A. P. MOLLER MAERSK A/S, MUMBAI V. DEPUTY COMMISSIONER OF INCOME TAX (INTERNATIONAL TAXATION) 1(1)(2), MUMBAI

ITA 407/MUM/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 9497 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-06-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: I
• Assessment Year: 2014-2015
• Appeal Filed On: 18-01-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: V SREEKAR SHRI DIVESH CHAWLA
• Assessee Lawyers: CIRCUMSTANCES OF CASE
• Keywords: Double taxation relief

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI BEFORE SHRI B. R. BASKARAN , AM AND SHRI AMARJIT SINGH, JM / I .T.A. NO. 407 / MUM/ 201 8 ( / ASSESSMENT YEAR: 20 14 - 15 ) A. P. MOLLER MAERSK A/S C/O, MAERSK LINE INDIA PRIVATE L TD, 12 FLOOR, TOWER A, URMI ESTATE, GANPATRAO KADAM MARG, LOWER PAREL, MUMBAI - 400013 . / VS. DCIT (INTERNATIONAL TAXATION) - 1(1)(2) SCINDIA HOUSE MUMBAI - 400038. ./ ./ PAN/GIR NO. : AAECA 4801 C ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING : 10 / 0 4 / 201 9 / DATE OF PRONOUNCEMENT : 0 7 / 0 6 / 201 9 / O R D E R PER AMARJIT SINGH, J M: THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 30 . 12 .201 6 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 55 , MUMBAI [HEREINAFTE R REFERRED TO AS THE CIT(A)] RELEVANT TO T HE A.Y. 20 14 - 1 5 . 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: - 1.1 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE COMMISSIONER OF INCOME TAX (APPEALS) 55 CIT(A) 55 AND THE DEPUTY COMMISSIONER OF INCOME TAX, INTERNATIONAL TAXATION 1(1)(2). MUMBAI REVENUE BY : SHRI V. SREEKAR ASSESSEE BY: SHRI DIVESH CHAWLA ITA NO. 407 / M/201 8 A.Y.20 1 4 - 1 5 2 [AO] HAS ERRED IN DENYING THE BENEFIT OF ARTICLE 9 OF THE TAX TREATY TO THE INTEREST ON INCOME TAX REFUND AND TAXING THE SAME UNDER ARTICLE 12 OF THE TAX TREATY. 1.2 THE CIT(A) AND THE AO FAILED TO APPRECIATE THAT INCOME TAX REFUND HAS ARISEN FROM INCOME EARNED FROM OPERATION OF SHIPS IN INTERNATIONAL TRAFFIC. FURTHER, APART FROM OPERATION OF SHIP IN INTERNATIONAL TRAFFIC, THE APPELLANT DOES NOT HAVE ANY SEPARATE BUSINESS ACTIVITY IN INDIA 1.3 THE CIT(A) AND THE AO OUGHT TO HAVE HELD THAT INTEREST O N INCOME TAX REFUND IS COVERED BY PARA 4(A) OF ARTICLE 9 OF THE TAX TREATY, BEING INTEREST ON FUNDS CONNECTED WITH THE OPERATION OF SHIP IN INTERNATIONAL TRAFFIC AND THEREFORE TAXABLE ONLY IN DENMARK AND NOT IN INDIA. 3 . THE BRIEF FACTS OF THE CASE ARE TH AT THE ASSESSEE IS A DANISH PUBLIC LIMITED COMPANY LISTED ON THE STOCK EXCHANGE OF COPENHAGEN. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF SHIPPING, CHARTERING AND RELATED ACTIVITIES IN INTERNATIONAL TRAFFIC AND HAS EARNED REVENUE FROM SUCH SHIPPING OPERATI ON WITH INDIA. THE ASSESSEE IS A DANISH PUBLIC LIMITED COMPANY AND IS TAX RESIDENT OF DENMARK. THE ASSESSEE IS ENGAGED IN OPERATION OF SHIPS IN INTERNATIONAL TRAFFIC, WHICH IS COVERED BY ARTICLE 9 OF THE DOUBLE TAXATION AVOIDANCE AGREEMENT (DTAA) BETWEEN I NDIA AND DENMARK. IN THE RETURN OF INCOME , ASSESSEE HAS SUBMITTED THAT THE GROSS FREIGHT EARNINGS OF RS.87,87,61,39,062/ - IS NOT TAXABLE AS PER ARTICLE 9(1) OF INDIA - DENMARK DTAA AS THE PROFITS DERIVED FROM THE OPERATIONS OF SHIPS IN INTERNATIONAL TRAFFIC BY AN ENTERPRISES OF DENMARK ARE TAXABLE ONLY IN DENMARK AND NOT IN INDIA. THE ASSESSEE RECEIVED THE INTEREST ON INCOME TAXABLE REFUND WHICH WAS FOUND TO BE TAXABLE UNDER ATICLE 12(2) OF THE TAX TREATY. THE BENEFIT U/S 9 OF THE TAX TREATY WAS DENIED. THER EAFTER, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO ALSO DISMISSED THE APPEAL OF THE ASSESSEE, THEREFORE, THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. ISSUE NOS. 1 TO 3 ITA NO. 407 / M/201 8 A.Y.20 1 4 - 1 5 3 4. ALL THE ISSUES ARE IN CONNECTION WITH THE CONFIRMATION OF TAX UPON TH E INTEREST INCOME ON TAX REFUND. BEFORE GOING FURTHER, WE DEEM IT NECESSARY TO ADVERT THE FINDING OF THE CIT(A) ON RECORD.: - GROUND NO. 6 IS WITH REGARD TO INTEREST ON INCOME TAX REFUND OF RS. 42,979,609/ - RECEIVED IS NOT TAXABLE AS INTEREST INCOME UNDER ARTICLE 12(2) OF THE TAX TREATY. THE APPELLANT SUBMITTED BEFORE ME THAT IN THE INSTANT CASE, THE INTEREST HAS ARISEN BECAUSE SOME OF THE CUSTOMERS HAVE ERRONEOUSLY DEDUCTED TAX AT SOURCE FROM FREIGHT INCOME WHICH IS EXEMPT UNDER TAX TREATY. SO IN EFFECT IN TEREST IS RECEIVED ON FUNDS WHICH ARE GENERATED FROM CARRYING ON THE BUSINESS OF OPERATION OF SHIPS IN INTERNATIONAL TRAFFIC. HOWEVER, IT IS SEEN THAT THIS GROUND IS COVERED AGAINST THE APPELLANT IN HIS OWN CASE OF A.Y. 2005 - 06 BY HONBLE MUMBAI ITAT. HENC E FOLLOWING THE ORDER OF HON'BLE ITAT APPELLANT'S THIS GROUND IS DISMISSED. 5. ON APPRAISAL OF THE ABOVE MENTIONED FINDING, WE NOTICED THAT THE CIT(A) HAS DECIDED THE MATTER OF CONTROVERSY AGAINST THE ASSESSEE ON THE BASIS OF DECISION OF HONBLE ITAT IN T HE ASSESSEES OWN CASE FOR THE A.Y 2005 - 06 IN ITA. NO.7676/M/2010 DATED 14.12.2012. THE FACTS ARE NOT DISTINGUISHABLE AT THIS STAGE. THE DECISION HAS NOT BEEN CONTROVERTED BY ANY OTHER AUTHORITY. AT THE TIME OF ARGUMENTS, THE LD. REPRESENTATIVE OF THE ASSE SSEE HAS VEHEMENTLY ADMITTED THIS FACT THAT THE ISSUE HAS BEEN DECIDED AGAINST THE ASSESSEE BY HONBLE ITAT IN THE ASSESSEES OWN CASE . TAKING INTO ACCOUNT ALL THE FACTS AND CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE ISSUE HAS DULY BEEN COVERED AGAINST THE ASSESSEE IN THE ASSESSEES OWN CASE (SUPRA), THEREFORE, THE FINDING OF THE CIT(A) IS QUITE JUSTIFIABLE WHICH IS NOT LIABLE TO BE INTERFERE WITH AT THIS APPELLATE STAGE. ALL THE ISSUES ARE DECIDED IN FAVOUR OF THE REVENUE AGAINST THE ASSESSEE. ITA NO. 407 / M/201 8 A.Y.20 1 4 - 1 5 4 6 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS HEREBY ORDERED TO BE DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 07 /0 6 /2019 SD/ - SD/ - ( B. R. BASKARAN ) (AMARJIT SINGH) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; DATED : 07/06 / 2019 V IJAY SR. P.S. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT . 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// (SR . PRIVATE SECRETARY) , / ITAT, MUMBAI