DDIT (IT) 4(1), MUMBAI V. MSC MEDITERRANEAN SHIPPING CO. S.A, MUMBAI

ITA 3866/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 49542 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 14-07-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 13-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR SENTHIL KUMAR
• Keywords: Double taxation relief
• Section: 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI BEFORE SHRI R.S.SYAL, AM AND SHRI V.DURGA RAO, JM ITA NO.3866/MUM/2010 : ASST.YEAR 2007-2008 THE DY.COMMISSIONER OF INCOME-TAX (INTERNATIONAL TAXATION) 4(1) MUMBAI. VS. M/S.MSC MEDITERRANEAN SHIPPING CO. S.A. C/O.PRICEWATERHOUSE COOPERS PVT. LTD. PWC HOUSE, GURU NANAK (STATION ROAD) BANDRA (WEST), MUMBAI 400 050. PAN : AACCM4945P. (APPELLANT) (RESPONDENT) APPELLANT BY : DR.SENTHIL KUMAR RESPONDENT BY : SHRI NISHANT THAKKAR O R D E R PER R.S.SYAL, AM : THIS APPEAL BY THE REVENUE ARISES OUT OF THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) ON 15.02.2010 IN RELATI ON TO THE ASSESSMENT YEAR 2007-2008. 2. THE ONLY GROUND RAISED IN THIS APPEAL IS AGAINST THE DIRECTION OF THE LEARNED CIT(A) TO DELETE THE INTEREST U/S.234B. BR IEFLY STATED THE FACT S OF THE CASE ARE THAT THE ASSESSEE IS A NON-RESIDENT COMPANY INCORPORATED IN GENEVA, SWITZERLAND, ENGAGED IN THE BUSINESS OF OPERATION OF SHIPS IN IN TERNATIONAL WATERS. THE ASSESSING OFFICER HELD THAT THE SHIPPING PROFITS OF THE ASSESSEE WERE NOT GOVERNED BY DTAA AND HENCE WERE REQUIRED TO BE CONSIDERED UNDER TH E REGULAR PROVISIONS OF THE ACT. HE APPLIED THE PROVISIONS OF SEC TION 44B. THEREAFTER INTEREST U/S.234B WAS CHARGED. INSOFAR AS THE LEVY OF INTER EST AMOUNTING TO RS.6,59,82,836 U/S.234B OF THE ACT IS CONCERNED, THE LEARNED CIT(A) HE LD THAT THE PROVISIONS OF SECTION 234B WERE ESSENTIALLY TO BE READ ALONG WITH SECTION 209( 1)(D) AND SECTION 195. HE, THEREFORE, HELD THAT THE INTE REST U/S.234B WAS NOT LEVIABLE. ITA NO.3866/MUM/2010 M/S.MSC MEDITERRANEAN SHIPPING CO. SA. 2 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RE LEVANT MATERIAL ON RECORD. THERE IS NO DISPUTE ON THE FACT THAT THE ASSESSEE IS A NON -RESIDENT COMPANY. IN SUCH A SITUATION ANY INCOME TAXABLE IN THE HANDS OF THE ASSESSEE REQUIRES THE PAYER OF THE INCOME TO DEDUCT TAX AT SO URCE U/S.195 OF THE ACT. IT, THEREFORE, SHOWS THAT THE ENTIRE INCOME TAXABLE IN THE HANDS OF THE ASSESSEE IN INDIA IS SUBJECT TO PROVISIONS OF DEDUCTION OF TAX AT SOURCE. WHEN A PARTICULAR INCOME IS SUBJECT TO THE TDS PROVISIONS, THE RECIPIENT CANNOT BE HE LD LIABLE FOR INTEREST FOR DEFAULT IN PAYMENT OF ADVANCE TAX IN TERMS OF SECTION 234B. THE HO NBLE JURISDICTIONAL HIGH COURT IN THE CASE OF DIRECTOR OF INCOME-TAX (INTERNATIONAL TAXATION) VS. NGC NETWORK ASIA LLC [(2009) 313 ITR 187 (BOM.)] HAS HELD TO THIS EXTENT. SIMILAR VIEW HAS BEEN TAKEN BY THE MUMB AI BENCH OF THE TRIBUNAL IN DEPUTY DIRECTOR OF INCOME-TAX (INTERNATIONAL TAXATION) VS . THORESEN CHARTERING SINGAPORE (PTE) LIMITED [(2009) 315 ITR (AT) 376 (MUMBAI)] . THE LEARNED DEPARTMENTAL REPRESENTATIVE, AFTER GOING THROUGH THE A BOVE PRECEDENTS, FAIRLY CONCEDED THAT INTEREST WAS NOT CHARGEABLE. IN VIEW OF THESE PRECEDENTS WE UPHOLD THE IMPUGNED ORDER DIRECTING THAT NO INTEREST U/S. 234B IS LEVIABLE IN THE INSTANT CASE. 4. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED ON THIS 20 TH DAY OF JULY, 2011. SD/- SD/- ( V.DURGA RAO ) ( R.S.SYAL ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI : 20 TH JULY, 2011. DEVDAS*` ITA NO.3866/MUM/2010 M/S.MSC MEDITERRANEAN SHIPPING CO. SA. 3 COPY TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT CONCERNED 4. THE CIT(A) - XI, MUMBAI. 5. THE DR/ITAT, MUMBAI. 6. GUARD FILE. TRUE COPY. BY ORDER ASSISTANT REGISTRAR, ITAT, MUMBAI. ITA NO.3866/MUM/2010 M/S.MSC MEDITERRANEAN SHIPPING CO. SA. 4 DATE INITIAL 1. DRAFT DICTATED ON 14.07.2011 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 15.07.2011 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. FILE SENT TO THE BENCH CLERK SR.PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER. *