The ITO, International Taxation, GANDHIDHAM V. M.V. Eleni T Voy-1, GANDHIDHAM

ITA 405/RJT/2013

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 0491 (ITAT-RAJKOT)
• Duration Of Justice: 1 year(s) 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-10-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 05-10-2015
• Assessment Year: 2011-2012
• Appeal Filed On: 30-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Residential status; Double taxation relief; Wrong claim
• Section: 56

Judgement Text

I.T.A. NO. 405/RJT/2013 ASSESSMENT YEAR: 2009 - 10 PAGE 1 OF 11 IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT [CORAM: PRAMOD KUMAR AM AND RAJPAL YADAV JM ] I.T.A. NO. 405/RJT/2013 ASSESSMENT YEAR: 2009 - 10 INCOME TAX OFFICER (INTERNATIONAL TAXATION) GANDHIDHAM, KUTCH . .APPELLANT VS. MUR SHIPPING DMC CO, UAE - MITSUTOR SHIPPING AGENCIES PVT LTD, AS AGENTS FOR .. . RESPONDENT 18/19, BAJAJ CHAMBERS, PLOT NO 265, WARD 12 B GANDHIDHAM 370201 APPEARANCES BY: PRASOON KABRA FOR THE APPELLANT J P SHAH FOR THE RESPONDENT DATE OF CONCLUD ING THE HEARING : OCTOBER 5 , 2015 DATE OF PRONOUNCING THE ORDER : OCTOBER 23 , 2015 O R D E R PER PRAMOD KUMAR : 1, BY WAY OF THIS APPEAL, THE APPELLANT ASSESSING OFFICER HAS CHALLENGED CORRECTNESS OF THE ORDER DATED 30 TH AUGUST 2013, PASSED BY THE CIT(A) I N THE MATTER OF ASSESSMENT UNDER SECTION 172(4) OF THE INCOME TAX ACT, 1961, IN RESPECT OF SAILING BY M V ELENI T VOY I RELATABLE TO THE ASSESSMENT YEAR 2009 - 10 . GRIEVANCE OF THE ASSESSING OFFICER, IN SUBSTANCE, IS THAT ON THE FACTS AND IN THE CIRCUMSTANCE S OF THE CASE, THE LEARNED CIT(A) ERRED IN GRANTING BENEFITS OF INDIA UAE DOUBLE TAX AVOIDANCE AGREEMENT [205 ITR (STAT) 49; INDO UAE TAX TREATY IN SHORT], TO THE ASSESSEE, AND IN THUS HOLDING THAT THE PROFITS OF THE ASSESSEE, FROM OPERATION OF SHIPS IN I NTERNATIONAL TRAFFIC, ARE NOT TAXABLE IN INDIA. 2. BRIEFLY STATED, THE RELEVANT MATERIAL FACTS, TO THE EXTENT NECESSARY FOR ADJUDICATION OF APPEAL BEFORE US, ARE AS FOLLOWS. DURING THE COURSE OF THE SCRUTINY OF RETURN FILED BY THE ASSESSEE UNDER SECTION 172(3), THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS CLAIMED 100% DTAA BENEFIT FOR THE BENEFICIARY OF M/S MUR SHIPPING DMC CO UAE AND THAT THE ASSESSEE HAS SUBMITTED LETTER OF COMMERCIAL LICENCE AND TAX RESIDENCE CERTIFICATE . THE ASSESSING OFF ICER, HOWEVER, PROCEED TO REJECT THIS CLAIM OF TREATY PROTECTION BY I.T.A. NO. 405/RJT/2013 ASSESSMENT YEAR: 2009 - 10 PAGE 2 OF 11 OBSERVING THAT THE TAX RESIDENCY CERTIFICATE WAS ISSUED BY DUBAI HAD CLEARLY MENTIONED THAT ISSUED IN DUBAI, ON THURSDAY THE 15/011/2009 WITHOUT ANY RESPONSIBILITY WHATSOEVER ON MINISTRY OF FINANCE AND, THEREFORE, THE MATTER IS CRYSTAL CLEAR THAT YOUR COMPANY HAS REGISTERED JUST TO GE T THE BENEFIT OF DTA AND THIS COMPANY IS NOT PAYING FREIGHT IN INDIA OR UAE . THE ASSESSING OFFICER THEN REFERRED TO THE PROVISIONS OF ARTICLE 29 OF THE INDIA UAE TAX TREATY WHICH STATES THAT AN ENTITY, WHICH IS A RESIDENT OF CONTRACTING STATE, SHALL NOT BE ENTITLED TO THE BENEFITS OF THIS AGREEMENT IF THE MAIN PURPOSE, OR ONE OF THE MAIN PURPOSES OF THE CREATION OF SUCH AN ENTITY WAS TO OBTAIN BENEFITS OF THAT BENEFITS OF THIS AGREEMENT WHICH WOULD OTHERWISE NOT BE AVAILABLE AND, IN THIS BACKDROP, PROCEEDED TO EXAMINE WHETHER IT IS A CASE IN WHICH ARTICLE 29 CAN BE INVOKED TO DECLINE TREATY BENEFITS TO THE ASSESSEE. THE ASSESSING OFFICER REQUISITIONED T HE INFORMATION REGARDING THE SHAREHOLDERS, THE ANNUAL GENERAL MEETINGS HELD BY THE COMPANY, THE DIRECTORS AND THE FREIGHT BENEFICIARY AND THE EVIDENCES OF ACTUAL TAXES PAID BY THE ASSESSEE COMPANY. UPON COLLECTING THE REQUISITIONED INFORMATION AND UPON ANA LYZING THE SAME, THE ASSESSING OFFICER CONCLUDED AS FOLLOWS: 1) IT IS STRANGE TO NOTE THAT, THE TAX RESIDENCY ISSUED BY THE UAE HAS CLEARLY, VINDICATED LIKE THIS ISSUED IN DUBAI ON THURSDAY THE 15/01/2009 WITHOUT ANY RESPONSIBILITY WHOSOEVER ON THE MINIS TRY OF FINANCE. THIS PROVED BEYOND DOUBT THAT THE SAID COMPANY MERELY GOT REGISTRATION & LICENSE FOR DOING THE BUSINESS AND PLACE OF EFFECTIVE CONTROL AND MANAGEMENT OF THE ENTERPRISE SITUATED OUT OF UAE. 2) THE COMMERCIAL LICENSE ISSUED BY THE GOVERNMEN T OF UAE TO DO THEIR BUSINESS IN UAE FOR CERTAIN YEARS (I.E. 3 YEARS FROM 08.10.2006 TO 07.10.2009) NOTHING MORE THAT. THE SAID LICENSE ALSO ISSUED IN FAVOUR OF MANAGER MR. KARSTEN AMBAK HIS NATIONALITY ALSO SHOWN DANISH, VIDE NO.80043. 3) COPIES OF COMP ANIES AGM NOT SUBMITTED. THE SAID AGM SHOULD BE TAKEN IN TO GENERAL ASSEMBLY OF UAE, IT ALSO MEANT THAT THE SAID NOT SITUATED IN UAE AND ITS EFFECTIVE CONTROL AND MANAGEMENT IS ALSO OUT OF UAE. 4) MEMORANDUM OF ASSOCIATION OF MUR SHIPPING FZCO, THE DIRE CTORS OF THE COMPANY ARE NOT 100% UAE RESIDENT. THE NAME & NATIONALITY OF THE DIRECTORS AS FOLLOWS : - SR. NO. NAME OF THE DIRECTOR DESIGNATION NATIONALITY 1. ROBERT MUIRHEAD DIRECTOR SCOTTISH 2. KARSTEN AMBAK DIRECTOR DANISH 3. DEAN POST DIRECTOR SOUT H AFRICA 4. LOEN PRICE DIRECTOR SOUTH AFRICA/HONG KONG 5) ACCORDING TO THE MOA, THE COMPANIES 100% SHARE HOLDERS IS NOT UAE RESIDENT. THE TWO SWITZERLAND BASED COMPANIES ARE HOLDING TOTAL FIVE SHARE OF THE COMPANY. THE COUNTRY OF SWITZERLAND GOVERNME NT OF INDIA DID NOT HAVE DTAA AGREEMENT IN RESPECT OF OPERATION OF SHIP. PARTICULAR OF SHARE HOLDER IS AS FOLLOWS : - SR. NO. NAME OF THE SHARE HOLDERS NATIONALITY VALUE (AED) NO OF SHARES 1 M/S MUR SHIPPING AG, AEGERISTRASSE 48, PO BOX NO.352, SWITZERLAND 4,00,000 4 I.T.A. NO. 405/RJT/2013 ASSESSMENT YEAR: 2009 - 10 PAGE 3 OF 11 6301 ZUG, SWITZERLAND 2. M/S MUR INVESTMENT AG, AEGERISTRASSE 48, PO BOX NO.352, 6301 ZUG, SWITZERLAND SWITZERLAND 1,00,000 1 TOTAL 5,00,000 5 6) THE OWNER OF THE VESSEL IS EMGITI MARITIME LTD OF MARSHALL ISLANDS IN WHICH GOVERNMENT OF I NDIA DID NOT HAVE DTAA AGREEMENT. FURTHER, THE GOVERNMENT OF INDIA HAS ENTERED DTAA AGREEMENT BETWEEN UAE WITH CERTAIN CONDITION LAID DOWN FOR THIS BENEFIT. IN THE DEFINITION FOR RESIDENT BY THE ARTICLE - 4 & ARTICLE - 8, LIKEWISE DTAA AGREEMENT HAS INSERTED FURTHER CLAUSE OF ARTICLE - 29 LIMITATION OF BENEFIT TO DETERMINED ACTUAL BENEFICIARY OF THE DTAA AGREEMENT. THE ARTICLE 29 IS REPRODUCED HEREUNDER : - ARTICLE 29 LIMITATION OF BENEFITS AN ENTITY WHICH IS A RESIDENT OF A CONTRACTING STATE SHALL NOT BE ENTITLED TO THE BENEFITS OF THIS AGREEMENT IF THE MAIN PURPOSE OR ONE OF THE MAIN PURPOSES OF THE CREATION OF SUCH ENTITY WAS TO OBTAIN THE BENEFITS OF THIS AGREEMENT THAT WOULD BE OTHERWISE AVAILABLE. THE CASE OF LEGAL ENTITIES NOT HAVING BONA FIDE BUSI NESS ACTIVITIES SHALL BE COVERED BY THIS ARTICLE. OVER AND ABOVE, THE COMPANY S EFFECTIVE CONTROL AND MANAGEMENT IS NOT SITUATED IN UAE OR IN OTHER WORDS THE COMPANY IS NOT MANAGED AND CONTROLLED WHOLLY IN UAE. THE SAID COMPANY IS NOT RESIDENT OF UAE AS PER ARTICLE NO.4 OF DTAA AGREEMENT EXECUTED WITH GOVERNMENT OF INDIA & UAE AND ITS PLACE OF EFFECTIVE CONTROL AND MANAGEMENT ARE SITUATED IN OUT OF UAE. ON FOREGOING DISCUSSION AND NARRATION OF THE FACT OF THIS CASE, THAT THE M/S MUR SHIPPING DMC CO. OF UAE IS NOT ENTITLED TO CLAIM THE DTAA BENEFIT. THE MATTER IS VERY SIMPLE, THAT THE SAID COMPANY HAS GOT JUST REGISTRATION FOR DOING THEIR BUSINESS IN UAE. IN THIS CASE, FROM THE DOCUMENTS AVAILABLE ON RECORDS THE MATTER WAS CRYSTAL CLEAR THAT THE AGENT/ FREIGHT BENEFICIARY IS NOT ENTITLED TO CLAIM THE DTAA BENEFIT. THIS ACTION OF THE AGENT HAS ITSELF PROVED THE MALA FIDE INTENTION AND THE WRONG CLAIM OF BENEFIT OF DTAA. UNDER THIS FACT AND CIRCUMSTANCE OF THE CASE THE DTAA BENEFIT ALREADY CLAIMED IN THE PROVISIONAL RETURN FOR THE AFORESAID VESSEL IS HEREBY WITHDRAWN. 3. AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LEARNED CIT(A). LEARNED CIT(A), WHILE REVERSING THE STAND SO TAKEN BY THE ASSESSING OFFICER, OBSERVED AS FOLLOWS: 5. THE MATT ER HAS BEEN CONSIDERED, KEEPING IN VIEW THE SUBMISSIONS AND REPORT OF THE A.O. FILED DURING THE APPELLATE PROCEEDINGS AS WELL AS THE REMAND PROCEEDINGS. THE ISSUE AT HAND IS ABOUT THE APPLICABILITY OF LOB CLAUSE, EFFECTIVE CONTROL AND MANAGEMENT OF THE CO MPANY AND ABOUT GRANTING OF DTAA BENEFITS UNDER INDIA UAE TAX TREATY. IN MY CONSIDERED OPINION, THE COMPANY, MUR SHIPPING DMC CO DUBAI IS ELIGIBLE FOR DTAA BENEFITS UNDER INDIA UAE TREATY AS: I AM OF THE CONSIDERED OPINION THAT THE ASSESSING OFFICER I S NOT CORRECT IN HIS LOGIC TO SAY THAT DTAA (INDIA - U.A.E.) CLAIMED BY THE COMPANY IN PROVISIONAL & FINAL RETURN ARE TO BE WITHDRAWN BASED ON COMPANY S AGM IS HELD OUTSIDE UAE, DIRECTORS OF THE COMPANY ARE I.T.A. NO. 405/RJT/2013 ASSESSMENT YEAR: 2009 - 10 PAGE 4 OF 11 NOT UAE RESIDENT (CITIZENS), SHAREHOLDERS OF THE CO MPANY ARE NOT RESIDENT OF UAE, AND MUR SHIPPING DMC HAS ONLY REGISTERED OFFICE IN UAE AND THEREFORE ITS EFFECTIVE CONTROL AND MANAGEMENT ARE OUT OF UAE. DETAILED OBSERVATIONS ARE AS UNDER: DELHI HIGH COURT IN CASE OF RAVI RAJ GUPTA V. HANS RAJ GUPTA & CO. PVT. LTD. C.S. (OS) NO.1944 OF 2003 DATED 17 TH FEBRUARY, 2009 HAS RULED THAT - A SHAREHOLDER HAS NO SAY IN MANAGEMENT OF A COMPANY UNLESS & UNTIL HE BECOMES PART OF MANAGEMENT . A SHAREHOLDER HAS RIGHT ONLY TO THE DIVIDEND AND OF PARTICIPATION IN THE ANNUAL GENERAL MEETINGS AND TO VOTE THERE. THE TRUE TEST FOR DETERMINING THE LOCATION OF CONTROL AND MANAGEMENT LIES IS LOCATION WHERE THE BOARD MEETINGS ARE HELD. THE LEARNED A.O. SHOULD HAVE OBSERVED THAT THE MANAGEMENT OF THE COMPANY IS IN THE HAND OF ITS BOARD OF DIRECTORS WHO ARE RESPONSIBLE FOR THE OPERATIONS AND GROWTH OF THE COMPANY. THE ENTIRE DECISION MAKING THOUGH REVIEWED BY THE SHAREHOLDERS IS DONE BY THE BOARD OF DIRECTORS IN BOARD MEETINGS, WHICH ARE HELD IN UAE. THE CASE OF RADHA RANI HOL DINGS (P) LTD. VS. ASST. DIT (DELHI) (2007) 16 SOT 4955 SUPPORTS THIS VIEWPOINT WHERE IT WAS STATED: THE BOARD OF DIRECTORS SUBJECT TO, THE OVERALL SUPERVISION OF SHAREHOLDERS, ACTUALLY CONTROLS AND MANAGES THE AFFAIRS OF A COMPANY EFFECTIVELY AS AGAINST THE DAY - TO - DAY OPERATION OF THE COMPANY, THE SUITS OF THE BOARD OF DIRECTORS OF THE COMPANY SHOULD DETERMINE THE PLACE OF CONTROL AND MANAGEMENT OF THE COMPANY. THIS DOES NOT MEAN WHERE ONE OR MORE OF THE DIRECTORS NORMALLY RESIDE, BUT WHERE THE BOARD ACT UALLY MEETS FOR THE PURPOSE OF DETERMINATION OF THE KEY ISSUES RELATING TO THE COMPANY. - THE BOARD MEETINGS AND IMPORTANT DECISION ARE TAKEN AT DUBAI, SENIOR STAFF INCLUDING DIRECTOR WHO IS MAINLY MANAGING THE AFFAIRS IS RESIDENT OF DUBAI AND HAVING PERM ANENT RESIDENTIAL STATUS . PLACE OF HOLDING OF AGM AND RESIDENTIAL STATUS OF SHARE HOLDERS ARE NOT RELEVANT FACTOR FOR DETERMINING RESIDENTIAL STATUS OF THE COMPANY. THE PLACE OF HOLDING AGM IS GOVERNED BY LAW OF THE COUNTRY WHERE THE COMPANY IS INCORPORA TED. FURTHER SHAREHOLDERS DO NOT HAVE SAY OR DIRECT INTERFERENCE IN THE MANAGEMENT OF COMPANY THEREFORE IN MY VIEW THE ASSESSING OFFICER S STAND IN THIS REGARD IS NOT CORRECT TO SAY THAT EFFECTIVE CONTROL AND MANAGEMENT IS NOT SITUATED IN UAE JUST BECAUSE SHAREHOLDERS ARE NOT RESIDENT OF UAE OR JUST BECAUSE AGM WAS NOT HELD IN UAE. ALSO ASSESSING OFFICER SEEMS TO BE WRONGLY CONSIDERING NATIONALITY OF DIRECTOR AS FACTOR TO DECIDE THE RESIDENTIAL STATUS OF THE COMPANY. APPELLANT HAS BEEN ABLE TO PROVE THA T MANAGER DIRECTOR SHRI KARSTEN AMBAK (AS PER GOVT. OF DUBAI LICENSE NO.80043) OF THE COMPANY IS RESIDING AT UAE AND HAS PERMANENT RESIDENTIAL VISA OF UAE. FURTHER, IT HAS BEEN PROVED THAT AT LEAST TWO OTHER DIRECTORS, MR. DEAN AND MR. ROBERT MICHAEL MUIR HEAD HAVE PERMANENT RESIDENTIAL VISA OF UAE. FURTHER AS PER DTAA ARTICLE 4 RESIDENTIAL STATUS OF THE COMPANY IS TO BE DETERMINED AS :. ARTICLE 4 RESIDENT 1. FOR THE PURPOSES OF THIS AGREEMENT THE TERM RESIDENT OF A CONTRACTING STATE MEANS: I.T.A. NO. 405/RJT/2013 ASSESSMENT YEAR: 2009 - 10 PAGE 5 OF 11 (B) I N THE CASE OF THE UNITED ARAB EMIRATES: ......... A COMPANY WHICH IS INCORPORATED IN THE UAE AND WHICH IS MANAGED AND CONTROLLED WHOLLY IN UAE. BASED ON INDIAN EMBASSY CERTIFIED DOCUMENTS SUBMITTED SUCH AS INCORPORATION CERTIFICATE, TRADING LICENSE, VALID TAX RESIDENCY CERTIFICATE, THE COMPANY IS INCORPORATED IN UAE AND BASED ON DETAILS OF BOARD MEETING HELD AND OTHER DETAILS SUCH AS MANAGER DIRECTOR S RESIDENTIAL STATUS SUBMITTED SHOWED THAT THE COMPANY IS CONTROLLED AND MANAGED FROM UAE. FURTHER AS REGARD S ASSESSING OFFICER S STAND ON ISSUE OF TAX RESIDENCY CERTIFICATE WITH GENERAL DISCLAIMER, I HAVE ALSO CONSIDERED THE VIEWS OF BOTH SIDES, IN MY OPINION, THE DISCLAIMER CLAUSE SEEMS TO BE GENERAL AND RESTRICTING UAE GOVERNMENT LIABILITY AND HAS NOTHING EXC EPTIONAL FOR THIS COMPANY AS THESE WORDINGS ARE COMMONLY FOUND IN ALL TRC ISSUED AT UAE. IN ANY CASE, THESE WORDINGS CANNOT BE BASIS FOR DENIAL OF DTAA BENEFITS. MUR HAS NOT ONLY REGISTERED OFFICE IN UAE AND PRESENCE OF SENIOR EMPLOYEES BUT ALSO ITS EF FECTIVE CONTROL AND MANAGEMENT IS IN UAE IN MY CONSIDERED VIEW BASED ON FACTS. THE NUMBER OF SENIOR RESIDENT EMPLOYEES AND ORGANISATIONAL CHART SUBMITTED BY THE ASSESSEE ON MY DIRECTIONS SHOWS THAT THE OPERATIONAL AND EFFECTIVE CONTROL AND MANAGEMENT OF T HE COMPANY IS IN THE UAE. AS PER EXPLANATION UNDER SECTION 115VC OF INCOME TAX ACT, 1961 DEFINING THE PLACE OF EFFECTIVE MANAGEMENT OF SHIP OPERATING COMPANY. WHERE IT IS SPECIFICALLY STATED THAT IN A CASE WHERE THE BOARD OF DIRECTORS ROUTINELY APPROVE T HE COMMERCIAL AND STRATEGIC DECISION MADE BY THE EXECUTIVE DIRECTORS OR OFFICERS OF THE COMPANY, THE EFFECTIVE MANAGEMENT LIES IN THE PLACE WHERE SUCH EXECUTIVE DIRECTORS OR OFFICERS OF THE COMPANY PERFORM THEIR FUNCTION, SINCE ALL THE BOARD MEETINGS HAVE BEEN REGULARLY CONDUCTED IN UAE AFFIRMS THE FACTS THAT CONTROL AND MANAGEMENT LIES IN UAE. EVIDENCES PRODUCED AUTOMATICALLY REJECT THE APPLICABILITY OF LIMITATION OF BENEFIT CLAUSE AND I HOLD THAT M/S. MUR SHIPPING DMC CO IS A RESIDENT UNDER INDIA - UAE TA X TREATY IN TERMS OF ARTICLE 4. THE ASSESSING OFFICER HAS NOTHING AGAINST APPLICABILITY OF DTAA BETWEEN INDIA AND UAE IN THE CASE OF THE ASSESSEE. THE APPELLANT HAS FILED RESIDENCY CERTIFICATE, INCORPORATION CERTIFICATE, TRADING LICENSE AND OTHER DOCUMENT S TO PROVE THAT IT IS RESIDENT OF DUBAI. IT IS ALSO WORTHWHILE TO MENTION HERE THAT THE HON BLE HIGH COURT OF GUJARAT IN TAX APPEAL NO.12 OF 2012 IN THE CASE OF APPELLANT ITSELF VIDE ITS ORDER DATED 04.07.2012 FOR A.Y. 2007 - 08, ON SIMILAR ISSUE, HAS DECIDE D THE ISSUE IN FAVOUR OF THE APPELLANT. THEREFORE, CONSIDERING ALL THE FACTS AND CIRCUMSTANCES, I HOLD THAT THE PROFITS ARISING OUT OF OPERATIONS OF SHIP IN QUESTION IN INTERNATIONAL WATER, BY THE APPELLANT IS NOT SUBJECT TO TAXATION IN INDIA DUE TO APPLI CABILITY OF ARTICLE 8 READ WITH ARTICLE 4 OF INDIA - UAE DTAA. 4. THE ASSESSING OFFICER IS AGGRIEVED OF THE RELIEF SO GRANTED BY THE CIT(A) AND IS IN APPEAL BEFORE US. 5. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDER ED FACTS OF THE CASE IN THE LIGHT OF THE APPLICABLE LEGAL POSITION. 6. WE FIND THAT, AS LEARNED DEPARTMENTAL REPRESENTATIVE RIGHTLY CONTENDS AND SO FAR AS THE JUDGMENT DATED 4 TH JULY 2012 PASSED BY HON BLE JURISDICTIONAL HIGH COURT IN TAX APPEAL NO. 12 OF 2012 IS CONCERNED, THE ISSUE BEFORE THEIR I.T.A. NO. 405/RJT/2013 ASSESSMENT YEAR: 2009 - 10 PAGE 6 OF 11 LORDSHIPS WAS WITH RESPECT TO THE EVIDENCES IN SUPPORT OF PLACE OF EFFECTIVE MANAGEMENT UNDER THE INDIA NETHERLANDS DOUBLE TAXATION AVOIDANCE AGREEMENT. THE CONCLUSIONS ARRIVED IN THIS CONTEXT, IN OUR CONSIDERED VIEW, WOULD NOT BE DECISIVE ON THE ISSUE AS TO WHETHER OR NOT THE CIT(A) RIGHTLY REVERSED THE ACTION OF THE ASSESSING OFFICER IN DENYING THE TREATY PROTECTION. THE MATTER, HOWEVER, DOES NOT END THERE. EVEN IF THE ISSUE BEFORE US IS NOT COVERED BY THE JUD GMENT OF HON BLE JURISDICTIONAL HIGH COURT, THE MATTER IS TO BE ADJUDICATED ON MERITS ANYWAY. ON MERITS, L EARNED DEPARTMENTAL REPRESENTATIVE S THRUST OF ARGUMENTS IS ONE TWO ISSUES - FIRST, THAT THERE IS NO EVIDENCE TO SUGGEST THAT THE ASSESSEE ACTUALLY PAI D ANY TAXES IN UAE; AND SECOND, THAT IT WAS A FIT CASE TO INVOKE ARTICLE 29 OF THE INDO UAE TAX TREATY AS THE ASSESSEE COULD NOT REBUT THE FACTS BROUGHT ON RECORD BY THE ASSESSING OFFICER. 7. IT IS IN THIS BACKDROP THAT WE NEED TO TAKE A LOOK AT ARTICLE 29 OF INDIA UAE TAX TREATY WHICH HAS BEEN INVOKED BY THE ASSESSING OFFICER TO DECLINE TREATY BENEFITS TO THE ASSESSEE. THIS ARTICLE PROVIDES AS FOLLOWS: 'AN ENTITY WHICH IS A RESIDENT OF A CONTRACTING STATE SHALL NOT BE ENTITLED TO THE BENEFITS OF THIS A GREEMENT IF THE MAIN PURPOSE OR ONE OF THE MAIN PURPOSES OF THE CREATION OF SUCH ENTITY WAS TO OBTAIN THE BENEFITS OF THIS AGREEMENT THAT WOULD NOT BE OTHERWISE AVAILABLE. THE CASES OF LEGAL ENTITIES NOT HAVING BONAFIDE BUSINESS ACTIVITIES SHALL BE COVERED BY THIS ARTICLE.' 8. THE ABOVE ARTICLE WAS INTRODUCED IN THE INDO UAE TAX TREATY BY THE VIRTUE OF A PROTOCOL DATED 26 TH MARCH 2007 [NOTIFICATION NO. 282 OF 2007; 213 CTR (STATUTE) 64] . IT MAY BE RECALLED THAT UNDER THE ORIGINAL TREATY PROVISIONS, RESIDEN T OF A CONTRACTING STATE WAS DEFINED AS ANY PERSON WHO, UNDER THE LAWS OF THAT STATE, IS LIABLE TO TAX THEREIN BY REASON OF HIS DOMICILE, RESIDENCE, PLACE OF MANAGEMENT, PLACE OF INCORPORATION OR ANY OTHER CRITERION OF A SIMILAR NATURE AND THERE WAS CONS IDERABLE CONTROVERSY ON WHETHER , UNDER THIS PROVISION, THE ACTUAL TAXABILITY OF INCOME IN THE UAE WAS A CONDITION PRECEDENT FOR AVAILING THE TREATY BENEFITS IN INDIA. THIS ISSUE WAS PARTICULARLY RELEVANT AS NOT ALL THE RESIDENTS, WHETHER INDIVIDUAL OR CORP ORATE, WERE NECESSARILY TAXABLE ENTITIES UNDER THE UAE LAW. THE UAE, AS A TAX JURISDICTION, HAD RIGHT TO TAX THESE RESIDENTS BUT THE RIGHTS WERE NOT EXERCISED BY INTRODUCING LAW TO TAX THEM. WHILE DEALING WITH THE ISSUE AS TO WHETHER OR NOT, IN SUCH A SIT UATION, THE UAE TAX RESIDENTS WILL BE ELIGIBLE FOR TREATY PROTECTION IN RESPECT OF THEIR INCOME SOURCED IN INDIA, A COORDINATE BENCH OF THIS TRIBUNAL, IN THE CASE OF ADIT VS GREEN EMIRATE TRAVELS [(2006) 100 ITD 203 (BOM)] , OBSERVED THAT, . .... AS LONG A S A PERSON HAS SUCH LOCALITY - RELATED ATTACHMENTS WHICH ATTRACT RESIDENCE TYPE TAXATION, THAT 'PERSON IS TO BE TREATED AS RESIDENT AND THIS STATUS OF BEING A 'RESIDENT OF THE CONTRACTING STATE IS INDEPENDENT OF THE I.T.A. NO. 405/RJT/2013 ASSESSMENT YEAR: 2009 - 10 PAGE 7 OF 11 ACTUAL LEVY OF TAX ON THAT PERSON AND C ONCLUDED THAT VIEWED IN THIS PERSPECTIVE, WE ARE OF THE CONSIDERED OPINION THAT BEING 'LIABLE TO TAX IN THE CONTRACTING STATE DOES NOT NECESSARILY IMPLY THAT THE PERSON SHOULD ACTUALLY BE LIABLE TO TAX IN THAT CONTRACTING STATE BY VIRTUE OF AN EXISTING L EGAL PROVISION BUT WOULD ALSO COVER THE CASES WHERE THAT OTHER CONTRACTING STATE HAS THE RIGHT TO TAX SUCH PERSONS IRRESPECTIVE OF WHETHER OR NOT SUCH A RIGHT IS EXERCISED BY THE CONTRACTING STATE . HOWEVER, UNCOMFORTABLE WITH THE FACT THAT THE JUDICIAL BODIES WERE CALLED UPON TO ADJUDICATE ON SUCH A FUNDAMENTAL ASPECT AS THE ELIGIBILITY FOR TREATY BENEFITS, AND WITH THE WHOLLY AVOIDABLE AMBIGUITY PREVAILING ON THIS ISSUE DUE TO INERTIA OF THE TAX ADMINISTRATION, THE COORDINATE BENCH FURTHER OBSERVED AS F OLLOWS: 10. BEFORE PARTING WITH THE MATTER, WE MAY ADD THAT INSTEAD OF ALLOWING SUCH MATTERS, AS IS THE DISPUTE BEFORE US, TO BE SUBJECTED TO CONFUSING SIGNALS RESULTING IN UNCERTAINTY AND PROLONGED LITIGATION, IT IS CERTAINLY MORE DESIRABLE FOR THE GOVER NMENT TO TAKE A CLEAR - CUT STAND ON THE ISSUE OR LET THE MATTER BE RESOLVED AT THE LEVEL OF GOVERNMENTS OF THE CONTRACTING STATES. THAT PERHAPS IS A BETTER SOLUTION FOR QUICKLY RESOLVING DISPUTES ON SUCH A FUNDAMENTAL ASPECT OF A TAX TREATY AS TO WHO WILL B E ELIGIBLE FOR THE BENEFITS OF THAT TAX TREATY. WE HOPE THAT THE GOVERNMENT WILL RESOLVE THIS MATTER ONCE FOR ALL AND WOULD NOT ALLOW THIS UNCERTAINTY TO LAST FOR LONG. WE LEAVE IT AT THAT. 9. IT IS HEARTENING TO NOTE THAT WITHIN LESS THAN ONE AND A HALF YEAR FROM THE ABOVE OBSERVATIONS HAVING BEEN MADE BY THE TRIBUNAL, THE TAX ADMINISTRATION DID INDEED RESOLVE THE ISSUE. VIDE PROTOCOL DATED 26 TH MARCH 2007 (SUPRA), THE DEFINITION OF EXPRESSION RESIDENT WAS REVISED AS FOLLOWS: 1. FOR THE PURPOSES OF THIS AGREEMENT THE TERM 'RESIDENT OF A CONTRACTING STATE' MEANS: (A) IN THE CASE OF INDIA: ANY PERSON WHO, UNDER THE LAWS OF INDIA, IS LIABLE TO TAX THEREIN BY REASON OF HIS DOMICILE, RESIDENCE, PLACE OF MANAGEMENT OR ANY OTHER CRITERION OF A SIMILAR NATURE. THIS TERM, HOWEVER, DOES NOT INCLUDE ANY PERSON WHO IS LIABLE TO TAX IN INDIA IN RESPECT ONLY OF INCOME FROM SOURCES IN INDIA; AND (B) IN THE CASE OF THE UNITED ARAB EMIRATES : AN INDIVIDUAL WHO IS PRESENT IN THE UAE FOR A PERIOD OR PERIODS TOTALING IN THE AGGREGATE AT LEAST 183 DAYS IN THE CALENDAR YEAR CONCERNED, AND A COMPANY WHICH IS INCORPORATED IN THE UAE AND WHICH IS MANAGED AND CONTROLLED WHOLLY IN UAE. 10. THE REQUIREMENT OF ACTUAL LIABILITY TO TAX FOR THE RESIDENTS IN UAE WAS THUS CONSCIOUSLY REMO VED FROM THE DEFINITION OF RESIDENT OF A CONTRACTING STATE . AS NOTED BY HON BLE DELHI HIGH COURT, IN THE CASE OF EMIRATES SHIPPING LINE FZE VS ADIT [(2012) 349 ITR 493 @519 (DEL)] , IN THE CONTEXT OF THIS AMENDED DEFINITION OF RESIDENT OF A CONTRACTING STATE SO FAR AS A UAE TAX RESIDENT IS CONCERNED, UNDER THE AMENDED ARTICLE, THE REQUIREMENT OF I.T.A. NO. 405/RJT/2013 ASSESSMENT YEAR: 2009 - 10 PAGE 8 OF 11 LIABILITY TO TAX HAS BEEN DONE AWAY WITH . IT CANNOT, THEREFORE, BE ANY LONGER OPEN TO THE ASSESSING OFFICER TO DECLINE THE TREATY PROTECTION TO A UAE TAX RESI DENT , IN RESPECT OF INDIA SOURCED INCOME, ON THE GROUND THAT THE UAE TAX RESIDENT HAS NOT ACTUALLY BEEN TAXED IN RESPECT OF HIS INCOME IN UAE. TO THAT EXTENT, LEARNED DEPARTMENTAL REPRESENTATIVE IS COMPLETELY IN ERROR AND WE REJECT HIS STAND ON THIS ISSUE . 11. THE AMENDMENT OF TREATY DEFINITION FOR RESIDENT IN A CONTRACTING STATE , HOWEVER, DID COME WITH A BUILT IN CHECK TO ENSURE THAT THIS PROVISION IS NOT ABUSED BY INCORPORATING SPECIAL PURPOSE VEHICLES IN UAE ONLY TO SEEK UNDUE BENEFITS IN INDIA . AS A PLAIN READING OF THE ARTICLE 29 SHOWS, THIS ARTICLE SEEKS TO DECLINE THE TREATY BENEFITS IN A CASE IN WHICH MAIN PURPOSE, OR ONE OF THE MAIN PURPOSES OF THE CREATION OF AN ENTITY IS TO OBTAIN BENEFITS OF THAT BENEFITS OF THIS AGREEMENT WHICH WOULD OTHERW ISE NOT BE AVAILABLE . IN OTHER WORDS, ONLY WHEN CREATION OF AN ENTITY IS PART OF MANOEUVRING, WHOLLY OR MAINLY, TO OBTAIN THE BENEFITS OF THE INDIA UAE TAX TREATY WHICH WOULD NOT BE OTHERWISE AVAILABLE , THE BENEFITS OF INDIA UAE TAX TREATY ARE TO BE DECL INED UNDER ARTICLE 29. EVEN THIS LIMITATION OF BENEFIT CLAUSE IS SUBJECT TO THE RIDER THAT THE CASES OF LEGAL ENTITIES NOT HAVING BONAFIDE BUSINESS ACTIVITIES SHALL BE COVERED BY THIS ARTICLE. IN OTHER WORDS, AS LONG AS SUCH ENTITIES HAVE BONAFIDE BUSINES S ACTIVITIES, THE PROVISIONS OF ARTICLE 29 CANNOT BE PRESSED INTO SERVICE AT ALL BY A TAX JURISDICTION. HOWEVER, FOR THE REASONS WE WILL SET OUT IN A SHORT WHILE, IT IS NOT REALLY NECESSARY TO GO INTO THAT ASPECT OF THE MATTER AT ALL. WE HAVE NOTED THAT T HE ASSESSING OFFICER HAS GIVEN TWO REASONS FOR INVOKING ARTICLE 29 - FIRST, THAT THE VESSEL IS OWNED BY AN ENTITY BASED IN MARSHALL ISLANDS WHICH HAS NO TAX TREATY WITH INDIA; AND SECOND, THAT THE ASSESSEE COMPANY IS OWNED BY SHAREHOLDERS IN SWITZERLAND, AND SINCE THE INCOME FROM OPERATIONS OF SHIPS OF THE SWITZERLAND BASED ENTITIES IN INTERNATIONAL TRAFFIC IS NOT COVERED BY ARTICLE 8 OF INDIA SWITZERLAND DTAA, IF BOTH THE SWISS SHAREHOLDERS, WHICH WHOLLY OWN CAPITAL OF THE ASSESSEE COMPANY, WERE TO CARRY ON BUSINESS DIRECTLY, THE TREATY PROTECTION WOULD NOT HAVE BEEN AVAILABLE 12. NONE OF THESE REASONS, IN OUR CONSIDERED VIEW, ARE SUSTAINABLE IN LAW. 13 . WE FIND THAT THOUGH THE MERCHANT VESSEL IN QUESTION IS INDEED OWNED BY A MARSHALL ISLANDS BASED ENTI TY, IT IS AN UNDISPUTED POSITION THAT THE VESSEL IS GIVEN TO THE ASSESSEE UNDER A LONG TERM TIME CHARTER ARRANGEMENT, AND THAT, UNDER ARTICLE 8, OWNERSHIP OF THE VESSEL IS NOT A SINE QUA NON FOR AVAILING TREATY PROTECTION OF SHIPPING INCOME. ARTICLE 8(1) P ROVIDES THAT PROFITS DERIVED BY AN ENTERPRISE OF A CONTRACTING STATE FROM THE OPERATION BY THAT ENTERPRISE OF SHIPS IN INTERNATIONAL TRAFFIC SHALL BE TAXABLE ONLY IN THAT STATE AND ESSENTIALLY PROFITS FROM OPERATION OF SHIPS IN INTERNATIONAL TRAFFIC WILL ALSO COVER THE SITUATIONS IN WHICH THE PROFITS ARE EARNED FROM OPERATING THE SHIPS I.T.A. NO. 405/RJT/2013 ASSESSMENT YEAR: 2009 - 10 PAGE 9 OF 11 IRRESPECTIVE OF WHETHER OR NOT SUCH S HIPS ARE OWNED BY THE ENTERPRISE CLAIMING THE TREATY PROTECTION. ARTICLE 29 CAN BE PRESSED INTO SERVICE ONLY WHEN MAIN PURPOSE, OR ON E OF THE MAIN PURPOSES OF THE CREATION OF AN ENTITY WAS TO OBTAIN BENEFITS OF THAT BENEFITS OF THIS AGREEMENT WHICH WOULD OTHERWISE NOT BE AVAILABLE BUT THEN SINCE NOTHING REALLY TURNS ON THE SITUS OF OWNERSHIP OF THE SHIPS SO FAR AS TREATY BENEFITS, ON T HE FACTS OF THIS CASE, ARE CONCERNED, THE FACT OF THE SHIPS BEING OWNED BY AN ENTITY IN MARSHALL ISLANDS IS WHOLLY IRRELEVANT FOR INVOKING ARTICLE 29. 14 . COMING TO THE SECOND GROUND ON WHICH THE ASSESSING OFFICER HAD INVOKED ARTICLE 29, IT HAS BEEN STAT ED THAT THE INCOME FROM OPERATIONS OF SHIPS OF THE SWITZERLAND BASED ENTITIES IN INTERNATIONAL TRAFFIC IS NOT COVERED BY ARTICLE 8 OF INDIA SWITZERLAND DTAA [(1995) 214 ITR (STATU TE) 223; INDO SWISS TAX TREATY, IN SHORT] AND THEREFORE IF BOTH THE SWISS SH AREHOLDERS, WHICH WHOLLY OWN CAPITAL OF THE ASSESSEE COMPANY, WERE TO CARRY ON BUSINESS DIRECTLY, THE TREATY PROTECTION WOULD NOT HAVE BEEN AVAILABLE. 15. THIS LINE OF REASONING IS CLEARLY FALLACIOUS INASMUCH AS THE ASSESSMENT YEAR BEFORE US IS POST THE AMENDMENT VIDE PROTOCOL DATED 16 TH FEBRUARY 2000 [NOTIFICATION NO. 35 OF 2001, DATED 7 TH FEBRUARY 2001; 165 CTR (STATUTE) 47] WHICH GIVES RESIDUARY TAXATION RIGHTS TO THE RESIDENCE JURISDICTION. WHILE IT IS INDEED CORRECT THAT ARTICLE 8 OF INDO SWISS TAX T REATY DOES NOT COVER INCOME FROM OPERATION OF SHIPS IN INTERNATIONAL TRAFFIC AND RESTRICTS ITSELF TO INCOME OPERATION OF AIRCRAFT IN INTERNATIONAL TRAFFIC, ARTICLE 22(1), INSERTED WITH EFFECT FROM 1 ST APRIL 200 1 , PROVIDES THAT ITEMS OF INCOME OF A RESIDEN T OF A CONTRACTING STATE, WHEREVER ARISING, NOT DEALT WITH IN THE FOREGOING ARTICLES OF THIS AGREEMENT SHALL BE TAXABLE ONLY IN THAT STATE . THERE IS NO DISPUTE, AND AS A MATTER OF FACT IT HAS BEEN THE CASE OF THE ASSESSING OFFICER, THAT INCOME OF OPERATI ON OF SHIPS IN INTERNATIONAL TRAFFIC IS NOT SPECIFICALLY DEALT WITH IN THE INDO SWISS DTAA. WHILE ON THIS ASPECT OF THE MATTER , A USEFUL REFERENCE MAY ALSO BE MADE TO THE DECISION OF THIS TRIBUNAL IN THE CASE OF ADIT VS MEDITERRANEAN SHIPPING CO SA [(2013 ) 56 SOT 278 (MUM)] . IN EFFECT, THEREFORE, WHETHER A SWISS TAX RESI DENT EARNS INDIA SOURCED INCOME FROM OPERATIONS OF SHIPS IN INTERNATIONAL TRAFFIC IN INDIA OR WHETHER A UAE TAX RESIDENT EARNS INDIAN SOURCED INCOME FROM OPERATIONS OF SHIPS IN INTERNATIO NAL TRAFFIC, THE INCOME IS NOT TAXABLE IN INDIA - IN THE FORMER CASE BECAUSE OF THE PROVISIONS OF ARTICLE 22(1) OF INDO SWISS TAX TREATY, AND IN THE LATER CASE OF BECAUSE OF THE PROVISIONS OF SECTION 8 OF INDIA UAE TAX TREATY. 16. AS A COROLLARY TO THIS L EGAL POSITION, THE CONDITION PRECEDENT FOR INVOKING AR TICLE 29 OF INDO UAE TAX TREATY , I.E. MAIN PURPOSE, OR ONE OF THE MAIN PURPOSES OF THE CREATION OF THE ASSESSEE ENTITY BEING TO OBTAIN BENEFIT OR BENEFITS OF INDO UAE TAX TREATY WHICH WOULD OTHERWIS E NOT BE AVAILABLE, IS NOT FULFILLED. WHEN I.T.A. NO. 405/RJT/2013 ASSESSMENT YEAR: 2009 - 10 PAGE 10 OF 11 TREATY PROTECTION IN RESPECT OF INCOME OF SUCH A NATURE WAS ANYWAY AVAIL ABLE, THOUGH UNDER A DIFFERENT KIND OF PROVISION OF THE INDO SWISS TAX TREATY, THE ASSESSEE ENTITY CANNOT BE SAID TO HAVE BEEN CREATED FOR TH E PURPOSE OF AVAILING INDO UAE TAX TREATY BENEFITS. THE ACTION OF THE ASSESSING OFFICER IN INVOKING THE PROVISIONS OF ARTICLE 29 IS VITIATED IN LAW ON THIS COUNT AS WELL. 1 7 . IN VIEW OF THE REASONS SET OUT ABOVE, THE ASSESSING OFFICER WAS CLEARLY IN ERROR IN INVOKING THE PROVISIONS OF ARTICLE 29 ON THE FACTS OF THIS CASE. THE CONDITIONS PRECEDENT FOR INVOKING THIS PROVISION, I.E. CREATION OF THE ASSESSEE ENTITY WHOLLY OR MAINLY, TO OBTAIN THE BENEFITS OF THE INDIA UAE TAX TREATY WHICH WOULD NOT BE OTHERWI SE AVAILABLE , COULD NOT HAVE BEEN FULFILLED ON THE FACTS OF THIS CASE AS THE ASSESSEE WAS ANYWAY LIABLE FOR TREATY PROTECTION OF ITS INDIA SOURCED INCOME FROM OPERATIONS OF SHIPS IN INTERNATIONAL TRAFFIC WHETHER THE BUSINESS WAS CARRIED OUT FROM SWITZERLA ND OR FROM UAE AND IRRESPECTIVE OF THE FACT WHETHER OWNER OF THE VESSEL WAS IN MARSHALL ISLANDS OR ANYWHERE ELSE. 1 8 . COMING TO THE QUESTION AS TO WHETHER THE ASSESSEE QUALIFIED TO BE A RES IDENT OF UAE UNDER ARTICLE 4(1), ALL THAT IS REQUIRED IS THAT THE COMPANY IS INCORPORATED IN THE UAE AND WHICH IS MANAGED AND CONTROLLED WHOLLY IN UAE . WE FIND THAT THERE IS NO DISPUTE THAT THE ASSESSEE IS INCORPORATED IN THE UAE. AS REGARDS THE STAND OF THE ASSESSING OFFICER THAT THE DIRECTORS OF THE ASSESSEE COMPANY ARE NOT UAE NATIONALS, THIS IS WHOLLY IRRELEVANT AS THE DIRECTORS ARE RESIDENTS OF THE UAE AND NATIONALITY OF THE DIRECTORS, DE HORS THEIR PLACE OF RESIDENCE AND BUSINESS ACTIVITY, IS NOT DECISIVE OF THE FACT AS TO WHETHER OR NOT THE COMPANY IS MANAGED AND CONTROLLED IN THE UAE. WE ALSO FIND THAT THE DIRECTORS OF THE ASSESSEE COMPANY ARE RESIDENTS OF UAE AND THE BOARD, AS ALSO SHAREHOLDERS, MEETINGS HAVE TAKEN PLACE IN THE UAE. COPIES OF THE MINUTES OF THESE MEETINGS HAVE ALSO BEEN PLACED BEFORE US, AND N O DEFECTS HAVE BEEN POINTED OUT IN THE SAME. WE HAVE ALSO NOTED, AS EVIDENT FROM THE ANNUAL ACCOUNTS AND THE LIST OF EMPLOYEES FILED BEFORE US, THAT THE ASSESSEE COMPANY IS NOT MERELY A PAPER COMPANY AND HAS ACTUALLY CARRIED OUT MATERIAL BUSINESS OPERATIO NS FROM THE UAE. AS REGARDS THE ISSUE RAISED BY THE ASSESSING OFFICER ON THE WORDING OF THE TAX RESIDENCY CERTIFICATE ISSUED BY THE MINISTRY OF FINANCE, AND THE DISCLAIMER GIVEN THEREON, WE FIND IT WHOLLY DEVOID OF ANY LEGALLY SUSTAINABLE MERITS SO FAR AS ELIGIBILITY FOR TREATY BENEFITS ARE CONCERNED. SUCH HEDGING IN THE OFFICIAL CERTIFICATIONS BY THE STATUTORY AUTHORITIES IS TOO COMMON A SITUATION, AND A PART OF THE STANDARD OPERATING PRACTICES, TO BE REASON ENOUGH TO DRAW AN ADVERSE INFERENCE. IN ANY CA SE, NOTHING TURNS ON THIS CERTIFICATE PER SE AND IN A SITUATION LIKE THE ONE THAT WE ARE SEIZED OF, I.E. WHEN ALL THE CORROBORATIVE FACTS, IN SUPPORT OF THE CERTIFICATION, ARE ON RECORD, THERE IS NO REASON TO REJECT THE TREATY ENTITLEMENTS ON THE BASIS OF , WHAT THE ASSESSING OFFICER PERCEIVES AS, SHORTCOMINGS IN THE TAX RESIDENCY CERTIFICATE. AN ISSUE IS THEN RAISED BY THE ASSESSING OFFICER ABOUT THE LIMITED THREE YEAR PERIOD OF I.T.A. NO. 405/RJT/2013 ASSESSMENT YEAR: 2009 - 10 PAGE 11 OF 11 COMMERCIAL LICENCE ISSUED BY THE GOVERNMENT OF UAE BUT IT IS DIFFICULT TO EVEN UNDERSTAND, MUCH LESS APPROVE, THIS OBJECTION. WHETHER THE ASSESSEE IS GIVEN A PERPETUAL LICENCE TO CARRY ON BUSINESS IN THE UAE OR WHETHER THE LICENCE IS RENEWED EVERY YEAR, DOES NOT, IN OUR CONSIDERED VIEW, AFFECT THE FACT THAT THE ASSESSEE WAS CARRYIN G ON BUSINESS IN THE RELEVANT PREVIOUS YEAR. THE APPROACH OF THE ASSESSING OFFICER IS TOO PEDANTIC AND IS ANYWAY SWAYED BY THE CONSIDERATIONS WHICH ARE NOT REALLY RELEVANT IN THE PRESENT CONTEXT. 19. GIVEN THESE FACTS, IN OUR CONSIDERED VIEW, THE APPREHE NSIONS RAISED BY THE ASSESSING OFFICER ARE DEVOID OF ANY LEGALLY SUSTAINABLE BASIS AND ARE NOT SUPPORTED BY ANY COGENT MATERIAL. THE LOB CLAUSE, AS SET OUT IN ARTICLE 29 OF THE INDIA UAE TREATY, AS SEE HAVE SEEN EARLIER IN THIS ORDER, COULD NOT HAVE BEEN INVOKED ON THE FACTS OF THIS CASE EITHER. IN SUCH A SITUATION, O NCE THERE IS REASONABLE EVIDENCE TO SUGGEST THAT THE AFFAIRS OF THE COMPANY ARE CONDUCTED FROM UAE, AS IS THE CASE BEFORE US, AND THERE IS NO MATERIAL TO CONTROVERT THE SAME OR TO ESTABLISH TH AT THE COMPANY IS CONTROLLED OR MANAGED FROM OUTSIDE UAE, LEARNED CIT(A) WAS INDEED QUITE JUSTIFIED IN REVERSING THE ACTION OF THE ASSESSING OFFICER AND IN GRANTING THE BENEFITS OF INDIA UAE TAX TREATY. 20. IN VIEW OF THE DETAILED REASONS SET OUT ABOVE, AS ALSO BEARING IN MIND ENTIRETY OF THE CASE, WE APPROVE THE CONCLUSIONS ARRIVED AT BY THE LEARNED CIT(A) AND DECLINE TO INTERFERE IN THE MATTER. 21. IN THE RESULT, THE APPEAL IS DISMISSED . PRONOUNCED TODAY ON 23 RD DAY OF OCTOBER, 2015 SD/ - SD/ - RAJPAL YADAV PRAMOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) DATED: 23 RD DAY OF OCTOBER 2015 COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIV E (6) GUARD FILE BY ORDER ETC ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT