DDIT (IT) 2(1), NAVI MUMBAI V. SAFMARINE CONTAINER LINES NV, MUMBAI

ITA 4995/MUM/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 5022 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2009-2010
• Appeal Filed On: 03-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHUTOSH RAJHANS IZRFKHZ DH LS
• Keywords: Double taxation relief

Judgement Text

M/S SAFMARINE CONTAINER LINES NV - 1 - VK;DJ VIHYH; VF/KDJ.K BZ U;K;IHB EQACBZ ESAA IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUM BAI JH JKTSUNZ FLAG YS[KK LNL; ,OA JH VFER 'KQDYK] U;KF ;D LNL; DS LE{K BEFORE SHRI RAJENDRA SINGH ACCOUNTANT MEMBER AND SH RI AMIT SHUKLA JUDICIAL MEMBER VK;DJ VIHY LA[;K /ITA NO. 4995/MUM/2012 FU/KKZJ.K O'KZ @ ASSESSMENT YEAR: - 2009-10 DDIT(IT)-2(1) ROOM NO. 120, 1 ST FLOOR SCINDIA HOUSE, BALLARD ESTATE, N.M. ROAD, MUMBAI 400 038. CUKE@ VS. M/S SAFMARINE CONTAINER LINES NV C/O MARRSK INDIA PVT. LTD. EMPIRE INDUSTRIES COMPLEX 414, SENAPATI BAGPAT MARG, LOWER PAREL. MUMBAI 400 013. VIHYKFKHZ @ APPELLANT IZR;FKHZ @ RESPONDENT VIHYKFKHZ DH VKSJ LS @ APPELLANT BY SHRI ASHUTOSH RAJHANS IZR;FKHZ DH VKSJ LS @ RESPONDENT BY SHRI PARESH SHAPARIA VKNS'K@ VKNS'K@ VKNS'K@ VKNS'K@ ORDER PER RAJENDRA SINGH, AM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 25.5.2012 OF CIT(A) FOR THE ASSESSMENT YEAR 2009-10. THE ONLY DISPUTE R AISED BY THE REVENUE IN THIS APPEAL IS REGARDING THE TAXABILITY OF INLAND HOULAGE CHARGES. 2. FACTS IN BRIEF ARE THAT THE ASSESSEE WHICH IS A NON-RESIDENT COMPANY REGISTERED IN BELGIUM WAS ENGAGED IN THE BUSINESS OF OPERATION OF SHIPS. THE ASSESSEE HAD RECEIVED CERTAIN INLAND HAULAGE CHARGES. UNDER ARTICLE-8 OF DTAA BETWEEN INDIA AND BELGIUM, INCOME FROM OPERATION OF SHIPS IN THE INTERNATIONAL TRAFFIC IS EXEMPT. THE ASSESSEE LQUOKBZ DH RKJH[K @ DATE OF HEARING 19-09-2013 ?KKS'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT 19-09-2013 M/S SAFMARINE CONTAINER LINES NV - 2 - REFERRED TO THE ARTICLE 8(2)(B)(II) WHICH COVERS AN Y OTHER ACTIVITY DIRECTLY CONNECTED WITH SHIPPING. THE ASSESSEE THEREFORE, ARGUED THAT ACTIV ITY OF INLAND TRANSPORTATION WAS DIRECTLY CONNECTED WITH INTERNATIONAL TRAFFIC AND THEREFORE INCOME WAS EXEMPT UNDER ARTICLE-8. THE ASSESSEE RELIED ON THE DECISION OF THE TRIBUNAL IN ITS OWN CASE IN ASSESSMENT YEAR 2001-02 IN ITA NO.3701/M/2005 IN WHICH THE TRIBUNAL HELD THAT INLAND HAULAGE CHARGES EARNED BY THE ASSESSEE WERE COVERED BY THE INCOME D ERIVED FROM OPERATION OF SHIPS IN THE INTERNATIONAL TRAFFIC AS PER ARTICLE-8 OF DTAA BETWEEN INDIA AND BELGIUM. THE AO HOWEVER, DID NOT ACCEPT THE CONTENTION RAISED. IT W AS OBSERVED BY HIM THAT ONLY LOADING, UNLOADING AND DEMURRAGES ETC. WERE ACTIVITIES DIREC TLY CONNECTED TO SHIPPING. IT WAS ALSO OBSERVED BY HIM THAT THE DECISION OF THE TRIBUNAL I N ASSESSMENT YEAR 2001-02 WAS AGAINST THE STAND TAKEN BY THE DEPARTMENT CONSISTENTLY IN S HIPPING CASES. HE, THEREFORE, HELD THAT INCOME FROM INLAND HAULAGE CHARGES WAS CHARGEABLE I N INDIA. THE TOTAL TERMINAL HANDLING CHARGES RELATING TO EXPORT AND IMPORT BOTH WAS RS.4 9,02,45,025/-. THE AO ESTIMATED THE INLAND HANDLING CHARGES AT 76.5% OF TOTAL TERMINAL HANDLING CHARGES AND ASSESSED THE SUM OF RS.37,50,37,444/- AS INLAND HOULAGE CHARGES INCO ME FROM WHICH WAS COMPUTED AT RS.3,46,74,145/- @ 7.5%. 3. IN APPEAL, THE ASSESSEE SUBMITTED THAT THE ISSU E WAS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE TRIBUNAL IN ASSESSM ENT YEAR 2001-02 (SUPRA), AND ALSO BY THE DECISION OF THE TRIBUNAL IN ASSESSMENT YEAR 200 3-04 IN ITA NO.5460/M/2006 AND ALSO IN ASSESSMENT YEAR 2005-06 IN ITA NO.415/M/2009. CI T(A) OBSERVED THAT THE CASE OF THE ASSESSEE WAS COVERED BY THE DECISION OF THE TRIBUNA L IN ASSESSMENT YEAR 2001-02 WHICH HAD BEEN FOLLOWING IN SUBSEQUENT YEARS IN WHICH IT HAS BEEN HELD THAT INLAND HAULAGE CHARGES WERE ONLY INCIDENTAL AND CLOSELY CONNECTED WITH THE DIRECT OPERATIONS OF THE SHIPS AND, HENCE, COVERED UNDER THE ARTICLE-8 OF DTAA. CI T(A) THEREFORE DELETED THE ADDITION MADE BY THE AO AGGRIEVED BY WHICH THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 4. WE HAVE HEARD BOTH PARTIES, PERUSED THE RECORDS AND CONSIDERED THE MATTER CAREFULLY. THE DISPUTE RAISED IN THIS APPEAL IS REG ARDING ASSESSMENT OF INCOME FROM INLAND HAULAGE CHARGES RECEIVED BY THE ASSESSEE COMPANY WH ICH IS A NON-RESIDENT COMPANY REGISTERED IN BELGIUM AND ENGAGED IN THE BUSINESS O F OPERATION OF SHIPS. THE INCOME FROM OPERATION OF SHIPS IN INTERNATIONAL TRAFFIC IS NOT TAXABLE IN INDIA UNDER ARTICLE 8 OF DTAA. M/S SAFMARINE CONTAINER LINES NV - 3 - ARTICLE 8(2)(B)(II) ALSO EXEMPTS ANY ACTIVITY DIREC TLY CONNECTED WITH SHIPPING. THE ASSESSEE HAD TAKEN THE INCOME FROM INLAND HAULAGE CHARGES AS DIRECTLY CONNECTED WITH SHIPPING INCOME AND ACCORDINGLY CLAIMED EXEMPT WHICH HAD NOT BEEN ACCEPTED BY THE AO. CIT(A) HAS, HOWEVER, ALLOWED THE CLAIM FOLLOWING THE DECIS ION OF THE TRIBUNAL IN ASSESSEES OWN CASE IN 2001-02 WHICH HAS ALSO BEEN FOLLOWED IN SUB SEQUENT YEARS AND HAS BEEN UPHELD BY THE HONBLE HIGH COURT OF MUMBAI BY JUDGMENT DAT ED 17.1.2013 IN ITA NO. 952 OF 2011 IT HAS BEEN HELD BY THE TRIBUNAL THAT INLAND HAULAG E CHARGES ARE NOT ONLY INCIDENTAL BUT ALSO CLOSELY CONNECTED WITH DIRECT OPERATIONS OF SH IPS. FACTS IN THIS YEAR ARE IDENTICAL. THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF T HE TRIBUNAL IN ASSESSEES OWN CASE IN THE EARLIER YEARS (SUPRA), WE CONFIRM THE ORDER OF CIT( A) IN ALLOWING THE CLAIM . 5. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMI SSED. ORDER PRONOUNCED IN THE OPEN COURT ON 19-9-2013 SD/- SD/- (AMIT SHUKLA) (RAJENDRA SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER SKS SR. P.S, MUMBAI DATED 19.9.2013 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, E BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI