DCIT (IT) 4(3)(1), MUMBAI V. VALENTINE MARITIME (FULF) LLC, MUMBAI

ITA 4389/MUM/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6996 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-06-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: L
• Assessment Year: 2010-2011
• Appeal Filed On: 24-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M V RAJGURU
• Assessee Lawyers: HIRO RAI AW SHRI DHARAN GANDHI
• Keywords: Permanent establishment

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL L BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI N.K PRADHAN , ACCOUNTANT MEMBER ITA NO. 4389 / MUM/2016 ( ASSESSMENT YEAR : 20 10 11 ) DY. COMMISSIONER OF INCOME TAX I.T 4(3)(1), MUMBAI . APPELLANT V/S VALENTINE MARITIME (GULF) LLC C/O VINOD AGNANI, 2004 2005 MONTREAL TOWER, B 31, SHANTI NAGAR ANDHERI (WEST), MUMBAI 400 051 PAN AABCV1070B . RESPONDENT ASSESSEE BY : SHRI HIRO RAI A/W SHRI DHARAN GANDHI REVENUE BY : S HRI M.V. RAJ GURU DATE OF HEARING 11 .0 6 .2018 DATE OF ORDER 13.06.2018 O R D E R PER SAKTIJIT DEY, J.M. AFORESAID APPEAL BY THE DEPARTMENT IS AGAINST ORDER DATED 4 TH MARCH 2016, PASSED BY THE L EARNED COMMISSIONER (APPEALS) 58 , MUMBAI , FOR THE ASSESSMENT YEAR 2010 11 . 2 . IT IS NECESSARY TO PUT ON RECORD THAT THIS APPEAL WAS EARLIER DISPOSED HEARD AND DISPOSED OFF IN THE ABSENCE OF THE ASS ESSEE VIDE ORDER DATED 29 TH MARCH 2017. SUBSEQUENTLY, THE ASSESSEE FILED AN 2 VALENTINE MARITIME (GULF) LLC APPLICATION SEEKING RECA LL OF THE ORDER. AFTER CONSIDERING THE APPLICATION OF THE ASSESSEE, THE TRIBUNAL RECALLED THE APPEAL ORDER VIDE ORDER DATED 6 TH APRIL 2018, IN M.A. NO.755/MUM./2017. 3 . BE THAT AS IT MAY, T HE CORE ISSUE ARISING FOR OUR CONSIDERATION IS, WHETHER THE AMOUNT OF ` 75,93,303, RECEIVED BY THE ASSESSEE IS TAXABLE UNDER SECTION 44BB OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT )? 4 . BRIEF FACTS ARE, THE ASSESSEE IS A COMPANY INCORPORATED IN ABU DHA BI AND IS A RESIDENT OF UNITED ARAB EMIRATES (UAE). THE ASSESSEE IS ENGAGED IN THE BUSINESS OF INS TALLATION AND FABRICATION OF ON SHORE AND OFF SHORE PIPELINES IN CONNECTION WITH PROSPECTING OF OR EXTRACTION OF MINERAL OIL. IN COURSE OF ITS BUSINESS ACTIVI TY, THE ASSESSEE , DURING THE PREVIOUS YEAR TOOK UP TWO PROJECTS IN INDIA. HOWEVER, IN THE PRESENT APPEAL, WE ARE CONCERNED WITH THE PROJECT WITH LEIGHTON CONTRACTORS ( INDIA ) PVT. LTD. FOR CHARTER H IRE OF BARGE REGINA 250 AND CARG O BARGE VML1 , FOR ONGC OIL FIELDS. IN RELATION TO THE AFORESAID PROJECT THE ASSESSEE FOR THE YEAR ENDED 31 ST MARCH 2010, RECEIVED U.S. $ 15,78,307. THOUGH, THE ASSESSEE TREATED IT AS BUSINESS PROFIT, HOWEVER, TAKING SHELTER BEHIND ARTICLE 7 OF INDIA UAE DOUBLE TAXATION AVOIDANCE AGR EEMENT (DTAA) IT WAS SUBMITTED THAT SUCH BUSINESS PROFIT IS TAXABLE ONLY TO THE EXTENT THEY ARE ATTRIBUTABLE TO A PERMANENT ESTABLISHMENT (PE ) IN INDIA. REFERRING TO ARTICLE 5 OF THE 3 VALENTINE MARITIME (GULF) LLC TAX TREATY, IT WAS CLAIMED BY THE ASSESSEE THAT , SINCE , THE PROJECT IS FO R A PERIOD OF LESS THAN NINE MONTHS, THERE IS NO P.E. IN INDIA, HENCE, THE AMOUNT RECEIVED IS NOT TAXABLE IN INDIA. THE ASSESSING OFFICER, HOWEVER, DID NOT FIND MERIT IN THE SUBMISSIONS OF THE ASSESSEE. REFERRING TO THE ASSESSMENT ORDER PASSED FOR THE ASSE SSMENT YEAR 2009 10, THE ASSESSING OFFICER HELD THAT THE ASSESSEE HAS A P.E. IN INDIA SINCE IT HAS ENTERED INTO A CONTRACT WITH LEIGHTON CONTRACTORS ( INDIA ) PVT. LTD. ON 16 TH JULY 2008. THEREFORE , THE PROJECT IS FOR A PERIOD EXCEEDING NINE MONTHS. THUS, HE BROUGHT THE AMOUNT RECEIVED OF U.S. $ 15,78,307, EQUIVALENT TO ` 7,59,33,032 TO TAX UNDER SECTION 44BB OF THE ACT BY ESTIMATING THE INCOME @ 10% OF THE GROSS RECEIPT. ASSESSEE CHALLENGED THE ADDITION BY FILING APPEAL BEFORE THE FIRST APPELLATE AU THORITY. 5 . AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND TAKING NOTE OF THE FACT THAT WHILE DECIDING IDENTICAL ISSUE ARISING IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2009 10, THE LEARNED COMMISSIONER (APPEALS) HAS HELD THAT THE DATE OF STARTING OF THE CONTRACT SHOULD BE ADOPTED AT 9 TH NOVEMBER 2008 AND RECKONED FROM THAT DATE THE PROJECT IS LESS THAN NINE MONTHS, HENCE, THERE IS NO P.E. IN INDIA, LEARNED COMMISSIONER (APPEALS) DECIDED THE ISSUE IN FAVOR OF THE ASSESSEE . BEING AGGRIEVED OF THE AFORE SAID DECISION OF THE LEARNED COMMISSIONER (APPEALS) , THE REVENUE IS IN APPEAL BEFORE US. 4 VALENTINE MARITIME (GULF) LLC 6 . AT THE VERY OUT SET , SHRI HIRO RAI, LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL WHILE DISPOSIN G OFF DEPARTMENTS APPEAL IN ASSESSMENT YEAR 2009 10 . 7 . SHRI M.V. RAJ GURU, LEARNED DEPARTMENTAL REPRESENTATIVE HAS AGREED WITH THE AFORESAID SUBMISSIONS OF THE ASSESSEE. 8 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIALS ON RECORD. AS COULD BE SEEN FROM THE FACTS NARRATED IN THE IMPUGNED ASSESSMENT ORDER, THE DURATION PERIOD OF THE PARTICULAR PROJECT / CONTRACT WITH LEIGHTON CONTRACTORS ( INDIA ) PVT. LTD. WAS FROM 9 TH NOVEMBER 2008 TO 11 TH JUNE 2009 WHICH FALLS IN T W O FINANCIAL YEARS I.E., FINANCIAL YEAR 2008 09 AND 2009 10. IT HAS BEEN THE CONSISTENT CLAIM OF THE ASSESSEE , SINCE , THE PERIOD OF CONTRACT IS LESS THAN NINE MONTHS , THERE IS NO P.E. IN INDIA, HENCE, THE BUSINESS PROFITS ARE NOT TAXABLE IN INDIA IN TERMS OF THE INDIA UAE TAX TREATY. REJECTING THE AFORESAID CLAIM OF THE ASSESSEE IN ASSESSMENT YEAR 2009 10, THE ASSESSING OFFICER HELD THAT THE PERIOD OF CONTRACT HAS TO B E RECKONED FROM THE DATE OF EXECUTION OF CONTRACT I.E., 16 TH JULY 2008. THEREFORE, THE PERIOD OF CONTRACT IS MORE THAN 9 MONTHS, HENCE, THE ASSESSEE HAS A P.E. IN INDIA. HOWEVER, WHILE DECIDING ASSESSEES APPEAL IN ASSESSMENT YEAR 2009 10, LEARNED COMMISSI ONER (APPEALS) HAS HELD 5 VALENTINE MARITIME (GULF) LLC THAT THE PERIOD OF NINE MONTHS HAVE TO BE COMPUTED FROM THE DATE OF COMMENCEMENT OF PROJECT AND NOT THE DATE OF CONTRACT. SINCE , THE DATE OF COMMENCEMENT OF PROJECT WAS 9 TH NOVEMBER 2008, IT WAS HELD THAT THE CONTRACT WAS FOR A PERI OD OF LESS THAN NINE MONTHS, HENCE, THE ASSESSEE DID NOT HAVE A PE IN INDIA AS THE PROJECT CONTINUED TILL 11 TH JUNE 2009. WHILE DECIDING THE APPEAL FILED BY THE DEPARTMENT AGAINST THE AFORESAID ORDER OF THE LEARNED COMMISSIONER (APPEALS) FOR ASSESSMENT YEA R 2009 10, THE TRIBUNAL IN ACIT V/S VALENTINE MARITIME (GULF) LLC, 166 ITD 001, AGREED WITH THE VIEW EXPRESSED BY THE LEARNED COMMISSIONER (APPEALS), THEREBY , DISMISSED THE GROUND RAISED BY THE DEPARTMENT INSOFAR AS IT RELATED TO THE AMOUNT RECEIVED FROM T HE PROJECT WHI CH IS SUBJECT MATTER OF DISPUTE IN THE PRESENT APPEAL. FACTS BEING IDENTICAL, FOLLOWING THE AFORESAID DECISION OF THE CO ORDINATE BENCH IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2009 10, WE UPHOLD THE ORDER OF THE LEARNED COMMISSIONER (APPEA LS) BY DISMISSING THE GROUNDS RAISED. 9 . IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 13.06.2018 SD/ - N.K. PRADHAN ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 13.06.2018 6 VALENTINE MARITIME (GULF) LLC COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); ( 4 ) THE CIT, MUMBAI CITY CONCERNED; ( 5 ) THE DR, ITAT, MUMBAI; ( 6 ) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (SR. PRIVATE SECRETARY) ITAT, MUMBAI