPELLANT TLPL SHIPPING & LOGISTICS LTD - AS AGENT PLOT NO 334, WARD 12/B, 1 ST FLOOR ASHIRWARD COMPLEX, GANDHIDHAM, KUTCH 370 201 [PAN: AAACB2330B] VS. INCOME TAX OFFICER - INTERNATIONAL TAXATION GANDHIDHAM ... RESPONDENT APPEARANCES BY: NONE , FOR THE APPELLANT RAJDEEP SINGH F OR THE RESPON DENT DATE OF CONCLUDING THE HEARING : APRIL 18 , 201 6 DATE OF PRONOUNCING THE ORDER : APRIL 18 , 201 6 O R D E R 1. BY W AY OF THIS APPEAL, THE APPELLANT HAS CHALLENGED CORRECTNESS OF THE ORDER DATED 10 TH MARCH 2014 PASSED BY THE LEARNED C IT(A) IN THE MATTER OF ASSESSMENT UNDER SECTION 172(4) OF THE INCOME TAX ACT, 1961, IN RESPECT OF VARIOUS VESSELS SAILING DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2012 - 13. 2. NONE APPEARED FOR THE ASSESSEE . HOWEVER, HAVING REGARD TO THE FA CT THAT THE APPEAL INVOLVES A SHORT POINT OF LAW, WHICH IS VERY WELL SETTLED IN FAVOUR OF THE ASSESSEE, AND, THEREFORE, THE APPEAL CAN BE DISPOSED OF IN FAVOUR OF THE ASSESSEE, EVEN IN HIS ABSENCE, I CONSIDER IT APPROPRIATE TO PROCEED EX PARTE QUA THE ASSE SSEE. I HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENTATIVE, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE APPLICABLE LEGAL POSITION. ITA NO 306/AHD/16 ASSESSMENT YEAR: 2012 - 13 PAGE 2 OF 7 3. TO ADJUDICATE ON THIS APPEAL, ON MERITS, ONLY A FEW MATERIAL FACTS NEED TO B E TAKEN NOTE OF. THERE IS NO DISPUTE THAT THE ASSESSEE IS A TAX RESIDENT OF INDONESIA AND THAT HE HAS EARNED INCOME FROM SLOT CHARTERING IN CERTAIN VESSELS SAILING FROM THE PORT OF MUNDRA DURING THE RELEVANT PREVIOUS YEAR. DURING THE COURSE OF THE SCRUTINY OF RETURNS FILED BY THE ASSESSEE UNDER SECTION 172, THE BENEFITS OF INDIA INDONESIA DOUBLE TAXATION AVOIDANCE AGREEMENT [ (1988) 171 ITR (ST) 27 ; INDIA INDONESIA TAX TREATY, IN SHORT ], ON THE SHORT GROUND THAT THESE VESSELS IN WHICH THE CONTAINERS WERE TR ANSPORTED WERE NOT OWNED OR CHARTERED BY THE ASSESSEE . IN THE IMPUGNED ASSESSMENT ORDER, THE ASSESSING OFFICER DID SPECIFICALLY OBSERVE AS FOLLOWS: THE ASSESSEE HAS NOT OWNED OR CHARTERED THESE VESSELS. THE ASSESSEE HAS EITHER TAKEN ONLY SOME SLOTS OR H AS LOADED A FEW HANDFUL CONTAINERS ON THE VESSELS MENTIONED ABOVE. SECTION 172 EXPLICITLY GIVES POWERS FOR CHARGING AND RECOVERY OF TAX ON ANY SHIP OWNED OR CHARTERED BY A NON - RESIDENT WHICH CARRIES PASSENGERS, LIVESTOCK, MAIL OR GOODS SHIPPED AT ANY PORT IN INDIA. THUS, IT IS CLEAR THAT WHEN A NON - RESIDENT OWNS OR CHART ERS A SHIP AND GOODS ARE SHIPPED AT A PORT IN INDIA, THEN THE PROVISIONS OF SECTION 172 IN CONSONANCE WITH THE DTA AGREEMENT OF INDIA WITH THE COUNTRY OF SHIP OWNER OR CHARTERER HAS TO BE L OOKED INTO. THE BENEFIT OF DTA AGREEMENT WILL IN ANY CASE NOT BE AVAILABLE TO THE SLOT CHARTERER OR TO THOSE WHO HAVE JUST LOADED A FEW CONTAINERS ON BOARD, SINCE THE VESSEL IS NEITHER OWNED OR CHARTERED BY THEM SINCE THE VESSEL HAS NOT BEEN OWNED OR CHAR TERED BY THE ASSESSEE, THE CLAIM OF EXEMPTION IS NOT ALLOWABLE. AS SUCH THE CLAIM OF EXEMPTION IS ERRONEOUS. THE CLAIM OF EXEMPTION OF THE ASSESSEE FOR THE AFOREMENTIONED VESSEL IS, THEREFORE, DISALLOWED AND REJECTED. 4. AGGRIEVED BY THE STAND SO TAKEN BY THE ASSESSING OFFICER, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) BUT WITHOUT ANY SUCCESS. LEARNED CIT(A), IN HIS BRIEF OPERATIVE PORTION OF THE ORDER, REITERATED THE STAND OF THE ASSESSING OFFICER AND ADDED THAT THE BENEFIT OF DTAA IS NOT AVAILABLE TO THE SLOT CHARTERER , THAT THE APPELLANT HAS NOT PROVED, WITH EVIDENCES, THAT THE ABOVE VESSELS ARE OWNED OR CHARTERED BY THEM , AND THAT IT IS HELD THAT THE APPELLANT IS NOT THE OWNER OR CHARTERER OF THE VESSELS, AND, THEREFORE, THE ACTION OF THE AO IN REJECTING THE CLAIM OF EXEMPTION IS JUSTIFIED . THE ASSESSEE IS NOT SATISFIED WITH THE ORDER OF THE CIT(A) AND IS IN FURTHER APPEAL BEFORE ME. ITA NO 306/AHD/16 ASSESSMENT YEAR: 2012 - 13 PAGE 3 OF 7 5. I FIND THAT ARTICLE 8 OF THE INDIA INDONESIA TAX TREATY, WHICH DEALS, INTER ALIA, WITH TAXATION OF INCOME FROM OPERATIONS OF SHIPS IN INTERNATIONAL TRAFFIC, PROVIDES AS FOLLOWS: ARTICLE 8 - SHIPPING AND AIR TRANSPORT 1. PROFITS DERIVED BY AN ENTERPRISE OF A CONTRACTING STATE FROM THE OPERATION OF SHIPS OR AIRCRAFT IN INTERNATIONAL TRAFFIC SHALL BE TAXABLE ONLY IN THAT STATE. 2. THE PROVISIONS OF PARAGRAPH 1 OF THIS ARTICLE SHALL ALSO APPLY TO PROFITS FROM PARTICIPATION IN A POOL, A JOINT BUSINESS OR AN INTERNATIONAL OPERATING AGENCY. 3. FOR THE PURPOSES OF THIS ARTICLE, INTEREST ON FUNDS CONNECTED WITH THE OPERATION OF SHIPS OR AIRCRAFT IN INTERNATIONAL TRAFFIC SHALL BE REGARDED AS PROFITS DERIVED FROM THE OPERATION OF SUCH SHIPS OR AIRCRAFT AND THE PROVISIONS OF ARTICLE 11 SHALL NOT APPLY IN RELATION TO SUCH INTEREST. 4. THE TERM 'OPERATION OF SH IPS OR AIRCRAFT' SHALL MEAN BUSINESS OF TRANSPORTATION OF PASSENGERS, MAIL, LIVESTOCK OR GOODS CARRIED ON BY THE OWNERS OR LESSEES OR CHARTERERS OF SHIPS OR AIRCRAFT, INCLUDING THE SALE OF TICKETS FOR SUCH TRANSPORTATION ON BEHALF OF OTHER ENTERPRISES, THE INCIDENTAL LEASE OF SHIPS OR AIRCRAFT AND ANY OTHER ACTIVITY DIRECTLY CONNECTED WITH SUCH TRANSPORTATION 6. A PLAIN LOOK AT ARTICLE 9(1) SHOWS THAT THAT THE PROFITS DERIVED BY AN ENTERPRISE OF A CONTRACTING ST A TE FROM THE OPERATION OF SHIPS OR AIRCRAFT IN INTERNATIONAL TRAFFIC IS TAXABLE ONLY IN THE STATE IN WHICH SUCH ENTERPRISE IS RESIDENT. IN OTHER WORDS, SOURCE JURISDICTION HAS NO RIGHTS TO TAX SUCH AN INCOME. THE EXPRESSION INCOME FROM OPERATION OF SHIPS OR AIRCRAFTS STANDS DEFINED UNDER ARTICLE 9(4) INASMUCH AS OPERATION OF SHIPS OR AIRCRAFTS SHALL MEAN TO INCLUDE NOT ONLY TRANSPORTATION OF PASSENGERS, MAIL, LIVESTOCK OR GOODS CARRIED ON BY THE OWNERS OR LESSEES OR CHARTERERS OF A SHIP OR AIRCRAFT BUT ALSO SALE OF TICKETS FOR SUCH TRANSPORT ATION ON BEHALF OF OTHER ENTERPRISES , THE INCIDENTAL LEASE OF SHIPS OR AIRCRAFTS BUT ALSO, RATHER MOST IMPORTANTLY, ANY OTHER ACTIVITY DIRECTLY CONNECTED WITH SUCH TRANSPORTATION . IN EFFECT THUS, NOT ONLY THE INCOME FROM OPERATIONS OF SHIPS OR AIRCRAF T IN INTERNATIONAL TRAFFIC, BUT ALSO ACTIVITIES CONNECTED THEREWITH, ARE TAXED ONLY IN THE RESIDENCE STATE. ARTICLE 9(2) GOES A STEP FURTHER. ARTICLE 9(2) PROVIDES THAT THIS ITA NO 306/AHD/16 ASSESSMENT YEAR: 2012 - 13 PAGE 4 OF 7 RESIDENCE TAXATION RULE SHALL ALSO APPLY TO PROFITS FROM PARTICIPATION IN A POOL, A JOINT BUSINESS OR AN INTERNATIONAL OPERATING AGENCY . EFFECTIVELY THUS, AS LONG AS THE PROFIT IS FROM OPERATIONS OF SHIPS OR AIRCRAFT IN INTERNATIONAL TRAFFIC, OR EVEN ANY ACTIVITY DIRECTLY CONNECTED WITH SUCH OPERATIONS , WHETHER CARRIED ON BY THE ASSES SEE ON HIS OWN OR IN COLLABORATION WITH OTHERS E.G. IN A POOL, JOINT BUSINESS OR INTERNATIONAL OPERATING AGENCY, ALL SUCH PROFITS CAN ONLY BE TAXED IN THE COUNTRY IN WHICH THE ASSESSEE IS FISCALLY DOMICILED. THE RULE IS CLEAR, UNAMBIGUOUS AND OF WIDEST SCO PE. 7. VIEWED IN THIS LIGHT, THE ACTIVITY OF CARRYING CARGO IN INTERNATIONAL TRAFFIC, IRRESPECTIVE OF WHETHER THE VESSELS ARE OWNED OR CHARTERED BY THE ASSESSEE OR NOT, IS CLEARLY COVERED BY THE SCOPE OF RESIDENCE RULE TAXABILITY UNDER ARTICLE 9 OF INDIA INDONESIA TAX TREATY. THE REFERENCE TO OWNERSHIP AND CHARTER OF THE VESSELS DOES NOT FIND ANY MENTION IN ARTICLE 9 AT ALL. AS A MATTER OF FACT, ITS SECTION 172 WHERE A REFERENCE IS MADE TO THE OWNERSHIP OR CHARTER OF THE VESSELS. SECTION 172 PROVIDES AS FOLLOWS: SHIPPING BUSINESS OF NON - RESIDENTS. (1) THE PROVISIONS OF THIS SECTION SHALL, NOTWITHSTANDING ANYTHING CONTAINED IN THE OTHER PROVISIONS OF THIS ACT, APPLY FOR THE PURPOSE OF THE LEVY AND RECOVERY OF TAX IN THE CASE OF ANY SHIP, BELONGING TO OR CHARTERED BY A NON - RESIDENT , WHICH CARRIES PASSENGERS, LIVESTOCK, MAIL OR GOODS SHIPPED AT A PORT IN INDIA 1631 [* * *]. (2) WHERE SUCH A SHIP CARRIES PASSENGERS, LIVESTOCK, MAIL OR GOODS SHIPPED AT A PORT IN INDIA, 1632 [SEVEN AND A HALF PER CENT] OF THE AMOUNT PAID OR PAYABLE ON ACCOUNT OF SUCH CARRIAGE TO THE OWNER OR THE CHARTERER OR TO ANY PERSON ON HIS BEHALF, WHETHER THAT AMOUNT IS PAID OR PAYABLE IN OR OUT OF INDIA, SHALL BE DEEMED TO BE INCOME ACCRUING IN INDIA TO THE OWNER OR CHARTERER ON ACCOUNT OF SUCH CARRIAGE. (3) BEFORE THE DEPARTURE FROM ANY PORT IN INDIA OF ANY SUCH SHIP, THE MASTER OF THE SHIP SHALL PREPARE AND FURNISH TO THE 1632A [ASSESSING OFFICER] A RETURN OF THE FULL AMOUNT PAID OR PAYABLE TO THE OWNER OR CHARTERER OR ANY PERSON ON HIS BEHALF, ON ACCOUNT OF THE CARRIAGE OF ALL PASSENGERS, LIVESTOCK, MAIL OR GOODS SHIPPED AT THAT PORT SINCE THE LAST ARRIVAL OF THE SHIP THEREAT : PROVIDED THAT WHERE THE 1632A [ASSESSING OFFICER] IS SATISFIED THAT IT IS NOT POSSIBLE FOR THE MASTER OF THE SHIP TO FURNISH THE RETURN REQUIRED BY THIS SUB - SECTION BEFORE THE DEPARTURE OF THE SHIP FROM THE PORT AND PROVIDED THE MASTER OF THE SHIP HAS MADE SATISFACTORY ARRANGEMENTS FOR THE FILING OF THE RETURN AND PAYMENT OF THE TAX BY ANY OTHER PERSON ON HIS BEH ALF, THE 1632A[ASSESSING OFFICER] MAY, IF THE RETURN IS FILED WITHIN THIRTY DAYS OF THE DEPARTURE OF THE SHIP, DEEM THE FILING OF THE RETURN BY THE PERSON SO AUTHORISED BY THE MASTER AS SUFFICIENT COMPLIANCE WITH THIS SUB - SECTION. ITA NO 306/AHD/16 ASSESSMENT YEAR: 2012 - 13 PAGE 5 OF 7 (4) ON RECEIPT OF THE R ETURN, THE 1632A [ASSESSING OFFICER] SHALL ASSESS THE INCOME REFERRED TO IN SUB - SECTION (2) AND DETERMINE THE SUM PAYABLE AS TAX THEREON AT THE 1633[RATE OR RATES IN FORCE] APPLICABLE TO THE TOTAL INCOME OF A COMPANY WHICH HAS NOT MADE THE ARRANGEMENT REFER RED TO IN SECTION 194 AND SUCH SUM SHALL BE PAYABLE BY THE MASTER OF THE SHIP. 1633A [(4A) NO ORDER ASSESSING THE INCOME AND DETERMINING THE SUM OF TAX PAYABLE THEREON SHALL BE MADE UNDER SUB - SECTION (4) AFTER THE EXPIRY OF NINE MONTHS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE RETURN UNDER SUB - SECTION (3) IS FURNISHED: PROVIDED THAT WHERE THE RETURN UNDER SUB - SECTION (3) HAS BEEN FURNISHED BEFORE THE 1ST DAY OF APRIL, 2007, SUCH ORDER SHALL BE MADE ON OR BEFORE THE 31ST DAY OF DECEMBER, 2008.] (5) FOR THE PURPOSE OF DETERMINING THE TAX PAYABLE UNDER SUB - SECTION (4), THE 1632A [ASSESSING OFFICER] MAY CALL FOR SUCH ACCOUNT OR DOCUMENTS AS HE MAY REQUIRE. (6) A PORT CLEARANCE SHALL NOT BE GRANTED TO THE SHIP UNTIL THE COLLECTOR OF CUSTOMS 1633B , OR OTH ER OFFICER DULY AUTHORISED TO GRANT THE SAME, IS SATISFIED THAT THE TAX ASSESSABLE UNDER THIS SECTION HAS BEEN DULY PAID OR THAT SATISFACTORY ARRANGEMENTS HAVE BEEN MADE FOR THE PAYMENT THEREOF. (7) NOTHING IN THIS SECTION SHALL BE DEEMED TO PREVENT THE O WNER OR CHARTERER OF A SHIP FROM CLAIMING BEFORE THE EXPIRY OF THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE DATE OF DEPARTURE OF THE SHIP FROM THE INDIAN PORT FALLS, THAT AN ASSESSMENT BE MADE OF HIS TOTAL INCOME OF THE PREVIOUS YEAR AND THE TAX PAYABLE ON THE BASIS THEREOF BE DETERMINED IN ACCORDANCE WITH THE OTHER PROVISIONS OF THIS ACT, AND IF HE SO CLAIMS, ANY PAYMENT MADE UNDER THIS SECTION IN RESPECT OF THE PASSENGERS, LIVESTOCK, MAIL OR GOODS SHIPPED AT INDIAN PORTS DURING THAT PREV IOUS YEAR SHALL BE TREATED AS A PAYMENT IN ADVANCE OF THE TAX LEVIABLE FOR THAT ASSESSMENT YEAR, AND THE DIFFERENCE BETWEEN THE SUM SO PAID AND THE AMOUNT OF TAX FOUND PAYABLE BY HIM ON SUCH ASSESSMENT SHALL BE PAID BY HIM OR REFUNDED TO HIM, AS THE CASE M AY BE 1633C. 1633D [(8) FOR THE PURPOSES OF THIS SECTION, THE AMOUNT REFERRED TO IN SUB - SECTION (2) SHALL INCLUDE THE AMOUNT PAID OR PAYABLE BY WAY OF DEMURRAGE CHARGE OR HANDLING CHARGE OR ANY OTHER AMOUNT OF SIMILAR NATURE.] 1631. THE WORDS 'UNLESS THE I NCOME - TAX OFFICER IS SATISFIED THAT THERE IS AN AGENT OF THE NON - RESIDENT FROM WHOM THE TAX WILL BE RECOVERABLE UNDER THE OTHER PROVISIONS OF THIS ACT' OMITTED BY FINANCE ACT, 1975, S. 19 (W.E.F. 1 - 6 - 1975). 1632. SUBS. FOR 'ONE - SIXTH' BY FINANCE ACT, 1975 , S. 19 (W.E.F. 1 - 6 - 1975). 1 632A. SEE 'ABBREVIATIONS USED'. 1633. SUBS. BY FINANCE (NO. 2) ACT, 1967, S. 29 (W.E.F. 1 - 4 - 1967), FOR 'RATE OR RATES FOR THE TIME BEING'. 1633A. INS. BY FINANCE ACT, 2007, S. 51 (RE TROSPECTIVELY W.E.F. 1 - 4 - 2007). 1633B. 'CO LLECTOR OF CUSTOMS' HAS BEEN DESIGNATED AS 'COMMISSIONER OF CUSTOMS' BY FINANCE ACT, 1995, S. 50, BUT NO CORRESPONDING AMENDMENT HAS BEEN MADE IN THE IT ACT. 1633C. CIRCULAR NO. 730, DATED 14 - 12 - 1995 [(1995) 129 CTR (ST) 45] CLARIFIES THAT NON - RESIDENT AS SESSEES ENGAGED IN THE BUSINESS OF CARRIAGE BY SHIPPING OF PASSENGERS AND GOODS, ETC., SHALL NEITHER ITA NO 306/AHD/16 ASSESSMENT YEAR: 2012 - 13 PAGE 6 OF 7 BE LIABLE TO PAY INTEREST UNDER SECTIONS 234B AND 234C NOR ENTITLED TO INTEREST UNDER SECTION 244A, IN RESPECT OF THEIR INCOME ATTRIBUTABLE ONLY TO THE BUS INESS OF SUCH CARRIAGE OF PASSENGERS AND GOODS, ETC. 1633D. INS. BY FINANCE ACT, 1997, S. 45 (RETROSPECTIVELY W.E.F. 1 - 4 - 1976). [EMPHASIS, BY UNDERLINING, SUPPLIED BY US] 8. IT IS ONLY WHEN THE ASSESSEE IS OWNER OR CHARTERER OF THE VESSEL THAT SECTION 172 COMES INTO PLAY. IF IT IS THE CASE OF THE ASSESSING OFFICER THAT THE ASSESSEE IS NOT AN OWNER OR CHARTERER OF THE VESSEL, SECTION 172, UNDER WHICH THE IMPUGNED ASSESSMENT IS FRAMED, DOES NOT COME INTO PLAY AT ALL, AND THE VERY FOUNDATION OF THE IMPUGN ED ASSESSMENT CEASES TO HAVE ANY LEGALLY SUSTAINABLE BASIS. REVENUE DOES NOT, THEREFORE, HAS ANYTHING TO GAIN FROM THIS HYPER - TECHNICAL PLEA. 9. WHILE DEALING WITH THE TAXABILITY OF INCOME IN A SITUATION IN WHICH TRANSPORTATION OF GOODS HAS BEEN DONE BY U SING THE SLOT CHARTER, AS IS THE ADMITTED POSITION ON THE FACTS OF THIS CASE, IT IS IMPORTANT TO TAKE NOTE OF A JUDICIAL PRECEDENT FROM HON BLE BOMBAY HIGH COURT. AS THERE IS NOTHING CONTRARY TO THE LAW SO LAID DOWN BY HON BLE BOMBAY HIGH COURT, AND AS IT COMES FROM A HIGHER FORUM IN THE JUDICIAL HIERARCHY, IT DOES CONSTITUTE A BINDING JUDICIAL PRECEDENT FOR US. HON BLE BOMBAY HIGH COURT, I N TH IS CASE I.E. C IT VS BALAJI SHIPPING UK LTD [(2012) 25 3 CTR 460 (BOM)] , HA VE CATEGORICALLY HELD THAT SLOT HIRE FAC ILITY IS AN INTEGRAL PART OF THE CONTRACT OF CARRIAGE OF GOODS BY SEA , AND, THEREFORE, ARE ELIGIBLE FOR TREATY PROTECTION AGAINST SOURCE TAXATION OF SUCH INCOME. ONCE THEIR LORDSHIPS ARE OF THE CONSIDERED VIEW THAT SLOT HIRE FACILITY IS AN INTEGRAL PART OF THE CONTRACT FOR CARRIAGE OF GOODS BY SEA, SLOT HIRE FACILITY IS AN ESSENTIALLY AN INTEGRAL PART OF, AND DIRECTLY LINKED TO, THE BUSINESS OF OPERATIONS OF SHIPS IN INTERNATIONAL TRAFFIC. AS A COROLLARY TO THIS POSITION, THE PROFITS FROM SLOT HIRE ACTIVI TY ARE ALSO ENTITLED TO TREATY PROTECTION UNDER ARTICLE 9. IN THIS BACKGROUND, WE MAY REFER TO THE OBSERVATIONS MADE BY THEIR L ORDSHIPS AS FOLLOWS: 24. SLOT HIRE AGREEMENTS HAVE BEEN AND REMAIN A REGULAR FEATURE OF THE SHIPPING INDUSTRY FOR DECADES . WHETH ER THEY CONSTITUTE A CHARTER OF A PORTION OF A SHIP OR NOT IS A DIFFERENT MATTER . IN A CASE OF THE FIRST TYPE, THE CARRIAGE OF GOODS BY AVAILING OF THE SLOT HIRE FACILITY IS AN INTEGRAL PART OF THE CONTRACT OF CARRIAGE OF GOODS BY SEA. WITHOUT IT, THE ENTE RPRISE / ASSESSEE WOULD BE GREATLY HAMPERED IN ITS BUSINESS IN RELATION TO INTERNATIONAL TRAFFIC, CARRIAGE OF GOODS BY SEA. ENTERPRISES OPERATING IN ANY MODE OR MANNER, DO NOT ALWAYS PLY THEIR SHIPS ALL OVER ITA NO 306/AHD/16 ASSESSMENT YEAR: 2012 - 13 PAGE 7 OF 7 THE GLOBE. EVEN IF THEY DO, THEIR SHIPS MAY NOT BE READILY AVAILABLE WHEN REQUIRED ON A PARTICULAR ROUTE IN CONNECTION WITH A CONTRACT OF CARRIAGE OF GOODS. IT IS NECESSARY, THEREFORE IN SUCH CASES FOR THEM TO RESORT TO SLOT HIRE AGREEMENTS. THIS ENABLES THEM TO TRANSPORT THE GOODS NOT ON BEHALF OF THE OWNER OF THE VESSEL WHICH HAS GRANTED THEM A SLOT HIRE FACILITY, BUT IN THEIR OWN NAME ON BEHALF OF THEIR CLIENTS. THE CONTRACT OF CARRIAGE OF GOODS BY SEA IS THUS PERFORMED BY SUCH ENTERPRISES ON A PRINCIPAL TO PRINCIPAL BASIS WITH THEIR CLIENTS AND NOT A S AGENTS OF THE OWNERS OF THE SHIPS AND/OR THEIR CLIENTS . [EMPHASIS, BY UNDERLINING, SUPPLIED BY US] 10. IN VIEW OF THE ABOVE DISCUSSIONS, AS ALSO BEARING IN MIND ENTIRETY OF THE CASE, I AM OF THE CONSIDERED VIEW THAT THE ASSESSEE IS ENTITLED TO TREATY P ROTECTION, UNDER ARTICLE 9, FROM SOURCE TAXATION OF INCOME ARISING FROM TRANSPORTATION OF GOODS BY OPERATION OF SHIPS IN INTERNATIONAL TRAFFIC - IRRESPECTIVE OF WHETHER OR NOT SUCH SHIPS WERE OWNED OR CHARTERED BY THE ASSESSEE THE PROFITS EARNED BY THE ASSE SSEE IN RESPECT OF THE SLOT HIRE OPERATIONS, OR FOR THAT PURPOSE ANY OTHER PART OF THE BUSINESS OF OPERATIONS OF SHIPS OR AIRCRAFT IN INTERNATIONAL TRAFFIC, ARE TAXABLE ONLY IN THE COUNTRY OF ITS F ISCAL DOMICILE, I.E. INDONESIA. I, THEREFORE, UPHOLD THE G RIEVANCE OF THE ASSESSEE ON MERITS. THE DEMANDS RAISED ON THE ASSESSEE BY THE IMPUGNED ASSESS MENT ORDER, ACCORDINGLY, HEREBY STANDS VACATED. 11. IN THE RESULT, THE APPEAL IS ALLOWED. PRONOUNCED IN THE OPEN COURT TODAY ON THE 18 TH DAY OF APRIL , 2016. SD/ - PRAMOD KUMAR (ACCOUNTANT MEMBER) DATED: THE 18 TH APRIL , 2016 . COPIES TO : (1) THE APPELLANT (2) THE RESPONDENT (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES , AHMEDABAD