WSA SHIPPING (BOMBAY) P. LTD, MUMBAI V. ADIT -IT CIR 2(2), MUMBAI

ITA 4632/MUM/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54923 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: L
• Next Hearing Date: 04-08-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 07-08-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: JI TENDRA YADAV
• Assessee Lawyers: UDAY SOMAN
• Keywords: Permanent establishment

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH L, MUMBAI BEFORE SHRI N.V.VASUDEVAN(J.M) & SHRI J.SUDHAKAR R EDDY (A.M) ITA NO. ASSTT.YEAR APPELLANT RESPONDENT ITA 4632/M/09 2004-05 WSA SHIPPING (BOMBAY) PVT. LTD. WSA MANAGEMENT PTE. LTD.-SIN.SAGAR TECH PLAZA, ANDHERI KURLA ROAD, SAKI NAKA, ANDHERI (EAST), MUMBAI -72. PAN: AAACW 2373B ADIT(IT) CIR 2(2), ROOM NO.116, SCINDIA HOUSE, BALLARD ESTATE, MUMBAI -38 ITA 4633/M/09 2004-05 WSA SHIPPING (BOMBAY) PVT. LTD. INTERTRANS EXPRESS LINES- KENYA MUMBAI. ADIT(IT) CIR 2(2), MUMBAI ITA 4634/M/09 2004-05 WSA SHIPPING (BOMBAY) PVT. LTD. WSA 1994 PTE. LTD. - SINGAPORE MUMBAI. ADIT(IT) CIR 2(2), MUMBAI ITA 4635/M/09 2004-05 WSA SHIPPING (BOMBAY) PVT. LTD. SACO AIRFRIEGHT GMBH- HAMBURG MUMBAI. ADIT(IT) CIR 2(2), MUMBAI ITA 4636/M/09 2004-05 WSA SHIPPING (BOMAY) P. LTD. AZIMUT SERVICES N.V- BELGIUM MUMBAI ADIT(IT) CIR 2(2), MUMBAI ITA 4637/M/09 2004-05 WSA SHIPPING (BOMBAY) P. LTD. WSA LINES (T) CO.LTD.- THAILAND MUMBAI. ADIT(IT) CIR 2(2), MUMBAI ITA 4638/M/09 2004-05 WSA SHIPPING (BOMBAY) P. LTD. GULF AGENCY CO.-UAE MUMBAI. ADIT(IT) CIR 2(2), MUMBAI WSA SHIPPING (BOMBAY) PVT. LTD. 2 ITA 4639/M/09 2004-05 WSA SHIPPING (BOMBAY) P. LTD. GULF AGENCY CO. (YEMEN) LTD.-YEMEN MUMBAI ADIT(IT) CIR 2(2), MUMBAI ITA 4640/M/09 2004-05 WSA SHIPPING (BOMBAY) P LTD. ALL LINK TRANS INT.L LTD.- SANTOS, MUMBAI. ADIT(IT) CIR 2(2), MUMBAI ITA 4641/M/09 2004-05 WSA SHIPPING (BOMBAY) P. LTD. EURASIA FREIGHT SERVI,LOS ANGLES, MUMBAI. ADIT(IT) CIR 2(2), MUMBAI ITA 4642/M/09 2004-05 WSA SHIPPING (BOMBAY) P. LTD. SEAGREEN SHIPPING CO.LTD.- KOREA , MUMBAI. ADIT(IT) CIR 2(2), MUMBAI ITA 4643/M/09 2004-05 WSA SHIPPING (BOMBAY) P. LTD. SACO SHIPPING GMBH- HAMBURG, MUMBAI ADIT(IT) CIR 2(2), MUMBAI ITA 4644/M/09 2004-05 WSA SHIPPING (BOMBAY) P. LTD. TIANJIN CONSOLE INTL- CHINA, MUMBAI ADIT(IT) CIR 2(2), MUMBAI ITA 4645/M/09 2004-05 WSA SHIPPING (BOMBAY) P. LTD. WSA LINES INTL (VANCOUVER)INC, MUMBAI ADIT(IT) CIR 2(2), MUMBAI ITA 4646/M/09 2004-05 WSA SHIPPING (BOMBAY ) P.LTD. WSA LINES (INTL) LTD. WEST-HK, MUMBAI. ADIT(IT) CIR 2(2), MUMBAI ITA 4647/M/09 2004-05 WSA SHIPPING (BOMBAY) P. LTD. SIVOM SOC.IVO.D-O MAR.IVORCOST, MUMBAI ADIT(IT) CIR 2(2), MUMBAI ITA 4648/M/09 2004-05 WSA SHIPPING (BOMBAY) P. LTD. WORLD SYSTEMS INTL LTD. -SINGAPORE MUMBAI. ADIT(IT) CIR 2(2), MUMBAI WSA SHIPPING (BOMBAY) PVT. LTD. 3 APPELLANTS BY : SHRI UDAY SOMAN RESPONDENT BY : SHRI JITENDRA YADAV DATE OF HEARING : 04/08/2011 DATE OF PRONOUNCEMENT : 12/0 8/2011 ORDER PER BENCH, THESE ARE 17 APPEALS BY WSA SHIPPING(BOMBAY) PVT. LTD., (HEREINAFTER REFERRED TO AS APPELLANT), A COMPANY ENGAGED IN THE BUSINESS OF CARGO CONSOLIDATION COMMONLY KNOWN IN THE BUSINESS AS NON -VESSEL OWNERS CARGO CARRIERS (NVOCC). THE APPELLANT IS REGISTERED AS A MULTIMODAL TRANSPORT OPERATOR (MTO) WITH THE MINISTRY OF SHIPPING DIRECT ORATE GENERAL OF SHIPPING, GOVT. OF INDIA. 2. THESE APPEALS ARE AGAINST ORDERS ALL DATED 16/06/2009 OF CIT(A) XXXI, MUMBAI WITH REFERENCE TO ASSESSMENT YEAR 20 04-05. 3. THE COMMON ISSUE THAT HAS TO BE DECIDED IN T HESE APPEALS IS AS TO WHETHER THE CIT(A) WAS JUSTIFIED IN TREATING THE AP PELLANT AS AGENT OF VARIOUS NON-RESIDENTS(17 NON-RESIDENTS) REFERRED TO IN THE ORDERS OF CIT(A) UNDER SECTION 163 OF THE INCOME TAX ACT 1961 (THE ACT). 4. THE FACTS GIVING RISE TO THESE APPEALS ARE AS FO LLOWS: THE APPELLANT IS ENGAGED IN THE BUSINESS OF CARGO CONSOLIDATION COMMONLY KNOWN IN THE BUSINESS AS NON VESSEL OWNERS CARGO CARRIERS (NVOCC). THE APPELLANT IS REGISTERED AS A MULTIMOD AL TRANSPORT OPERATOR (MTO) WITH THE MINISTRY OF SHIPPING; DIRECTORATE GE NERAL OF SHIPPING, GOVT. OF INDIA. THE APPELLANT RECEIVES CARGO FROM VARIOU S SHIPPERS / CONSIGNORS AT MUMBAI PORT / CONTAINER FREIGHT STATION MUMBAI / JN PT FOR SHIPMENTS TO VARIOUS DESTINATIONS WORLDWIDE. ONCE THE CARGO IS RECEIVED A DOCUMENT WSA SHIPPING (BOMBAY) PVT. LTD. 4 CALLED BILL OF LADING (B/L) IS ISSUED BY THE APPELL ANT TO THE SHIPPER. THE B/L SPECIFIES THE CONSIGNOR, THE CONSIGNEE, CARGO DESCR IPTION, DESTINATION OF THE CARGO WHERE THE DELIVERY HAS TO BE MADE TO THE CONS IGNEE. BASED ON THE VOLUMES OF THE CARGO AND BUSINESS EXPERIENCE THE AP PELLANT OBTAINS A CONTAINER FROM AGENTS OF SHIPPING LINES OR SHIPPING LINES. IN THE PROCESS OF CARGO CONSOLIDATION, THE CONTAINER OBTAINED FROM TH E AGENTS OF SHIPPING LINES OR SHIPPING LINES CANNOT BE STUFFED FULLY FOR A PARTICULAR DESTINATION. AS THE DELIVERY SCHEDULE OF THE CARGO HAS TO BE STR ICTLY ADHERE TO, THE APPELLANT STUFFS THE CARGO OF VARIOUS DESTINATIONS ON A PARTICULAR ROUTE IN ONE CONTAINER AND LOADS THE CONTAINER WITH THE SHIPPING LINE. THIS CONCEPT CAN BE FULLY UNDERSTOOD WITH THE FOLLOWING EXAMPLES: 1. A SHIPPER HANDS OVER THE CARGO TO THE APPELLANT FO R DELIVERY AT SYDNEY, AUSTRALIA. THE VOLUME OF THE AVAILABLE CARGO AS ON DATE FOR SYDNEY MAY NOT BE EQUIVALENT TO FULL CONTAINER LOAD. AS T HE APPELLANT IS UNDER AN OBLIGATION TO DELIVER THE CARGO WITHIN TIME IT S TUFFS THIS CARGO IN A CONTAINER ALONG WITH CARGOES FOR OTHER DESTINATIONS EN ROUTE TO SYDNEY AND DISPATCHES THE CONTAINER TO SINGAPORE. SINGAPO RE IS A HUB PORT WHEREIN THE CARGOES COME FROM VARIOUS PORTS FOR RER OUTING TO FINAL DESTINATIONS. 2. THE APPELLANT HAS A BUSINESS ASSOCIATE IN SINGAPORE WHO TURNS AROUND THE CARGO AND ROUTES THE SAME TO SYDNEY WHERE THE C ARGO IS ULTIMATELY DESTINED. FOR THIS SERVICES RENDERED IN SINGAPORE THE SAID BUSINESS ASSOCIATE RAISES AN INVOICE FOR ON CARRIAGE FROM SI NGAPORE TO SYDNEY. 3. AS THE APPELLANT HAS COLLECTED THE FREIGHT FROM MUM BAI TO SYDNEY, THE COST OF CARRIAGE I.E. SINGAPORE TO SYDNEY IS REMITT ED TO THE BUSINESS ASSOCIATE IN SINGAPORE. 5. THE AO NOTICED THAT THE APPELLANT HAS MADE PAYME NT TO THE NON- RESIDENT DURING THE RELEVANT ASSESSMENT YEARS UNDER CONSIDERATION ON WHICH NO TAX WAS DEDUCTED AT SOURCE AT THE TIME OF MAKING PAYMENT. THE AO, WSA SHIPPING (BOMBAY) PVT. LTD. 5 THEREFORE, ISSUED A SHOWCAUSE NOTICE TO APPELLANT CALLING UPON THE APPELLANT TO SHOW CAUSE AS TO WHY IT SHOULD NOT BE TREATED AS AN AGENT OF THE NON- RESIDENTS TO WHOM THE APPELLANT MADE PAYMENTS, U/S. 163 OF THE INCOME TAX ACT, 1961 (THE ACT). IN RESPONSE TO THE SAME, THE APPELLANT SUBMITTED THAT THE NON-RESIDENTS TO WHOM PAYMENT WAS MADE BY THE APPELLANT WERE BUSINESS ASSOCIATES OF THE APPELLANT BUT THERE WAS NO PRINCIPAL-AGENT RELATIONSHIP WITH THEM. THE APPELLANT SUBMITTED TH AT THE BUSINESS ASSOCIATES OF THE APPELLANT HAD RENDERED SERVICES A T THE RESPECTIVE PORT IN RESPECT OF CARGOES WHICH ARE TO BE SENT TO FURTHER ONWARD DESTINATIONS AND FOR WHICH ALL EXPENSES SUCH AS ONWARD FREIGHT, FREI GHT CHARGES, PORT CHARGES, DETENTION CHARGES ARE TO BE BORNE BY THEM. THE REM ITTANCES MADE BY THE APPELLANT ARE IN RESPECT OF INVOICES RAISED BY THE BUSINESS ASSOCIATES FOR THESE CHARGES IN RESPECT OF SERVICES RENDERED OUTSI DE INDIAN TERRITORIAL WATERS. IT WAS ALSO CLAIMED THAT THE APPELLANT TH AT IT WAS NOT BOUND TO SEND THE CARGO ONLY TO THE LISTED BUSINESS ASSOCIATES AN D IT WAS FREE TO SEND THE CARGO FOR ONWARD MOVEMENT TO ANYONE WHO OFFER BETTE R QUOTATION FOR ONWARD MOVEMENT. THE APPELLANT SUBMITTED THAT THE BUSINES S ASSOCIATES DID NOT HAVING PERMANENT ESTABLISHMENT (PE) IN INDIA. THE APPELLANT SUBMITTED THAT THE RECIPIENTS OF PAYMENT FROM THE APPELLANT W ERE NON-RESIDENT, AND INCOME HAD NOT ACCRUED OR ARISEN OR DEEMED TO HAVE ACCRUED OR ARISEN TO THEM IN INDIA. THE APPELLANTS THUS SUBMITTED THAT THE RECEIPTS FROM THE APPELLANTS WERE NOT CHARGEABLE TO TAX UNDER THE ACT IN THE HANDS OF THE NON- RESIDENTS. THEREFORE THE APPELLANT WAS NOT REQUIR ED TO DEDUCT TAX AT SOURCE IN RESPECT OF REMITTANCES MADE TO THEM. 6. THE AO DID NOT ACCEPT THE EXPLANATION OF THE APP ELLANT AND HE TREATED THE ASSESSEE AS AGENT OF NON-RESIDENT. THE A.O HELD TH AT TO TREAT A PERSON AS AN AGENT U/S. 163, WHAT IS REQUIRED IS TO PROVE THA T THE REPRESENTATIVE ASSESSEE HAS BUSINESS CONNECTION WITH THE NON-RESID ENT AND FROM WHOM OR THROUGH WHOM THE NON-RESIDENT IS IN RECEIPT OF ANY INCOME, WHETHER DIRECTLY OR INDIRECTLY. BOTH THESE FACTS HAVE NOT BEEN DISP UTED BY M/S. WSA WSA SHIPPING (BOMBAY) PVT. LTD. 6 SHIPPING (BOMBAY) P LTD. IT HAS REMITTED THE FREI GHT COLLECTED FROM MUMBAI TO THE ULTIMATE DESTINATION WITHOUT ANY DEDUCTION O F TAX. IN THE CIRCUMSTANCES, MS/ WSA SHIPPING (BOMBAY) P. LTD. WA S TREATED AS AN AGENT OF WSA 1994 PTE LTD. SINGAPORE.. 7. ON APPEAL BY THE ASSESSEE THE CIT(A) CONFIRMED T HE ORDER OF THE AO. 8. AGGRIEVED BY THE ORDER OF THE CIT(A) THE APPELLA NTS HAVE FILED THE PRESENT APPEALS BEFORE THE TRIBUNAL. THE GROUND OF APPEAL RAISED IS COMMON IN ALL THESE APPEALS AND FOR THE SAKE OF REFERENCE GROUND OF APPEAL OF ITA NO.4632/M/09 IS REPRODUCED. BEING AGGRIEVED BY THE ORDER PASSED BY THE COMMISS IONER OF INCOME TAX (APPEALS)-XXXI, MUMBAI, YOUR APPELLANT SUBMITS THE FOLLOWING GROUNDS OF APPEAL FOR YOUR KIND CONSIDERATION: THE COMMISSIONER OF INCOME TAX (APPEALS) XXXI, MUMB AI ERRED IN TREATING THE APPELLANT AS THE AGENT OF WSA MANAGEME NT PTE. LTD SINGAPORE. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND, MO DIFY OR WITHDRAWAL ALL OR ANY OF THE GROUNDS OF APPEAL STATED HEREIN A BOVE. 9. AT THE TIME OF HEARING OF THESE APPEALS LD. COUN SEL FOR THE ASSESSEE FAIRLY CONCEDED THAT IDENTICAL ISSUE IN THE CASE OF THE VERY SAME APPELLANT IN RESPECT OF CERTAIN OTHER NON-RESIDENTS, IN RESPECT OF WHOM THE ASSESSEE WAS CONSIDERED AS AN AGENT UNDER SECTION 163(1) OF THE ACT, ON IDENTICAL FACTS HAD COME UP FOR CONSIDERATION BEFORE THE TRIBUNAL I N ITA NOS. 1232 TO 1245/M/09 AND THE TRIBUNAL VIDE ORDER DATED 13/5/2 011 WAS PLEASED TO UPHOLD SIMILAR ORDER OF THE CIT(A). THE TRIBUNAL A LSO HELD THAT THERE WAS A BUSINESS CONNECTION BETWEEN THE APPELLANT AND THE N ON RESIDENTS AND THAT THE APPELLANT WAS COVERED BY THE PROVISIONS OF SECT ION 163(1)B) OF THE ACT. THE TRIBUNAL ALSO HELD THAT THE APPELLANT SATISFIED THE CRITERIA LAID DOWN IN SECTION 163(1)(C) OF THE ACT, NAMELY THE APPELLANT WAS A PERSON FROM OR THROUGH WHOM THE NON-RESIDENT WAS IN RECEIPT OF ANY INCOME WHETHER DIRECTLY OR INDIRECTLY. FOR THE REASONS STATED IN THE AFORESAID ORDER, WE WSA SHIPPING (BOMBAY) PVT. LTD. 7 UPHOLD THE ORDERS OF THE CIT(A) AND DISMISS ALL THE SE APPEALS BY THE APPELLANT. 10. IN THE RESULT, ALL THE APPEALS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 12 TH DAY OF AUG., 2011. SD/- SD/- (J.SUDHAKAR REDDY ) (N.V.VASUDEVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED. 12 TH AUG. 2011 COPY TO: 1. THE APPELLANT 2. THE ASSESSEE 3. THE CIT CITY CONCERNED 4. THE CIT(A)- CONCERNED 5. THE D.RL BENCH. (TRUE COPY) BY ORDER ASST. REGISTRAR, I TAT, MUMBAI BENCHES MUMBAI. VM. WSA SHIPPING (BOMBAY) PVT. LTD. 8 DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 4/8/11 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 5 /8/11 SR.PS/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/PS 7. FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER