ADDL CIT RG 5(1), MUMBAI V. CGU LOGISTICS LTD, MUMBAI

ITA 3493/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 55754 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-11-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 01-11-2011
• Assessment Year: 2008-2009
• Appeal Filed On: 03-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHANTAM BOSE
• Assessee Lawyers: ARVIND SONDE

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI C BENCH BEFORE SHRI D. MANMOHAN, VICE PRESIDENT & BEFORE SHRI T.R.SOOD, ACCOUNTANT MEMBER I.T.A.NO.3493/MUM/2010 A.Y 2008-09 ASST. COMMISSIONER OF I.T. 5(1), MUMBAI. VS. M/S. CGU LOGISTICS LTD., 3 RD FLOOR, PROSPECT CHAMBERS, D.N. ROAD, FORT, MUMBAI 400 001. PAN: AACCC 8880 B (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SHANTAM BOSE. RESPONDENT BY : SHRI ARVIND SONDE. DATE OF HEARING: 01-11-2011 DATE OF PRONOUNCEMENT: 4-11-2011 O R D E R PER T.R.SOOD, AM: IN THIS APPEAL, REVENUE HAS RAISED THE FOLLOWING GR OUND: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING THE APPEAL OF THE ASSESSEE ONLY ON THE GROUND THAT THE ASSESSEE IS CARRYING TH E BUSINESS IN OPERATION OF SHIPS IN SPITE OF VIOLATION OF PROVISI ONS OF SECTION 115VP(2) THAT THE ASSESSEE HAS TO MAKE APPLICATION WITHIN THREE MONTHS OF THE DATE OF ITS INCORPORATION OR THE DATE ON WHICH IT BECAME A QUALIFYING COMPANY AS THE CASE MAY BE. 2. IN THIS CASE ASSESSEE HAD MADE AN APPLICATION U/ S.115VP FOR EXERCISING AN OPTION FOR TONNAGE TAX SCHEME. THE AD DL. CIT NOTED THAT THE APPLICATION HAS BEEN MADE IN FORM NO.65 ON 16-0 5-2008. ON ENQUIRY HE FOUND THAT INTERNATIONAL TONNAGE CERTIFI CATE ISSUED BY MERCANTILE MARINE DEPARTMENT WAS DATED 31-03-2008. ON FURTHER ITA NO.3493 OF 10 2 ENQUIRY IT WAS NOTED THAT MAIN OBJECT OF THE ASSESS EE COMPANY ARE AS UNDER: (I) TO ACQUIRE BY PURCHASE, BUILDING OWNING AND OP ERATING GEARED, SELF PROPELLED SELF DISCHARGE UNITS AND OTHER VESSE LS OF EVERY DESCRIPTION, INCLUDING COMMERCIAL EXPLORATION OF ON E OR MORE VESSELS, EITHER BEING PROPERTY OF THE COMPANY OR CH ARTERED FROM THIRD PARTIES. (II) TO CARRY ON THE BUSINESS OF PROVIDING PORT, M ARINE AND LOGISTICS SERVICES AND FACILITIES INCLUDING BUT NOT LIMITED T O SERVICES AND FACILITIES FOR THE HANDLING AND STORAGE OF GOODS, S UCH AS WAREHOUSES, THE HANDLING OF VESSELS THE OPERATIONS OF ANISE AND FERRY TERMINALS AND CONDUCT OF LOGISTICS BUSINESS. (III) TO CARRY ON THE BUSINESS OF CONTRACTORS, IN RESPECT OF ALL TECHNICAL AND OTHER SERVICES CONNECTED TO SHIPPING INDUSTRY AND PORT OPERATIONS INCLUDING RECRUITMENT OF PEOPLE FOR VARIOUS CATEGORIES FOR INTERNAL AND OVERSEAS EMPLOYMENT CON NECTED WITH PORT AND OTHER ALLIED OPERATIONS. IN VIEW OF THE ABOVE, THE APPLICATION WAS REJECTED FOR THE FOLLOWING REASONS: 1. THE ASSESSEE COMPANY HAS GOT CERTIFICATE OF INDI AN REGISTRY UNDER MERCHANT SHIPPING ACT ON 27.5.2008 AND INTERN ATIONAL TONNAGE CERTIFICATE ISSUED BY MERCANTILE MARINE DEP ARTMENT ON 3.6.2008 WHICH IS NOT DURING THE A.Y.2008-09. 2. THE MAIN OBJECT OF THE COMPANY IS NOT TO CARRY O N THE BUSINESS OF OPERATING SHIPS WHICH IS ONE OF THE CONDITIONS F OR QUALIFYING COMPANY U/S. 115VC OF THE I.T.ACT. 3. OWNERSHIP OF THE QUALIFYING SHIP DOES NOT FALL I N THE A.Y.2008- 09. 3. BEFORE THE LD. CIT(A) IT WAS MAINLY SUBMITTED TH AT ASSESSEE WAS REQUIRED TO MAKE THE APPLICATION FOR OPTING THE SCH EME OF TONNAGE TAX U/S.115VP(2) WITHIN THREE MONTHS FROM THE DATE OF I NCORPORATION OR FROM THE DATE ON WHICH IT BECAME QUALIFYING COMPANY . IT WAS POINTED OUT THAT THE ASSESSEE COMPANY ACQUIRED A SHIP WHICH WAS PROVISIONALLY REGISTERED ON 29-12-2007 AND, THEREFORE, ASSESSEE B ECAME OWNER OF THE SHIP ON 29-12-2007. THE ASSESSEE APPLIED FOR TH E SCHEME OF ITA NO.3493 OF 10 3 TONNAGE TAX ON 24-3-2008. IT WAS POINTED OUT THAT P ERHAPS THE APPLICATION GOT MISPLACED AND PROCEEDINGS WERE TAKE N ONLY IN THE MONTH OF MAY. IT WAS POINTED OUT THAT THE ADDL. CIT WAS WRONG IN OBSERVING THAT ASSESSEE BECAME OWNER OF THE SHIP ON LY ON 27-5-2008. SOME OTHER TECHNICAL OBJECTIONS WERE ALSO RAISED. 4. THE LD. CIT(A) AFTER EXAMINING THE SUBMISSIONS, ALLOWED THE APPEAL OF THE ASSESSEE AGAINST WHICH REVENUE HAS FI LED THIS APPEAL BEFORE US. 5. THE LD. DR STRONGLY RELIED ON THE ORDER OF THE A DDL. CIT. 6. ON THE OTHER HAND, LD. COUNSEL OF THE ASSESSEE S HRI ARVIND SONDE INVITED OUR ATTENTION TO THE PROVISIONS OF SE C.115VP AND POINTED OUT THE CONDITIONS LAID DOWN FOR MAKING AN APPLICAT ION. HE THEN REFERRED TO PAGE-96 OF THE PAPER BOOK WHICH IS A CO PY OF THE PROVISIONAL CERTIFICATE OF THE INDIAN REGISTRAR WHI CH SHOWS THAT THE SHIP HAS BEEN REGISTERED ON 29-12-2007 AND, THEREFORE, A SSESSEE BECAME OWNER OF THE SHIP FROM THAT DATE. HE ALSO REFERRED TO PAGE-113 OF THE PAPER BOOK, WHICH IS A COPY OF THE VARIOUS SECTIONS OF MERCHANT SHIPPING ACT, 1968 AND INVITED OUR ATTENTION TO SEC .40 WHICH REQUIRES THAT IF A SHIP WAS ACQUIRED FROM OUTSIDE THE COUNTR Y, THEN SAME REQUIRED PROVISIONAL REGISTRATION. HE ALSO REFERRED TO PAGE 106 OF THE PAPER BOOK WHICH IS COPY OF THE REGISTRATION GIVEN BY MUMBAI PORT TRUST, WHICH SHOWS THAT THE SHIP WAS BROUGHT TO IND IA ON 29-3-2008. THEREFORE, CLEARLY ASSESSEE BECAME OWNER OF THE SHI P ON 29-12-2007. HE FURTHER REFERRED TO PAGE-86 WHICH IS A COPY OF T HE APPLICATION FILED ITA NO.3493 OF 10 4 ON 24-03-2008 AND WHICH WAS DULY ACKNOWLEDGED. THER EFORE, THE APPLICATION WAS FILED WITHIN TIME AND SIMPLY BECAUS E DEPARTMENT HAD MISPLACED THAT APPLICATION AND CIT(A) HAD CORRECTED THAT SITUATION, THE REVENUE HAS NO CASE. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFUL LY AND FIND THAT THE ORIGINAL APPLICATION HAS BEEN MADE ON 24-03-200 8, COPY OF WHICH IS PLACED AT PAGES 86 TO 90 OF THE PAPER BOOK. THIS AP PLICATION HAS BEEN DULY ACKNOWLEDGED BY THE OFFICE OF THE ADDL. CIT. S IMPLY BECAUSE THIS APPLICATION HAS BEEN MISPLACED, IT CANNOT BE SAID T HAT ASSESSEE HAS NOT FILED THE APPLICATION WITHIN TIME. THE ADDL. CIT HA D STARTED THE PROCEEDINGS ON THE BASIS OF THE NEW APPLICATION FIL ED ON 15-05-2008. FURTHER FROM PROVISIONAL REGISTRATION CERTIFICATE I SSUED BY THE INDIAN REGISTRAR IN TERMS OF SEC.40 OF MERCHANT SHIPPING A CT, 1968, IT BECOMES CLEAR THAT ASSESSEE BECAME OWNER OF THE SHI P ON 29-12-2007. THE OBJECTS WHICH HAVE BEEN EXTRACTED BY THE ADDL. CIT CLEARLY SHOW THAT MAIN OBJECT OF THE ASSESSEE WAS THAT OF OPERAT ION OF THE SHIP. IN FACT, THE LD. CIT(A) HAS ADJUDICATED THE ISSUE VIDE PARA-4 OF HIS ORDER WHICH IS AS UNDER: 4 I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELL ANT. FIRST CONTENTION OF THE APPELLANT IS THAT IT FILED APPLIC ATION IN FORM NO 65 ON 24-3-2008.THE ADDITIONAL CIT HAS NOT TAKEN THIS APP LICATION INTO ACCOUNT. THE APPELLANT AGAIN FILED APPLICATION ON 1 5/5/2008. THE ASSESSING OFFICER PASSED THE ON 1 15VP OF THE INCOM E TAX ACT NOT APPROVING THE APPELLANT THE OPTION TO PAY THE TAX U NDER TONNAGE TAX SCHEME. THE APPELLANT PURCHASED SHIP BULK PROSPERI TY WHICH WAS PROVISIONALLY REGISTERED IN THE NAME OF THE APPELLA NT ON 29/12/2007. DELIVERY OF THIS SHIP WAS TAKEN BY THE APPELLANT IN THE MONTH OF DECEMBER 2007. THUS THE APPELLANT BECAME OWNER OF T HE SHIP IN THE MONTH OF DECEMBER. ADDITIONAL CIT RELIED ON THE CER TIFICATE OF REGISTRY ITA NO.3493 OF 10 5 ISSUED ON 2515/2008 WHICH IS THE DATE OF FINAL REGI STRATION. THE SHIP IS SHOWN BY THE APPELLANT IN ITS ACCOUNTS FOR A.Y.2007 -08 AND THEREFORE THE ADDITIONAL CIT WAS NOT JUSTIFIED IN HOLDING THA T THE APPELLANT IS NOT THE OWNER OF SHIP. REGISTERED TONNAGE CAPACITY OF T HE SHIP IS 3283. THUS THE SHIP OF THE APPELLANT IS QUALIFYING SHIP A ND NOT COVERED BY THE EXCEPTIONS PROVIDED IN SECTION 1 15V0. FURTHER THE APPELLANT FILED THE APPLICATION WITHIN THREE MONTH FROM THE DATE ON WHI CH THE APPELLANT COMPANY BECAME QUALIFYING COMPANY. THE ADDITIONAL C IT HAS NOT PASSED THE ORDER WITHIN ONE MONTH FROM THE DATE ON WHICH APPELLANT FILED THE APPLICATION. EVEN IF THE FIRST APPLICATIO N FILED BY THE APPELLANT IS TO BE IGNORED, THEN ASSESSING OFFICER SHOULD HAV E PASSED THE ORDER BEFORE 30/6/2008. THE ADDITIONAL CIT PASSED THE ORD ER ON 18/7/2009. THUS THE ORDER PASSED BY ADDITIONAL CIT IS NOT WITH IN THE PERMITTED TIME. AS WE HAVE ALREADY OBSERVED ABOVE THAT ASSESSEE COM PLIED WITH ALL THE CONDITIONS LAID DOWN IN SEC.115VP, THEREFORE, WE FI ND NOTHING WRONG IN THE ORDER OF THE LD. CIT(A) AND CONFIRM THE SAME. 8. IN THE RESULT, APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 4/11/2011. SD/- SD/- (D.MANMOHAN) (T.R.SOOD) VICE PRESIDENT ACCOUNTANT MEMBER MUMBAI: 4/11/2011. P/-*