ADDL DIT (IT) RG-2, MUMBAI V. SIMATECH SHIPPING & FORWARDING LLC, MUMBAI

ITA 503/MUM/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 84379 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-12-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: L
• Next Hearing Date: 09-12-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 17-01-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N PADMANABAN
• Keywords: Double taxation relief

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES L MUMBAI . . , , BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER /AND SHRI SANJAY ARORA, ACCOUNTANT MEMBER ITA NO.503/MUM/2013 (A.Y.2009-10) DDIT(IT)-2(1), ROOM NO.120, SCINDIA HOUSE, 1 ST FLLOR, BALLARD ESTATE, NM ROAD, MUMBAI 400 038. (APPELLANT ) VS. M/S. SIMATECH SHIPPING & FORWARDING LLC, C/O. SIMA MARINE (INDIA) PVT. LTD. GROUND FLOOR, SAI COMMERCIAL ANNEXE, B.K.S. DEVSHI, MARG, GOVANDI (E), MUMBAI 400088. (RESPONDENT) APPELLANT BY : SHRI N.PADMANABAN RESPONDENT BY : NONE DATE OF HEARING : 09/12/2014 DATE OF PRONOUNCEMENT : 09 /12/2014 ORDER PER I.P.BANSAL, J.M: THIS IS AN APPEAL FILED BY THE REVENUE AND IT IS D IRECTED AGAINST ORDER PASSED BY LD. CIT(A)11, MUMBAI DATED 31/10/2012 FOR ASSES SMENT YEAR 2009-10. GROUNDS OF APPEAL READ AS UNDER: 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW, THE CIT(A) WAS JUSTIFIED IN DIRECTING TO ALLOW DOUBLE TAXATION RELIEF U/S. 90(1)(A)(II) OF THE IT ACT, ON CHARTERING OF SLOTS OF OTHER VESSELS NOT OWNED BY THE ASSESSEE COMPANY IGNORING THE FACT THAT THE DOUBLE TAXATION RELIEF IS ADMISSIBLE ONLY IN RESPECT OF OPERATION OF ITS OWN SHIPS IN THE INTERN ATIONAL TRAFFIC. 2. THE APPELLANT PRAYS THAT THE ORDER OF THE LD.CI T(A) ON THE ABOVE GROUND(S) BE SET ASIDE AND THAT OF THE ASSESSING OFFICER REST ORED. ITA NO.503/MUM/2013 (A.Y.2009-10) 2 2. NOTICE OF HEARING WAS SENT TO THE ASSESSEE THRO UGH RPAD WHICH IS SERVED AND ACKNOWLEDGEMENT IS PLACED ON RECORD. HOWEVER, NONE WAS PRESENT ON BEHALF OF THE ASSESSEE, THEREFORE, WE PROCEED TO DECIDE THE PRESE NT APPEAL EX-PARTE QUA THE ASSESSEE. 3. IT WAS POINTED OUT LD. DR THAT THIS ISSUE IS COV ERED BY THE EARLIER ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE IN RESPECT OF A.Y 2 006-07 AND 2007-08. REFERENCE WAS MADE TO THE CASE OF ADIT(IT)-2(1) VS. SIMATE CH SHIPPING FORWARDING LLC., 146 ITD 48 (MUMBAI TRIB.) AND THE ISSUE WAS RESTORED BACK TO THE FILE OF AO WITH THE FOLLOWING OBSERVATIONS: 15. WE HAVE HEARD THE CONTENTIONS RAISED BY EITHER PARTIES AND HAVE PERUSED THE LANGUAGE USED IN THE TREATIES, REFERRED TO BEFORE U S, TAKING UP THE ISSUE OF AVAILABILITY OF DTAA BETWEEN INDIA AND UAE, ON THE ASSESSEE, WHO IS TAX RESIDENT OF THAT COUNTRY, BUT HAS NOT PAID TAXES THERE, THE REVENUE IS INTERPRETI NG THAT SINCE THE ASSESSEE HAS NOT PAID TAXES IN UAE, THERE CAN BE NO CURTAILMENT OF T AX LIABILITY AS PER THE ACT, BY PRESSING THE DTAA. THE REASON, BEING THAT DTAA APPLIES ON JU RIDICAL DOUBLE TAXATION, I.E. IF INCOME IS NOT TAXED IN ONE STATE, THEN IT SHOULD BE TAXED IN FULL IN THE OTHER, IF IT IS OTHERWISE TAXABLE, WITHOUT GRATING ANY BENEFIT OF T HE TREATY. THIS ARGUMENT, IN OUR OPINION CANNOT BE SUSTAINED, BECAUSE, THE ASSESSEE IS OTHERWISE LIABLE TO TAX IN UAE. SIMPLY BECAUSE THERE IS NO TAX INCIDENCE IN UAE, DO ES NOT MEAN THAT THE ASSESSEE CEASES TO BE OTHERWISE LIABLE TO TAX, AS PER ARTI CLE 4. ONCE THE ASSESSEE, GETS WITHIN THE EXPRESSION OTHERWISE LIABLE TO TAX IN UAE TREATY, DTAA BECOMES OPERATIVE. THIS, EXACTLY IS THE RATIO LAID DOWN BY THE COORDINATE BE NCH OF THE ITAT AT KOLKATA IN GREEN EMIRATES SHIPPING & TRAVELS (SUPRA). 16. IN THE ABOVE CIRCUMSTANCES, THAT THE ASSESSEE S HALL GET THE TREATY BENEFIT, WE WOULD NOW EMBARK ON THE ARGUMENT OF THE AR THAT THE RATIO LAID DOWN BY BALAJI SHIPPING (SUPRA) SHOULD BE APPLIED AND ON THE OTHER HAND, DR S ARGUMENT THAT THE RATIO LAID DOWN IN FEDERAL EXPRESS CORPN. (SUPRA) SHOULD BE APPLIED , AS THE LANGUAGE USED FOR ARTICLE 8 IN UAE TREATY IS SIMILAR TO US TREATY. 17. WE ARE OF THE OPINION THAT THE CASE OF BALAJI S HIPPING (SUPRA) CANNOT BE RELIED UPON, SIMPLY BECAUSE ARTICLE 8 IS DIFFERENTLY WORDED. WE ARE, THEREFORE, CONVINCED WITH THE ARGUMENTS OF THE DR THAT THE WORDINGS USED IN ARTIC LE 8 IN UAE TREATY IS PARI MATERIA TO THE LANGUAGE USED IN US TREATY. THIS FACT, IS ACCEP TED BY THE AR. IN THESE CIRCUMSTANCES, WHEN WE FIND THAT THERE IS NO DETAIL ED REASONING IN THE ORDERS OF THE REVENUE AUTHORITIES, GIVING THE NATURE OF THE RECEI PTS FROM SHIPPING BUSINESS, WE, IN THE INTEREST OF JUSTICE, CONSIDER THAT THE ISSUE BE RES TORED TO THE FILE OF THE TO RECONSIDER THE EXACT NATURE OF INCOME. 18. WE, THEREFORE, SET ASIDE THE ORDER OF THE CIT(A ) AND DIRECT THE AO TO CONSIDER THE NATURE OF INCOME IN ISSUE AND CONSEQUENTLY, THE AVA ILABILITY OF ARTICLE 8 OF THE INDIA UAE ITA NO.503/MUM/2013 (A.Y.2009-10) 3 TREATY, WHICH SHALL BE IN ACCORDANCE WITH THE RATIO N LAID DOWN IN THE CASE OF FEDERAL EXPRESS CORPN. (SUPRA), NEEDLESS TO SAY, THAT THE A O SHALL ALLOW REASONABLE AND ADEQUATE OPPORTUNITY TO THE ASSESSEE TO PRESENT ITS CASE. RESPECTFULLY FOLLOWING THE AFOREMENTIONED DECISION OF TRIBUNAL, WE ALSO RESTORE THIS ISSUE TO THE FILE OF AO WITH SIMILAR DIRECTIONS. 4. IN THE RESULT, HE APPEAL FILED BY THE REVENUE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 09/12/2014 ! ' #$ % &'( 09/12/2014 ' ) SD/- SD/- ( /SANJAY ARORA ) ( . . / I.P. BANSAL ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; &' DATED 09/12/2014 ! ! ! ! ' '' ' *+, *+, *+, *+, -,$+ -,$+ -,$+ -,$+ / COPY OF THE ORDER FORWARDED TO : 1. ./ / THE APPELLANT 2. *0./ / THE RESPONDENT. 3. 1 ( ) / THE CIT(A)- 4. 1 / CIT 5. ,2) *+' , , / DR, ITAT, MUMBAI 6. )3 4 / GUARD FILE. !' !' !' !' / BY ORDER, 0,+ *+ //TRUE COPY// 5 55 5 / 6 6 6 6 (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI . ' . ./ VM , SR. PS