M/s. Pearl Logistic & EX-IM Corporation as Agent of Queen Arrow-1, Bhavnagar V. The Income Tax Officer, International Taxation, RAJKOT-GUJARAT

ITA 313/RJT/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6647 (ITAT-RAJKOT)
• Duration Of Justice: 3 year(s) 7 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 31-01-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 23-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Residential status; Double taxation relief
• Section: 143(3); 5(2)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT [ CONDUCTED THROUGH E-COURT AT AHMEDABAD ] BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER (1). ./ I.T.A. NO.313/RJT/2013 FOR A.Y.2011-12 (2). ./ I.T.A. NO.658/RJT/2012 FOR A.Y.2010-11 (3). ./ I.T.A. NO.659/RJT/2012 FOR A.Y.2010-11 (4). ./ I.T.A. NO.660/RJT/2012 FOR A.Y.2010-11 (5). ./ I.T.A. NO.661/RJT/2012 FOR A.Y.2010-11 (6). ./ I.T.A. NO.517/RJT/2013 FOR A.Y.2012-13 (7). ./ I.T.A. NO.499/RJT/2014 FOR A.Y.2013-14 (1-5).M/S. PEARL LOGISTICS & EX-IM CORPORATION 207, NIRMAL PLAZA, ABOVE ALLAHABAD BANK, OPP. SHANESHWER FLAT, BHAVNAGAR. (6-7). THE INCOME-TAX OFFICER, INTERNATION TAXATION, RAJKOT. / VS. (1-5). THE INCOME-TAX OFFICER, INTERNATION TAXATION, RAJKOT. (6-7). M/S. PEARL LOGISTICS & EX-IM CORPORATION 207, NIRMAL PLAZA, ABOVE ALLAHABAD BANK, OPP. SHANESHWER FLAT, BHAVNAGAR. !' #$ ./ % ./ PAN/GIR NO. : AAJFP 8182 F ( '& / APPELLANTS ) .. ( '('& / RESPONDENTS ) ASSESSEE : SHRI ANKIT GOKANI, A.R. REVENUE : SHRI PRAVIN KUMAR, SR. D.R. ) *+ , - . $ / DATE OF HEARING 31/01/2017 /0 - . $ / DATE OF PRONOUNCEMENT 20/03/2017 1#2 / O R D E R PER SHRI MAHAVIR PRASAD, JUDICIAL MEMBER : OUT OF THESE SEVEN CONNECTING APPEALS, FIVE APPE ALS HAVE BEEN FILED BY THE ASSESSEE AND REMAINING TWO HAVE BEEN F ILED BY THE REVENUE ITA NO.313/RJT/2013, 658 , 659, 660 & 661/RJT/2012, 517/RJT/2013, 499/RJT/20 14 M/S. PEARL LOGISTICS & EX-IM CORP. VS. ITO - 2 - AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)- GANDHINAGAR, DATED 15/05/2013 FOR THE ASSESSMENT YE ARS (AY) 2011-12, 08/10/2012 FOR THE A.Y. 2010-11, 23/10/2013 FOR THE A.Y. 2012-13 & 03/06/2014 FOR THE A.Y. 2013-14. 2. IN THIS CASE BOTH THE PARTIES AGREED AND REMAINING THAT MAIN CONNECTING APPEAL LEADING CASE IS ITA NO. 313/RJT/2 013. IN THIS CASE FOLLOWING GROUNDS HAVE BEEN TAKEN: I. LD. AO HAS ERRED IN LAW AS WELL AS ON FACTS IN A SSESSING INCOME OF APPELLANT AT RS.4,14,274/- U/S. 172(4)OF THE ACT AND DENYING BENEFIT OF INDIA DENMARK DTAA, IGNORING TAX RESID ENCY AS WELL AS OTHER RELEVANT DETAILS FURNISHED AND LD. CIT (A) ALSO ERRED IN CONFIRMING THE SAME. II. LD. AO AND LD CIT(A) HAS ERRED IN LAW AS WELL A S ON FACTS IN NOT ACCEPTING THE CONTENTION OF THE APPELLANT THAT M/S. FABER SHIPBROKER APS, DENMARK, IS ONLY DISPONENT OWNER OF THE VESSEL WHO IS THE ACTUAL BENEFICIARY OF RECEIPT OF FREIGHT AND RESPONSIBLE FOR THE ENTIRE TAXATION BURDEN AND PAYM ENT OF TAX IN DENMARK. III. LD. AO AND LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON FACTS IN STATING THAT THE PAYMENT RECEIVED BY THE CLAIMED DI SPONENT OWNER FABER SHIP BROKER OF DENMARK, WOULD BE IN NATURE OF HIRING PAYMENT FOR CHARTER AND NOT FREIGHT FOR CARRYING GO ODS. IV. LD. AO HAS ERRED IN LAW AS WELL AS ON FACTS IN STATING THAT M/S. CTI GROUP INC., JORDAN HAS CHARTERED THE SHIP & HAS TRANSPORTED GOODS & HAS EARNED FREIGHT AND LD. CIT( A) ALSO ERRED IN CONFIRMING THE SAME. V. THE LD. AO HAS ERRED IN LAW IN TAXING INCOME IN INDIA IGNORING THE FACT THAT THERE IS DTAA WITH DENMARK I.E. COUNT RY TO WHICH FREIGHT BENEFICIARY BELONGS. ARTICLE 4 AND PARTICUL ARLY ARTICLE 9 OF DTAA CLEARLY MENTION THAT THE INCOME FROM SHIPPI NG BUSINESS ITA NO.313/RJT/2013, 658 , 659, 660 & 661/RJT/2012, 517/RJT/2013, 499/RJT/20 14 M/S. PEARL LOGISTICS & EX-IM CORP. VS. ITO - 3 - IS TAXABLE IN CONTRACTING STATE IN WHICH THE PLACE OF EFFECTIVE MANAGEMENT OF ENTERPRISE IS SITUATED. VI. THE LD. AO ERRED IN NOT ACCEPTING THE FACT THAT THE PRINCIPAL PLACE OF BUSINESS AND MANAGEMENT OF THE FREIGHT BEN EFICIARY (M/S. FABER SHIPBROKER APS) IS IN DENMARK. IGNORING TAX RESIDENCY CERTIFICATE ISSUED BY SKAT WITHOUT VALID REASONS. 3. THE FACTS OF THE CASES ARE THAT IN THIS CASE, TH E ASSESSEE/AGENT, M/S. PEARL LOGISTICS & EX-IM CORPORATION, BHAVNAGAR FOR TWO VOYAGES DURING THE FY 2010-11 FOR BEING FREIGHT BENEFICIARY OF M/S . FABER SHIP BROKERS APS, DENMARK WITHOUT PAYING FREIGHT TAX. THE RETURN ACCOMPANIED WITH CERTAIN DETAILS LIKE INDEMNITY BOND ETC. OTHER THAN THIS SUPPORTING DOCUMENTS (I) SUMMARY STATEMENT OF FABER SHIPBROKER APS, CERTIFICATE DATED 28.09.2008 SIGNED BY JENS FABER ANDERSEN PR ESIDENT ETC. FOR THE SAKE OF CONVENIENCE AND ISSUE INVOLVED IN THE MATTE R ARE IN SIMILAR NATURE, HENCE, THE ENTIRE VOYAGE RETURNS FILED DURI NG THE F.Y. 2010-11 RELEVANT TO AY 2011-12 ARE CONCLUDING AND PASSING S INGLE ORDER U/S. 172(4) OF THE ACT. 4. THE PRINCIPAL DID NOT HAVE REGULAR BUSINESS IN T HE PORT OF PORBANDHAR ONLY OCCASIONAL BUSINESS IS DOING AS AND WHEN IT GOT BUSINESS. THE RETURNS FILED BY THE AGENT/ASSESSEE H AD SUBMITTED COPIES OF MASTER CERTIFICATE ISSUED & SIGNED BY THE EACH MAST ER OF THE VESSEL. 5. THE DETAILS OF SHIP LOADED BY THE PRINCIPAL BENE FICIARY IN THE PORT OF PORBANDHAR INDIA ARE AS SCHEDULE -1 AS UNDER:- SR. NO. NAME OF THE VESSEL WITH DATE OF ARRIVAL FINAL RETURN FILED DATE NAME OF THE PORT FREIGHT AMOUNT IN INDIAN RS. DTAA CLAIMED 01 M.V. QUEEN ARROW-1 DT. 26.01.2011 02.02.2011 PORBANDHAR 2752344 87174 02. M. V. QUEEN ARROW -1 17.02.2011 PORBANDHAR 277 1307 87774 ITA NO.313/RJT/2013, 658 , 659, 660 & 661/RJT/2012, 517/RJT/2013, 499/RJT/20 14 M/S. PEARL LOGISTICS & EX-IM CORP. VS. ITO - 4 - 11.02.2011 TOTAL 174948 6. ON THE PRIMA FACIE VERIFICATION OF THE DOCUMENTS IT WAS NOTICED THAT CERTAIN DETAILS ARE REQUIRED TO BE CALLED FOR. ACCORDINGLY, THIS OFFICE HAD ISSUED NOTICE U/S. 172(4) OF THE ACT. THE CONTE NTION OF THE LETTER IS REPRODUCED HEREUNDER:- SUB: CALLING OF ACCOUNTS/DOCUMENTS U/S. 172(5) O F THE INCOME-TAX ACT, 1961 IN THE CASE OF M.V. QUEEN ARROW -1 OF 26. 01.2011 & M.V. QUEEN ARROW 1 OF 11.02.2011 FOR PRINCIPAL BENEFIC IARY OF M/S. FABER SHIPBROKERS APS- DENMARK. REG. PLEASE REFER TO YOUR RETURN DATED 01.02.2011 AND 15 .02.2011. ON GOING THROUGH THE SUBMISSION MADE AVAILABLE ON RECORDS, IT WAS NOTICED THAT YOU HAVE CLAIMED DTAA BENEFIT FOR THE COUNTRY OF DENMARK WITHOUT ANY VALID DOCUMENTS. YOUR ATTENTION IS ALSO INVITED FOR THE FOLLOWING BASIC REQUIREMENTS FOR OBTAINING DTAA BEN EFIT.:- ARTICLE 9: SHIPPING 1. PROFITS DERIVED FROM THE O PERATION OF SHIPS IN INTERNATIONAL TRAFFIC SHALL BE TAXABLE ONLY IN THE CONTRACTING STATE IN WHICH THE PLACE OF EFFECTIVE MANAGEMENT OF THE ENTE RPRISE IS SITUATED. IN OTHER TO OBTAIN BENEFIT OF DTA, YOU WILL SUBMIT FOLLOWING DETAILS OF THE FREIGHT BENEFICIARIES OF THE VESSELS:- I) PLEASE FURNISH LATEST AMENDED ARTICLE OF ASSOCIATIO N DATED 02.07.1999 (AS PER YOUR SUMMARY SHEET). II) PLEASE THAT, JENS FABER ANDERSEN, IS GENERAL MANAGE R OF THE COMPANY, THEREFORE, YOU ARE REQUESTED TO FURNISH FO LLOWING DETAILS:- A) PLEASE INCORPORATION CERTIFICATION OF M/S. FABER SH IPBROKER APS DENMARK. ITA NO.313/RJT/2013, 658 , 659, 660 & 661/RJT/2012, 517/RJT/2013, 499/RJT/20 14 M/S. PEARL LOGISTICS & EX-IM CORP. VS. ITO - 5 - B) DETAILS OF SHARE HOLDERS OF COMPANY WITH THEIR NATI ONALITY & ADDRESS OF M/S. FABER SHIPBROKER APS DENMARK. C) DURING THE YEAR COMPANIES AGM WHEREIN TAKEN WITH CO MPLETE ADDRESS AND ALSO SUBMIT COPY OF THE AGM M/S. FABER SHIPBROKER APS DENMARK. D) DETAILS OF DIRECTORS OF THE COMPANY AND THEIR NATIO NALITY WITH COMPLETE RESIDENTIAL ADDRESS ALONG WITH COPY OF PAS SPORT OF M/S. FABER SHIPBROKER APS DENMARK. III) PLEASE FURNISH COMPLETE COPY OF FREIGHT INVOICE. IV) PLEASE FURNISH COPY OF FORM NO. 15CA & 15CB FOR FUR NISHING OF INFORMATION UNDER SUB-SECTION (6) OF SECTION 195 FOR PERSON RESPONSIBLE FOR MAKING THE PAYMENT TO NON-RESIDENT IN RESPECT OF THIS VOYAGE. V) PLEASE FURNISH COPY OF ACCOUNT DEMURRAGE PAID TO PO RT OR ANY OTHER ENTITY FOR THIS PARTICULARS VOYAGE VESSELS. VI) PLEASE FURNISH CORRECT COPY OF INCOME TAX RETURN FOR YEAR 2008 TO 2011 FILED BY THE PRINCIPAL BENEFICIARY O F M/S. FABER SHIPBROKER APS DENMARK BEFORE THE COMPETENT AUTHO RITY IN DENMARK AS PER ARTICLE-3 (H) OF THE DTAA AGREEMEN T. VII) PLEASE STATE, WHETHER PRINCIPAL BENEFICIARY OF M/ S. FABER SHIPBROKER APS DENMARK HAD FILED INCOME-TAX RETUR N IN INDIA, IF YES, PLEASE FURNISH COPY OF ACKNOWLEDGEME NT OF RETURN FILED FOR AY 2007-08 TO 2010-11 AND STATE IF ANY SC RUTINY ASSESSMENT WAS CARRIED OUT ON THIS INCOME, PLEASE F URNISH COPY OF THE ORDER U/S. 143(3) OF THE ACT FOR AY 2007-08 TO 2009-10. ITA NO.313/RJT/2013, 658 , 659, 660 & 661/RJT/2012, 517/RJT/2013, 499/RJT/20 14 M/S. PEARL LOGISTICS & EX-IM CORP. VS. ITO - 6 - VIII) PLEASE FURNISH FREIGHT BENEFICIARY BANK ACCOUNT FOR THE PERIOD FROM 01.01.2011 TO 30.04.2011 AND ALSO HIGHLIGHT TH E FREIGHT AMOUNT TO US$ 60960 & US$ 61380 REMITTED ON THIS AC COUNT. IX) PLEASE FURNISH VOYAGE CHARTER PARTY AGREEMENT ALONG WITH RIDER CLAUSE EXECUTED BETWEEN OWNER OF M/S. SHIPBROKER APS DENMARK & CHARTER M/S. CIT-GROUP INC. JORDHAN. X) PLEASE FURNISH VESSEL REGISTRATION CERTIFICATE. XI) IN ORDER TO VERIFY THE FREIGHT ACCOUNT OF THE PRINC IPAL OF THE VESSEL, YOU ARE REQUESTED TO SUBMIT THE FOLLOWING D ETAILS A) DETAILS OF THE FREIGHT PAYMENTS MADE BY THE INDIAN AGENT FROM HIS BANK ACCOUNT TO FREIGHT BENEFICIARY/PRINCI PAL. B) COPY OF THE DISBURSEMENT ACCOUNT, MAINTAINED FOR TH IS VOYAGE C) COPY OF THE DISBURSEMENT ACCOUNT SUBMITTED TO THE R BI FOR REMITTANCE OF THE NET SURPLUS IN FAVOUR OF PRINCIPA LS. THE POINT WISE DETAILS/EXPLANATION/CLARIFICATION SH OULD BE FURNISHED ALONG WITH DOCUMENTARY EVIDENCES ON OR BE FORE 23.11.2011. PLEASE TREAT THIS LETTER AS NOTICE U/S. 172(5) OF THE INCOME-TAX ACT, 1961. 7. IN RESPONSE TO THE SAID NOTICE, THE AGENT/ASSESS EE HAD SUBMITTED DETAILS FILING RETURN U/S. 172(3) FOR OBTAINING POR T CLEARANCE U/S. 172 (6) OF THE ACT. IN THIS REPLY DATED 23.11.2011 RECE IVED BY THIS OFFICE ON 30.11.2011, THE AGENT/EXPLAINED AS UNDER:- COPY OF AMENDED ARTICLE OF ASSOCIATION DATED 02.07 .1999 IS ATTACHED HEREWITH. ITA NO.313/RJT/2013, 658 , 659, 660 & 661/RJT/2012, 517/RJT/2013, 499/RJT/20 14 M/S. PEARL LOGISTICS & EX-IM CORP. VS. ITO - 7 - A) INCORPORATION CERTIFICATE OF M/S. FABER SHIPBROKERS APS DENMARK IS ATTACHED HEREWITH. B) THE JENS FABER ANDERSEN IS A SOLE PROPRIETOR OF THE COMPANY AND TAX REGISTERED HERE IN COPENHAGEN, DENMARK, TAX NUMBER IS 37050629 COPY OF PASSPORT OF JENS FABER ANDERSEN IS ATTACHED HEREWITH. C) NO AGM IS HELD DURING THE YEAR AS THE COMPANY OWNED BY THE SOLE PROPRIETOR AS MENTIONED IN POINT ABOVE. D) THE JENS FABER ANDERSEN IS A SOLE PROPRIETOR OF THE COMPANY, AND TAX REGISTERED HERE IN COPENHAGEN, DENMARK TA X NUMBER IS 37050628. COPY OF PASSPORT OF JENS FABER ANDERSE N IS ATTACHED HEREWITH. I. COMPLETE COPY OF FREIGHT INVOICE THE FREIGHT WAS NOT RECEIVED FROM INDIA BUT FROM THE ULTIMATE BUYERS I. E. JORDEN. COPY OF DECLARATION MADE BY MANAGING DIRECTOR OF FA BER SHIPBROKERS IS ATTACHED HEREWITH. II. THERE IS NO PAYMENT MADE TO A NON-RESIDENT FROM IND IA IN RESPECT OF THIS VOYAGE. PAYMENT WAS MADE BY THE ULT IMATE BUYER FROM JORDEN. III. THE DETAILS ARE NOT POSSIBLE. IV. THE COMPANY IS RESIDENT OF DENMARK AS CERTIFIED TAX AUTHORITIES OF DENMARK. IT IS GRANTED CERTIFICATE OF RESIDENCE FOR THE PURPOSE OF CLAIMING BENEFIT UNDER THE DENMARK IND IA DTAA FOR FREIGHT. THEREFORE, IT IS LIABLE TO TAX IN DENM ARK. THE COPY OF TAX RESIDENCY CERTIFICATE IS ATTACHED HEREWITH. V. NO FREIGHT WAS RECEIVED FROM INDIA. FURTHER, THE CO MPANY IS RESIDENT OF DENMARK AS CERTIFIED BY TAX AUTHORITIES OF ITA NO.313/RJT/2013, 658 , 659, 660 & 661/RJT/2012, 517/RJT/2013, 499/RJT/20 14 M/S. PEARL LOGISTICS & EX-IM CORP. VS. ITO - 8 - DENMARK. IT IS GRANTED CERTIFICATE OF RESIDENCE FOR THE PURPOSE OF CLAIMING BENEFIT UNDER THE DENMARK. INDIA, DTA A FOR FREIGHT. THEREFORE, IT IS LIABLE TO TAX IN DENMARK. THE COPY OF TAX RESIDENCY CERTIFICATE IS ATTACHED HEREWITH. VI. NO FREIGHT WAS RECEIVED FROM INDIA. THE COPY OF FIX TURE NOTE AND AGREEMENT STATING THE BANK DETAILS IS ATTACHED HEREWITH. VII. FIXTURE NOTE IS THE ABRIDGED LEGAL FORMAT OF CHARTE R PARTY CONTEMPLATED AND LEGALLY RECOGNIZED INTERNATIONALIT Y EVIDENCING THE SAILENT DATA OF CHARTER PARTY TERMS AND CONDITIONS. THE COPY OF FIXTURE IS ATTACHED HEREWIT H FOR YOUR PERUSAL. VIII. COPY OF THE VESSEL REGISTRATION CERTIFICATE IS ATTA CHED HEREWITH. IX. NO PAYMENT IS MADE BY THE INDIAN AGENT FROM HIS BAN K ACCOUNT TO FREIGHT BENEFICIARY. 8. AS PER LD. AO, THERE WERE VARIOUS FACTORS INVOLV ED IN THIS CASE, SUCH AS AGENT/ASSESSEE HAD NOT SUBMITTED COMPLETE D ETAILS CALLED BY THE AO EXCEPT THE COPY OF VESSELS REGISTRATION CERTIFIC ATE AND SOME MORE INFORMATION OUGHT TO HAVE BEEN FILED BY THE ASSESSE E. HENCE, LD. AO WAS NOT SATISFIED WITH THE CONTENTION OF THE ASSESSEE. 9. AS PER AO, ASSESSEE HAS CLAIMED DTAA BENEFIT WIT H INCRIMINATING AND FORGED DOCUMENTS. THE ACTION OF T HE LOCAL AGENT HAS ITSELF PROVED THE SAME BEYOND DOUBT. UNDER THE CIRC UMSTANCE AND NARRATION AND EVIDENCE OF THE CASE, THE DTAA CLAIME D IS PROVISIONAL & ITA NO.313/RJT/2013, 658 , 659, 660 & 661/RJT/2012, 517/RJT/2013, 499/RJT/20 14 M/S. PEARL LOGISTICS & EX-IM CORP. VS. ITO - 9 - FINAL RETURN U/S. 172(3) OF THE ACT IS HEREBY WITHD RAWN AND FINALLY DEMAND U/S. 172(4) OF RS.1,74,948/- WAS RAISED. 10. AGAINST THE SAID ORDER ASSESSEE PREFERRED FIRST STATUTORY APPEAL BEFORE THE LD. CIT(A) WHO DISMISSED THE APPEAL OF T HE APPELLANT. 11. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE IMPUGNED ORDER, IN THIS CASE SHIP M/S. FABER SHIPBROKERS, DE NMARK IS THE DESPONENT OWNER AND SHIP WAS CHARTERED BY CIT GROUP INC., JORDAN FOR SHIPMENT OF 10,160 M.T. OF CEMENT PURCHASED FROM M/ S. SAURASHTRA CEMENT PVT. LTD. 12. SHIP ARRIVED ON PORBANDAR PORT ON 16/01/2011 & 11/02/2011 AND RETURN U/S. 172(3) WAS FILED ON 02/02/2011 AND 17/0 2/2011 FOR FREIGHT AMOUNT OF RS. 27,52,344/- AND RS. 27,71,307/- AND A MOUNT CHARGEABLE TO INCOME TAX U/S. 172(3) @ 7.5% IS RS.87,174/- AND 87 ,774/- TOTALING TO RS.1,74,948/-. 13. FREIGHT WAS PAYABLE BY CTI GROUP INC., JORDAN T O FABER SHIPBROKERS, DENMARK (KINDLY REFER CLAUSE NO. 13 AN D 14 OF CHARTER PARTY AGREEMENT AT PAGE NO.36 OF PAPER BOOK.) 14. FABER IS OWNER AND CTI GROUP JORDAN IS CHARTERE R (REFER PARA 3 & 4 OF CHARTER PARTY AGREEMENT). AS PER CHARTER PARTY AGREEMENT CTI GROUP INC., JORDAN IS CHARTERER AND FABER SHIPBROKE R, DENMARK IS THE OWNER. (THIS CAN BE VERIFIED FROM THE SIGNATORIES T O CHARTER PARTY AGREEMENT). THEREFORE, THE AGREEMENT SOUGHT BY CIT( A) ABOUT AGREEMENT ITA NO.313/RJT/2013, 658 , 659, 660 & 661/RJT/2012, 517/RJT/2013, 499/RJT/20 14 M/S. PEARL LOGISTICS & EX-IM CORP. VS. ITO - 10 - BETWEEN CTI GROUP INC., JORDAN AND FABER SHIPBROKER S, DENMARK IS CHARTER PARTY AGREEMENT WAS SUBMITTED BEFORE AO AND CIT(A). 15. ACCORDING TO SECTION 172 OF THE ACT, INCOME OF OWNER OR CHARTER WHO RECEIVES FREIGHT IS CHARGEABLE TO TAX. IN THIS CASE, FREIGHT IS RECEIVED BY FABER SHIPBROKERS, DENMARK AND HAS EARNED THE FR EIGHT, SO, THE INCOME OF FABER SHIPBROKER, DENMARK IS CHARGEABLE T O TAX IN INDIA. FABER SHIPBROKERS IS RESIDENT OF DENMARK AND TAX RE SIDENCY CERTIFICATE OF WHICH IS AVAILABLE ON RECORD. (REFER PAGE NO.35 OF PAPER BOOK). SO AS PER DECISION OF HONORABLE SC IN CASE OF AZADI BACHA O ANDOLAN 132 TAXMAN 373 (SC) THE BENEFIT OF DTAA BETWEEN INDIA A ND DENMARK SHALL BE AVAILABLE TO THE DENMARK RESIDENT. 16. FURTHER, AS PER ARTICLE 9 OF INDO DENMARK DTAA, PROFITS DERIVED FROM THE OPERATION OF SHIPS IN INTERNATIONAL TRAFFI C SHALL BE TAXABLE ONLY IN THE STATE WHERE PLACE OF EFFECTIVE MANAGEMENT OF THE ENTERPRISE IS SITUATED. IN THIS CASE THE POEM OF DENMARK ENTITY IS SITUATED IN DENMARK AS REGISTRATION CERTIFICATE RESIDENCE OF SHAREHOLDER PASSPORT OF OWNER ALL SHOWS THAT FABER SHIP BROKER IS RESIDENT OF DEN MARK AND ITS POEM IS IN DENMARK. THEREFORE HEAD AND BRAIN OF FABER SHIP BROKER IS SITUATED IN DENMARK. RELIANCE PLACED ON RADHA RANI HOLDINGS PVT. LTD.(110 TTJ 920) SARASWATI HOLDING CORP. INT. VS. DDIT (16 SOT 535) (D) DE BEERS CONS. MINES LTD. (1906 AC 455) (HL) ITA NO.313/RJT/2013, 658 , 659, 660 & 661/RJT/2012, 517/RJT/2013, 499/RJT/20 14 M/S. PEARL LOGISTICS & EX-IM CORP. VS. ITO - 11 - ARABIAN EXPRESS LINE LTD. (212 ITR 31) 17. IT IS NOTEWORTHY THAT IN THAT CASE OF SAME ASSE SSEE AND ON IDENTICAL FACTS CIT(A) HAS ALLOWED THE BENEFIT OF DTAA TO THE ASSESSEE (PAGE NO.53 TO 84). HOWEVER REVENUE HAS FILED APPEAL AGAI NST THOSE ORDERS IN ITA NO. 499/RJT/2014 AND 517/RJT/2014. 18. LD. CIT (A) HAS RAISED CONTENTION THAT INCOME O F CTI GROUP INC. JORDAN IS CHARGEABLE TO TAX IS ERRONEOUS AS IT HAS NEITHER AN INCOME ACCRUED AND ARISED U/S.5(2) READ WITH SECTION 9(1)( I) OF THE INCOME TAX ACT. THEREFORE, NOTHING IS CHARGEABLE TO TAX IN THE HANDS OF JORDAN CO. IN FACT, FREIGHT IS RECEIVED BY FABER SHIPBROKERS DENM ARK. SO IT IS FABER WHO IS RESPONSIBLE FOR PAYING TAX IN INDIA AS PER S ECTION 5(2) OF THE INCOME TAX ACT. 19. IN THE ENTIRETY OF FACTS AND CIRCUMSTANCES OF T HE CASE, IN OUR CONSIDERED OPINION APPELLANT HAS PROVED THE PLACE O F EFFECTIVE CONTROL AND MANAGEMENT OF THE APPELLANT BY FURNISHING SEVER AL DOCUMENTS INCLUDING DECLARATION BY DIRECTOR OF COMPANY THAT I T IS COMPLETELY 100% OWNED BY MR. JENS FABER ANDERSON, COPY OF PASSPORT OF DIRECTOR TO PROVE THAT THE NATIONALITY OF DIRECTOR AND COMPANY HAS BEEN OPERATING FROM DENMARK. IT CAN BE CONCLUDED THAT THE DIRECTOR MR. JENS FABER ANDERSON RESIDES IN DENMARK IS RESIDENT OF DENMARK AND HAVE BEEN OPERATING BUSINESS WHOLLY FROM DENMARK, ALL THE IMP ORTANT DECISIONS ARE TAKEN FROM DENMARK IN THE FORM OF MEETING AND THERE FORE, THE PLACE OF EFFECTIVE MANAGEMENT AND CONTROL IS DENMARK ONLY. T HE PRINCIPAL COMPANY IS ALSO ENGAGED IN INTERNATIONAL TRAFFIC AN D RESIDENCE IS ITA NO.313/RJT/2013, 658 , 659, 660 & 661/RJT/2012, 517/RJT/2013, 499/RJT/20 14 M/S. PEARL LOGISTICS & EX-IM CORP. VS. ITO - 12 - DENMARK. ARTICLE 9 OF THE TREATY BETWEEN INDIA AND DENMARK READ AS UNDER PROFITS DERIVED FROM THE OPERATION OF SHIPS IN INTE RNATIONAL TRAFFIC SHALL BE TAXABLE ONLY IN THE CONTRACTING STATE IN WHICH T HE PLACE OF EFFECTIVE MANAGEMENT OF THE ENTERPRISE IS SITUATED. THEREFORE, ON THE BASIS OF ARTICLE 9 OF THE DTAA B ETWEEN INDIA AND DENMARK, THE INCOME ON ACCOUNT OF OPERATION OF SHIP IN INTERNATIONAL TRAFFIC SHALL BE TAXABLE IN THE STATE IN WHICH THE PLACE OF EFFECTIVE MANAGEMENT IS SITUATED I.E. IN THIS CASE DENMARK. THEREFORE, IN VIEW OF THE ABOVE DISCUSSION AND CON SIDERING ARTICLE-9 OF THE TREATY BETWEEN INDIA AND DENMARK A ND ALSO THE DECISION TAKEN BY THE DEPARTMENT IN EARLIER CASES OF THE ASS ESSEE, WE HOLD THAT THE SHIPS OPERATED IN INTERNATIONAL TRAFFIC AND THEREFO RE, THE INCOME FROM SHIP SHALL NOT BE TAXED IN INDIA AS PER ARTICLE 9 O F THE TREATY. THEREFORE, ON ACCOUNT OF FOREGOING OBSERVATION, APPEAL OF THE ASSESSEE/APPELLANT IS ALLOWED. 20. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IN ITA NO. 313/RJT/2013 FOR THE ASSESSMENT YEAR 2011-12 IS ALLOWED. 21. NOW WE TAKE UP THE ASSESSEES APPEAL IN ITA NO .658/RJT/2012, 659/RJT/2012, 660/RJT/2012 & 661/RJT/2012 FOR THE A .Y.2010-11. THE ASSESSEE HAS TAKEN FOLLOWING COMMON GROUNDS OF APPE AL:- I. LD. AO HAS ERRED IN LAW AS WELL AS ON FACTS IN A SSESSING INCOME OF FREIGHT BENEFICIARY M/S. FABER SHIPBROKER APS OF RS.3,36,353/- (IN ITA NO.658/RJT/2012), RS.4,44,451 /- (IN ITA NO.659/RJT/2012), RS.5,54,429/- (IN ITA NO.660/RJT/ 2012), RS.5,99,672/- (IN ITA NO.661/RJT/2012) U/S. 172 OF THE ACT IN THE HANDS OF THE APPELLANT AND LD. CIT(A) ALSO ERRED IN CONFIRMING THE SAME. II. LD. AO AND LD CIT(A) HAS ERRED IN LAW AS WELL A S ON FACTS IN NOT ACCEPTING THE CONTENTION OF THE APPELLANT THAT M/S. FABER ITA NO.313/RJT/2013, 658 , 659, 660 & 661/RJT/2012, 517/RJT/2013, 499/RJT/20 14 M/S. PEARL LOGISTICS & EX-IM CORP. VS. ITO - 13 - SHIPBROKER APS, DENMARK, IS ONLY DISPONENT OWNER OF THE VESSEL WHO IS THE ACTUAL BENEFICIARY OF RECEIPT OF FREIGHT AND RESPONSIBLE FOR THE ENTIRE TAXATION BURDEN AND PAYM ENT OF TAX IN DENMARK. III. LD. AO AND LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON FACTS IN STATING THAT THE PAYMENT RECEIVED BY THE CLAIMED DI SPONENT OWNER FABER SHIP BROKER OF DENMARK, WOULD BE IN NATURE OF HIRING PAYMENT FOR CHARTER AND NOT FREIGHT FOR CARRYING GO ODS. IV. LD. AO HAS ERRED IN LAW AS WELL AS ON FACTS IN STATING THAT M/S. CTI GROUP INC., JORDAN HAS CHARTERED THE SHIP AS PE R THE DOCUMENTS FILLED HAS TRANSPORTED GOODS & HAS EARNED FREIGHT AND LD. CIT(A) ALSO ERRED IN CONFIRMING THE SAME. V. THE LD. AO AND LD. CIT(A) HAS ERRED IN LAW IN TA XING INCOME IN INDIA IGNORING THE FACT THAT THERE IS DTAA WITH DEN MARK I.E. COUNTRY TO WHICH FREIGHT BENEFICIARY BELONGS. ARTIC LE 4 AND PARTICULARLY ARTICLE 9 OF DTAA CLEARLY MENTION THAT THE INCOME FROM SHIPPING BUSINESS IS TAXABLE IN CONTRACTING ST ATE IN WHICH THE PLACE OF EFFECTIVE MANAGEMENT OF ENTERPRISE IS SITUATED. 22. SINCE WE HAVE ALLOWED THE ITA NO. 313/RJT/2013, SAME OUTCOME SHALL APPLY IN THESE APPEALS IN ITA NO.658, 659, 66 0 & 661/RJT/2012, THEREFORE, APPEAL OF THE ASSESSEE IS ALLOWED. 23. REVENUES APPEAL IN ITA NO. 517/RJT/2013 (FOR THE A .Y. 2012- 13) & 499/RJT/2014 (FOR THE A.Y.2013-14) :- DEPARTMENT/REVENUE HAS TAKEN FOLLOWING GROUNDS OF APPEAL IN ITA NO.517/RJT /2013 FOR THE ASSESSMENT YEAR 2012-13:- I. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS ON TH IS ISSUE OF APPLICABILITY OF ARTICLE-4-RESIDENT AND ARTICLE-9-S HIPPING IN WHICH THE PRINCIPAL BENEFICIARY DID NOT HAVE REGULA R SHIPPING BUSINESS IN INDIA. II. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS BY HOLDINGS THAT THE FREIGHT BENEFICIARY OF THE VESSEL IS M/S. FABER SHI PBROKER APS- DENMARK INSTEAD OF FREIGHT RECEIVED BY M/S. CIT GRO UP INC., JORDAN. THE COUNTRY OF JORDAN, THE GOVERNMENT OF IN DIA DID NOT HAVE COMPREHENSIVE TAX TREATY. III. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS B Y HOLDING THAT FREIGHT BENEFICIARY OF THE VESSEL IS M/S. FABER SHI PBROKER APS- ITA NO.313/RJT/2013, 658 , 659, 660 & 661/RJT/2012, 517/RJT/2013, 499/RJT/20 14 M/S. PEARL LOGISTICS & EX-IM CORP. VS. ITO - 14 - DENMARK WITHOUT VERIFYING OR FILING A COPY OF BANK ACCOUNT/BANK CERTIFICATE OF THE ACTUAL FREIGHT BENEFICIARY OF TH E VESSEL. IV. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS THA T DETERMINED FREIGHT BENEFICIARY OF THE VESSEL IS M/S. FABER SHI PBROKER APS DENMARK BASED ON THE CHARTER PARTY AGREEMENT INSTEA D OF VERIFYING THE BANK ACCOUNT OF FREIGHT REMITTANCE. V. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS THA T FREIGHT AMOUNT RECEIVED OR DEEMED TO BE RECEIVED IN INDIA BY OR ON BEHALF OF THE ASSESSEE ON ACCOUNT OF CARRIAGE OF PASSENGERS, LIVE STOCK, MAIL OR GOODS SHIPPED AT ANY PORT OUTSIDE INDIA IS NEITHER TAXED IN INDIA NOR PAID TAX IN DENMARK, WHICH VIOLATION OF CHAPTER IX DOUBLE TAXATION RELIEF AGREEMENT WITH FOREIGN COU NTRIES U/S. 90(1) OF THE ACT. VI. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS BY IGNORING THE COMPREHENSIVE DTAA AGREEMENT OF INDIA & DENMARK IN RESPECT OF ARTICLE-9-SHIPPING THAT PROFITS DERIVED FROM THE OPERATION OF SHIPS IN INTERNATIONAL TRAFFIC SHALL BE TAXABLE ONL Y IN THE CONTRACTING STATE IN WHICH THE PLACE OF EFFECTIVE M ANAGEMENT OF THE ENTERPRISE IS SITUATED. VII. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN STATING RELIANCE ON DECISION TAKEN BY HIS PREDECESSOR, IN ALLOWING T HE APPEALS; WHEREIN FACTUALLY, THE PREDECESSOR HAD DISMISSED TH E EARLIER APPEAL OF THE ASSESSEE VIDE APPEAL NO. CIT(A)/GNR/9 9 & 101/INTL.TAXN./2010-11 DTD. 02/07/2012. VIII. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DECIDING THE APPEALS WITHOUT CALLING UPON VARIOUS DOCUMENTS AS M ENTIONED IN STATEMENT OF FACTS ENCLOSED. IX. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS TH AT JUDICIAL ANALYSIS SUPPORTED BY RECENT DECISION OF HONBLE DE LHI BENCH TRIBUNAL IN THE CASE OF SMR INVESTMENT LD., VS. DY. DIT [2010] 12 ITAT INDIA 866 WHEREIN IT WAS HELD THAT MERELY T AX RESIDENCY CERTIFICATE IS NOT ENOUGH TO CONCLUDE THE RESIDENTIAL STATUS. X. ON THE FACTS AND CIRCUMSTANCES OF THE CASE LD. C IT(A) MAY OUGHT TO HAVE UPHELD THE ORDER OF THE AO. XI. IT IS THEREFORE, PRAYED THAT THE ORDER OF THE L D. CIT(A) MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED TO THE ABOVE EXTENT.AWAW 24. DEPARTMENT/REVENUE HAS TAKEN FOLLOWING GROUNDS OF APPEAL IN ITA NO. 499/RJT/2014 FOR THE A.Y.2013-14. I. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS BY HOL DINGS THAT THE ACTUAL FREIGHT BENEFICIARY OF THE VESSEL IS M/S. FA BER SHIPBROKER ITA NO.313/RJT/2013, 658 , 659, 660 & 661/RJT/2012, 517/RJT/2013, 499/RJT/20 14 M/S. PEARL LOGISTICS & EX-IM CORP. VS. ITO - 15 - APS-DENMARK INSTEAD OF FREIGHT RECEIVED BY M/S. CIT GROUP INC., JORDAN AS HELD BY THE ASSESSING OFFICER. II. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS BY HOLDING THAT FREIGHT BENEFICIARY OF THE VESSEL IS M/S. FABER SHI PBROKER APS- DENMARK MERELY ON THE BASIS OF CHARTER PARTY AGREEM ENT INSTEAD OF VERIFYING THE BANK ACCOUNT OF FREIGHT REMITTANCE , WITHOUT VERIFYING OR FILING A COPY OF BANK ACCOUNT/BANK CER TIFICATE OF THE ACTUAL FREIGHT BENEFICIARY OF THE VESSEL. III. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS B Y IGNORING THE COMPREHENSIVE DTAA AGREEMENT OF INDIA & DENMARK IN RESPECT OF ARTICLE-9-SHIPPING THAT PROFITS DERIVED FROM THE OPERATION OF SHIPS IN INTERNATIONAL TRAFFIC SHALL BE TAXABLE ONL Y IN THE CONTRACTING STATE IN WHICH THE PLACE OF EFFECTIVE M ANAGEMENT OF THE ENTERPRISE IS SITUATED. IV. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN STATING RELIANCE ON DECISION TAKEN BY HIS PREDECESSOR, IN ALLOWING T HE APPEALS; WHEREIN FACTUALLY, THE PREDECESSOR HAD DISMISSED TH E EARLIER APPEAL OF THE ASSESSEE VIDE APPEAL NO. CIT(A)/GNR/9 9 & 101/INTL.TAXN./2010-11 DTD. 02/07/2012. V. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DECIDING THE APPEALS WITHOUT CALLING UPON VARIOUS DOCUMENTS AS M ENTIONED IN STATEMENT OF FACTS ENCLOSED. VI. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT FOLLOWING THE JUDICIAL ANALYSIS SUPPORTED BY RECENT DECISION OF H ONBLE DELHI BENCH TRIBUNAL IN THE CASE OF SMR INVESTMENT LD., V S. DY. DIT [2010] 12 ITAT INDIA 866 WHEREIN IT WAS HELD THAT M ERELY TAX RESIDENCY CERTIFICATE IS NOT ENOUGH TO CONCLUDE THE RESIDENTIAL STATUS. VII. ON THE FACTS AND CIRCUMSTANCES OF THE CASE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE AO. VIII. IT IS THEREFORE, PRAYED THAT THE ORDER OF THE LD. CIT(A) MAY BE SET-ASIDE AND THAT OF THE ASSESSING OFFICER BE REST ORED TO THE ABOVE EXTENT. IX. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME OF HEARING. 25. SINCE WE HAVE ALLOWED APPEAL OF THE ASSESSEE IN ITA NO. 313/RJT/2013 , ITA NO.658, 659, 660 & 661/RJT/2012 . WE ARE NOT INCLINED TO ACCEPT THE CONTENTION OF THE DEPARTMENT AND DEPA RTMENTS BOTH THE APPEALS IN ITA NO.517/RJT/2013 & 499/RJT/2014 ARE DISMISSED . ITA NO.313/RJT/2013, 658 , 659, 660 & 661/RJT/2012, 517/RJT/2013, 499/RJT/20 14 M/S. PEARL LOGISTICS & EX-IM CORP. VS. ITO - 16 - 26. IN THE RESULT, APPEALS FILED BY THE ASSESSEE IN ITA NO. 313/RJT/2013 , ITA NO.658, 659, 660 & 661/RJT/2012 ARE ALLOWED AND APPEALS FILED BY THE DEPARTMENT IN ITA NO .517/RJT/2013 & 499/RJT/2014 ARE DISMISSED. THIS ORDER PRONOUNCED IN OPEN COURT ON 20/03/2017 SD/- SD/- ( PRADIP KUMAR KEDIA ) ( MAHAVIR PRASAD ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 20/03/2017 PRITI YADAV, SR. PS / COPY OF THE ORDER FORWARDED TO : 1. '& / THE APPELLANT 2. '('& / THE RESPONDENT. 3. 3 . ) 4. / CONCERNED CIT 4. ) 4. ( ) / THE CIT(A)-GANDHINAGAR. 5. 5+6 7 '8.8* , , :;1 3 1 / DR, ITAT, AHMEDABAD 6. 7 <= > , / GUARD FILE. / BY ORDER, ( 5. '8. //TRUE COPY// / ( DY./ASSTT.REGISTRAR) ! '# $, / ITAT, AHMEDABAD TRUE COPY 1. DATE OF DICTATION 22/02/2017 (DICTATION-PAD 8 PAGES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 27/02/2017 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S 27/02/2017 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 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 DISPATCH OF THE ORDER