ACIT, CHENNAI V. East Coast Terminal Operations & Port Services Ltd., CHENNAI

ITA 563/CHNY/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68746 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2013
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 26-09-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 01-04-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: T N BETGERI
• Assessee Lawyers: G STANLY

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : CHENNAI BEFORE DR. O.K. NARAYANAN, VICE PRESIDENT & SHRI VIKAS AWASTHY, JUDICIAL MEMBER I.T.A. NOS. 562, 563, 564, 565 & 566/MDS/2013 ASSESSMENT YEARS : 2005-06, 2006-07, 2007-08, 2008- 09 & 2009-10 THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE-II(1), CHENNAI 600 034. (APPELLANT) VS EAST COAST TERMINAL OPERATIONS & PORT SERVICES LTD., NO.4, 6 TH FLOOR, BUHARI TOWERS, MOORES ROAD, CHENNAI 600 006. [PAN: AAACE 4812 D] (RESPONDENT) REVENUE BY : SHRI T.N. BETGERI, JCIT ASSESSEE BY : SHRI G. STANLY, ADVOCATE DATE OF HEARING : 26-09-2013 DATE OF PRONOUNCEMENT : 26-09-2013 O R D E R PER VIKAS AWASTHY, JUDICIAL MEMBER: THE SET OF FIVE APPEALS RELEVANT TO THE ASSESSMENT YEARS (AYS) 2005-06, 2006-07, 2007-08, 2008-09 & 2009-10 HAVE BEEN FILED BY THE REVENUE IMPUGNING THE ORDERS OF THE CO MMISSIONER OF INCOME TAX(APPEALS)-III, CHENNAI ALL DATED 11-12-20 12 FOR THE I.T.A.NOS.562, 563, 564, 565 & 566/MDS/13 2 RESPECTIVE AYS. IN ALL THE FIVE APPEALS, THE REVEN UE HAS RAISED COMMON ISSUES: I. WHETHER THE SHIP M.V.GEM OF ENNORE IS A QUALIF YING SHIP UNDER THE PROVISIONS OF SECTION 115VD OF THE INCOME TAX ACT, 1961 (HEREIN AFTER REFERRED TO AS THE ACT)? II. WHETHER THE ASSESSEE IS A QUALIFYING COMPANY UN DER THE PROVISIONS OF SECTION 115VC OF THE ACT AND THUS ELIGIBLE FOR THE BENEFIT OF TONNAGE TAX SCHEME? 2. THE BRIEF FACTS OF THE CASE ARE: THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF SHIPPING/PORT SERVICES. FOR THE AYS. 2005-06 AND SUBSEQUENT ASSESSMENT YEARS, THE ASSESS EE FILED ITS RETURN OF INCOME DECLARING TONNAGE INCOME U/S.115VG . THE ASSESSEE IS A CO-OWNER OF SHIP M.V.GEM OF ENNORE. THE SHIP IS GIVEN ON LONG TERM CHARTER FOR A PERIOD OF TEN YEAR S TO M/S. POOMPUHAR SHIPPING CORPORATION, CHENNAI FOR MOVING THERMAL COAL FOR TAMIL NADU ELECTRICITY BOARD FROM HALDIA, PARADIP AND VIZAG TO ENNORE AND TUTICORIN. THE ASSESSING OFFIC ER HELD THAT THE SHIP USED BY THE ASSESSEE DOES NOT QUALIFY FOR TONN AGE TAX I.T.A.NOS.562, 563, 564, 565 & 566/MDS/13 3 SCHEME [TTS] AS ENVISAGED UNDER SECTION 115VD OF TH E ACT. SINCE, THE ASSESSEE DOES NOT FULFILL THE CONDITIONS LAID DOWN U/S.115VD OF THE ACT, THE INCOME DECLARED UNDER TTS IS TO BE REJECTED AND THE INCOME IS TO BE COMPUTED UNDER THE NORMAL PROVISIONAL OF THE ACT. THE ASSESSING OFFICER FURTHER HELD THAT THE ASSESS EE IS NOT A QUALIFYING COMPANY AS PROVIDED U/S.115VC. MAJORITY OF THE SHARES (99.99%) OF THE COMPANY ARE HELD BY TWO FOREIGN COM PANIES BASED AT DUBAI I.E., M/S. TRANS ARAB MARITIME (L.L. C), DUBAI AND M/S. EMIRATES TRADING AGENCY, LLC, DUBAI. ONLY 70 SHARES OF THE ASSESSEE-COMPANY ARE HELD BY INDIVIDUALS IN INDIA. ALTHOUGH, THE COMPANY IS AN INDIAN COMPANY REGISTERED IN INDIA, T HE EFFECTIVE CONTROL AND MANAGEMENT OF THE COMPANY IS BY MAJORIT Y SHAREHOLDERS FROM DUBAI. TO CIRCUMVENT THE CONDITI ONS LAID DOWN U/S.115VC AND TO TAKE THE ADVANTAGE OF TTS, THE ASS ESSEE COMPANY HAS BEEN REGISTERED IN INDIA WITH AN EFFECT IVE CONTROL FROM DUBAI. THE ASSESSING OFFICER REJECTED THE PRO FIT COMPUTED BY THE ASSESSEE UNDER TTS AND RE-COMPUTED THE PROFITS UNDER NORMAL PROVISIONS OF THE ACT. 3. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(APPEALS) FOR ALL THE AYS. THE I.T.A.NOS.562, 563, 564, 565 & 566/MDS/13 4 CIT(APPEALS) ALLOWED ALL THE APPEALS OF THE ASSESSE E ON BOTH THE GROUNDS. THE CIT(APPEALS) FOLLOWED THE ORDER OF TH E TRIBUNAL IN THE CASE OF M/S. WEST ASIA MARITIME LTD., REPORTED AS 16 ITR (TRIB) 175 TO SAY THAT THE SHIP M.V.GEM OF ENNORE IS A QUALI FYING SHIP WITHIN THE MEANING OF SECTION 115VD. AS REGARDS THE SECOND ISSUE RELATING TO QUALIFYING COMPANY, THE CIT(APPEALS) HELD THAT THE ASSESSEE-COMPANY SAT ISFY ALL THE FOUR CONDITIONS AS LAID DOWN U/S.115VC I.E., A) IT IS AN INDIAN COMPANY REGISTERED UNDER THE PRO VISIONS OF THE COMPANIES ACT, 1956; B) THE PLACE OF ITS EFFECTIVE MANAGEMENT IS IN INDI A AS THE COMPANY IS FULLY MANAGED BY ITS BOARD OF DIRECTORS VIZ MR. R. SRINIVASAN AND MR. ABDUL KHADER IN INDIA; C) THE ASSESSEE-COMPANY OWNS A QUALIFYING SHIP VIZ. M.V.GEM OF ENNORE HAVING 50% SHARE THEREIN; D) THE MAIN OBJECT OF THE COMPANY IS TO CARRY ON TH E SHIPPING ACTIVITY. THE MAIN SOURCE OF INCOME OF THE ASSESSE E IS FROM OPERATING SHIPS. I.T.A.NOS.562, 563, 564, 565 & 566/MDS/13 5 AGGRIEVED AGAINST THE ORDER OF THE CIT(APPEALS), T HE REVENUE HAS FILED APPEALS BEFORE THE TRIBUNAL FOR T HE AFOREMENTIONED AYS. 4. SHRI T.N. BETGERI, APPEARING ON BEHALF OF THE R EVENUE SUBMITTED THAT THE CIT(APPEALS) HAS ERRED IN COMING TO THE CONCLUSION THAT THE ASSESSEE-COMPANY IS ELIGIBLE FO R THE BENEFIT OF TTS. THE LD. DR SUBMITTED THAT THE SHIP M.V.GEM O F ENNORE IS NOT A QUALIFYING SHIP UNDER THE PROVISIONS OF SECTI ON 115VD AND THE ASSESSEE-COMPANY NOT A QUALIFYING COMPANY UNDER THE PROVISIONS OF SECTION 115VC OF THE ACT. THE LD. DR RELIED ON THE GROUNDS RAISED IN THE APPEALS AND STRONGLY SUPPORTED THE FI NDINGS GIVEN IN ASSESSMENT ORDERS. THE LD. DR IN SUPPORT OF HIS SU BMISSIONS RELIED ON THE DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL IN ITA NO. 897 TO 900/MDS/2013 IN THE CASE OF ACIT VS. M/S. FOUR M MARITIME PVT. LTD., DECIDED ON 31-07-2013. 5. ON THE OTHER HAND, SHRI G. STANLY, ADVOCATE APP EARING ON BEHALF OF THE ASSESSEE VEHEMENTLY SUPPORTED THE ORD ERS OF THE CIT(APPEALS) AND PRAYED FOR THE DISMISSAL OF THE AP PEALS OF THE REVENUE. I.T.A.NOS.562, 563, 564, 565 & 566/MDS/13 6 6. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENTATIVES OF BOTH THE SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIES BELOW. THE TWO COMMON GROUNDS HAVE BEEN RAISED IN ALL THE FIVE APPEALS OF THE REVENUE. I. WHETHER THE ASSESSEE-COMPANY OWNS QUALIFYING SHI P AND AS SUCH IS ELIGIBLE FOR THE BENEFIT OF TTS U/S.115VD; II. WHETHER THE ASSESSEE-COMPANY IS A QUALIFYING COMPANY WITHIN THE MEANING OF SECTION 115VC OF THE ACT. SO FAR AS THE FIRST ISSUE IS CONCERNED, THE LD. DR HAS FAIRLY ADMITTED THAT THE ISSUE HAD COME UP BEFORE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF M/S. WEST ASIA MARITIME LTD., (SUPRA) ONE OF THE CO-OWNERS OF THE SHIP, WHEREIN IT HAS BEEN HELD THAT THE SHIP M.V.GEM OF ENNORE IS A QUALIFYING SHIP U/S.115VD AND THE ASSESSEE IS ENTITLED TO THE BENEFIT OF TTS PROVIDED UNDER CHAPTER- XIIG OF THE ACT. THE LD. DR FURTHER CONTENDED THAT THE REVENUE HAS NOT ACCEPTED THE ORDER OF TRIBUNAL AND HAS FILE D APPEAL BEFORE THE HONBLE HIGH COURT WHICH IS PENDING FOR FINAL A DJUDICATION. I.T.A.NOS.562, 563, 564, 565 & 566/MDS/13 7 HOWEVER, THE LD. DR COULD NOT SHOW ANY ORDER STAYIN G THE OPERATIONS OF THE ORDER IMPUGNED. THE RELEVANT EXT RACT OF THE THIRD MEMBER BENCH ORDER IN THE CASE OF M/S. WEST ASIA MARITIME LTD., (SUPRA), WHEREIN THIS ISSUE HAS BEEN ADJUDICATED IS RE-PRODUCED HEREIN BELOW: 26. THE CONTENTION OF THE ASSESSING AUTHORITY THAT THE SHIP WAS EXCLUDED FROM THE AMBIT OF TONNAGE TAX SCHEME M AINLY FOR THE REASON THAT THE SHIP IS RENDERING SERVICES ONLY BETWEEN INDIAN PORTS, WHICH WOULD HAVE ALSO BEEN RENDERED O N LAND BY ROAD OR RAIL, IS TOO FAR-FETCHED. THERE IS NO SUCH STIPULATION ANYWHERE IN LAW. THE TONNAGE TAX SCHEME DOES NOT DISTINGUISH SHIPS OPERATING IN COASTAL WATERS AD SH IPS OPERATING IN INTERNATIONAL WATERS. THERE IS NO BAR ON THE COASTAL SHIPPING FOR THE TONNAGE TAX SCHEME. IF THE CONTENTION OF THE ASSESSING AUTHORITY IS ACCEPTED, THE INCOME FROM COASTAL SHIPPING WOULD BE OUTSIDE THE PURVIEW OF TO NNAGE TAX SCHEME. 27. THE NORMAL ACTIVITIES OF OPERATING A SEA GOING SHIP IS TO CARRY PASSENGERS, CARRY CARGO, TO DO TOWAGE, SALVAG E OR OTHER MARINE ASSISTANCE OR TRANSPORT IN CONNECTION WITH O THER SERVICES OF KIND NECESSARILY PROVIDED AT SEA. THE R ESTRICTION HAS TO BE LOOKED INTO IN THE ABOVE BACKGROUND. THE RESTRICTION IS THAT THE VESSEL IS NOT A QUALIFYING SHIP FOR THE PURPOSE OF SECTION 115VD IF THE MAIN PURPOSE FOR WHICH IT IS U SED IS THE PROVISION OF GOODS OR SERVICES OF A KIND NORMALLY P ROVIDED ON LAND. IT IS TO BE SEEN THAT NO SERVICES CAN BE REND ERED BY SHIPS ON LAND. IF THAT IS THE CASE WHEREVER LAND RO UTES ARE I.T.A.NOS.562, 563, 564, 565 & 566/MDS/13 8 AVAILABLE ONE HAS TO PRESUME THAT AN ASSESSEE CANNO T OPT FOR SEA ROUTES AND CANNOT CLAIM THE BENEFIT OF TONNAGE TAX SCHEME. THE LAW IS NOT MAKING ANY REFERENCE TO ANY OTHER ALTERNATIVE METHOD AVAILABLE FOR TRANSPORTATION OF GOODS AND CARGO FROM DESTINATION TO DESTINATION. THE LAW ONLY SAYS THAT AN ASSESSEE COMPANY IS ENTITLED FOR OPTING FOR TONN AGE TAX SCHEME IF IT IS OPERATING QUALIFYING SHIP AND SATIS FIES OTHER CONDITIONS PROVIDED THEREIN. THE LAW DOES NOT SAY T HAT THE SHIP SHOULD ALWAYS DO ITS VOYAGE BETWEEN INTERNATIONAL P ORTS. THE LAW DOES NOT SAY ANYTHING ABOUT THE DISTANCE TO BE COVERED BY SHIP IN A SINGLE VOYAGE. THE LAW PRESUMES THAT THE BENEFIT OF TONNAGE TAX SCHEME IS AVAILABLE TO ALL SEA GOING SH IPS SATISFYING THE CONDITION WHERE IT IS OPERATED BETWE EN INDIAN PORTS OR BETWEEN INDIAN PORTS AND FOREIGN PORTS. TH E OPERATION OF A SEA GOING SHIP DOES NOT ASSUME ANY DIFFERENT C HARACTER ONLY FOR THE REASON THAT THE SHIP IS OPERATING BETW EEN TWO INDIAN PORTS. THE CHARACTER OF OPERATING A SHIP DOE S NOT ASSUME ANY OTHER DIMENSION ONLY FOR THE REASON THAT THE SHIP IS OPERATED BETWEEN ONE INDIAN PORT AND ANOTHER FOR EIGN PORT. THESE ARE ALL MATTERS NEVER CONSTRUED IN THE SCHEME OF THE ACT PROVIDING THE BENEFIT OF TONNAGE TAX SCHEME TO THE ASSESSEES WHO ARE IN THE SHIPPING INDUSTRY AND OPER ATING QUALIFYING SHIPS. 28. THIS IS NOT AN ISSUE PARTICULAR TO INDIA. WORLD OVER COUNTRIES ARE PROVIDING SUCH INCENTIVES TO SHIPPING INDUSTRY FOR THEIR OWN ECONOMIC ADVANTAGE. THE POLICY OF GIVING SUCH INCENTIVES TO SHIPPING INDUSTRY IS A MATTER OF LARG ER POLICIES RELATING TO ECONOMIC PRIORITIES. IF THE INTENT OF T HE LAW IS INTERPRETED IN SUCH A MANNER TO ARRIVE AT AN ERRATI C CONCLUSION, THAT INTERPRETATION MUST ALWAYS BE AVOIDED. I.T.A.NOS.562, 563, 564, 565 & 566/MDS/13 9 29. THE ONLY PROVOCATION FOR THE ASSESSING OFFICER TO HOLD THAT THE SHIP OPERATED BY THE ASSESSEE COMPANY IS NOT A QUALIFYING SHIP IS THAT THE SHIP OPERATED BY THE ASSESSEE IS D OING THE SAME SERVICES THAT COULD BE PROVIDED ON LAND ALSO. IT IS IN THAT CONTEXT THAT THE COMMISSIONER OF INCOME-TAX(APPEALS ) HAS MADE A REFERENCE TO THE ENGLISH LAW ON THE SUBJECT. THE UNITED KINGDOM LAW WHILE USING THE SAME PHRASEOLOGY IN DRAFTING THE LAW IN THE MATTER OF TONNAGE TAX SCHEM E HAS PROVIDED CERTAIN EXAMPLES. IT SAYS WHAT COULD BE TH OSE ITEMS COMING UNDER THE PROVISIONS PROVIDED TO RESTRICT TH E ABUSE OF THE TAX INCENTIVE. THE EXAMPLES GIVEN IN THE ENGLIS H LAW STATES THE EXAMPLES SUCH AS BUSINESS THAT COULD BE PROVIDED ON LAND OR RETAILERS, RESTAURANTS, HOTELS, RADIO ST ATIONS, CASINOS, ETC. ONLY FOR THE REASON THAT EXAMPLES HAV E BEEN TAKEN FROM ENGLISH LAW IT DOES NOT MEAN THAT IT IS NOT RELEVANT TO INDIAN LAW. THE NORMAL INTERPRETATION OF THE PRO VISION MAKES IT CLEAR THAT THE RESTRICTION PROVIDED IN SUBSECTIO N(I) APPLIES ONLY TO THOSE PROVISION OF GOODS OR SERVICES UNRELA TED TO THE CORE ACTIVITIES OF OPERATING SHIP. EVEN THOUGH THE SHIP OPERATED BY THE ASSESSEE IS TRANSPORTING THERMAL CO AL FROM INDIAN PORTS TO INDIAN PORTS, THE SHIP IS PERFORMIN G EXACTLY THE CORE FUNCTION OF A SHIP OF CARRYING BULK CARGO FROM PORT TO PORT. THERE MAY BE ALTERNATIVE MEANS AVAILABLE FOR TRANSP ORTATION OF THERMAL COAL ON LAND ROUTE BY TRUCK OR TRAIN. THEOR ETICALLY SPEAKING, EVEN TRANSPORT PLANES CAN CARRY COAL FROM ONE DESTINATION TO ANOTHER DESTINATION. THESE KINDS OF EXTREME VIEWS ARE NOT AT ALL CALLED FOR IN INTERPRETING A B ENEFICIAL PROVISION COUCHED IN SIMPLE LANGUAGE. THE ASSESSING OFFICER IS TRYING TO BRING IN ADDITIONAL CONDITIONS WHICH H AVE NEVER BEEN CONTEMPLATED IN DRAFTING THE LAW. I.T.A.NOS.562, 563, 564, 565 & 566/MDS/13 10 30. ON THE FACTS AND CIRCUMSTANCES OF THE CASE I AG REE WITH THE VIEW OF THE LEARNED ACCOUNTANT MEMBER TO HOLD T HAT THE SHIP OPERATED BY THE ASSESSEE M.V.GEM OF ENNORE TRANSPORTING THERMAL COAL FROM ONE LOCATION TO ANOT HER LOCATION WITHIN THE COUNTRY, IS A QUALIFYING SHIP UNDER SECT ION 115VD OF THE INCOME-TAX ACT, 1961 AND THE ASSESSEE IS ENTITL ED FOR THE BENEFIT OF TONNAGE TAX SCHEME PROVIDED UNDER CHAPTE R XII-G OF THE INCOME-TAX ACT, 1961. I AGREE WITH THE VIEW OF THE LEARNED ACCOUNTANT MEMBER THAT THE APPEAL OF THE RE VENUE IS LIABLE TO BE DISMISSED. WE FIND THAT IDENTICAL ISSUE HAD COME UP BEFORE THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. M/S. FOUR M MARITIME PVT. LTD., (SUPRA), WHEREIN FOLLOWING THE DECISION IN THE CASE OF M/S. WEST ASIA MARITIME LTD., (SUPRA) SIMILAR VIEW HAS BEEN TAKEN BY THE CO-ORDINATE BENCH OF THE TRIBUNAL. THEREFORE, THIS GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 7. AS REGARDS THE SECOND ISSUE, THAT IS, WHETHER TH E ASSESSEE- COMPANY IS QUALIFYING COMPANY UNDER THE PROVISIONS OF SECTION 115VC, THE DR HAS POINTED THAT THE MAJORITY OF SHAR ES, THAT IS, 99.99% OF THE SHARES OF THE INDIAN COMPANY ARE HELD BY TWO FOREIGN COMPANIES BASED IN DUBAI. OUT OF THE TOTAL SHARES OF 1,37,90,788, M/S. TRANS ARAB MARITIME (L.L.C), DUBA I AND M/S. EMIRATES TRADING AGENCY, LLC, DUBAI JOINTLY OWN 1,3 7,90,718. I.T.A.NOS.562, 563, 564, 565 & 566/MDS/13 11 THE REMAINING 70 SHARES ARE HELD BY INDIVIDUALS IN INDIA. THOUGH THE CIT(APPEALS) IN HIS ORDER HAS MENTIONED THAT TH E ASSESSEE SATISFIES ALL THE CONDITIONS LAID DOWN U/S.115VC TO BE A QUALIFYING COMPANY TO AVAIL TTS, BUT WE FIND THAT THE CIT(APPE ALS) HAS NOT APPRECIATED THE FACTS OF THE CASE FROM THE PERSPECT IVE, WHETHER THE PLACE OF EFFECTIVE MANAGEMENT OF THE COMPANY IS IN INDIA? THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. M/S. FOUR M MARITIME PVT. LTD., (SUPRA) WHILE ADJUDICATING AN IDENTICAL ISSUE HAS HELD AS UNDER: IN THE CASE OF M/S.WEST ASIA MARITIME LTD.(SUPRA), THE QUESTION WHETHER THE SAID COMPANY QUALIFIED FOR THE CLAIM UNDER SECTION 115VC OF THE ACT, WAS NEVER THERE. IN FACT, IT WAS SPECIFICALLY MENTIONED IN PARA-7 OF THE SAID OR DER THAT ALL THE OTHER CONDITIONS STIPULATED UNDER CHAPTER-XIIG FOR AVAILING TTS WERE SATISFIED. HERE, ON THE OTHER HAND, ASSESS ING OFFICER HAS DISPUTED THE ASSESSEES CLAIM AS A QUAL IFYING COMPANY FOR A REASON THAT THE PLACE OF EFFECTIVE MANAGEMENT WAS NOT IN INDIA. ASSESSEE IS RELYING ON EXPLANATION(A) DESPITE 99.38% OF ITS EQUITY SHARE B EING HELD BY A COMPANY HAVING REGISTERED OFFICE IN REPUBLIC O F MAURITIUS. ACCORDING TO THE ASSESSING OFFICER, THE EFFECTIVE MANAGEMENT OF THE ASSESSEE WAS NOT IN INDIA. HOWEVE R, AS PER THE CIT(A), TWO MEMBERS COMPRISING THE BOARD O F DIRECTORS WERE IN INDIA. IN OUR OPINION, THIS ASPEC T HAS NOT RECEIVED THE REQUIRED ATTENTION EITHER BY THE ASSES SING OFFICER OR BY THE CIT(A). THE PLACE WHERE THE BOARD OF DIRE CTORS OF THE I.T.A.NOS.562, 563, 564, 565 & 566/MDS/13 12 COMPANY MADE THEIR DECISION WOULD NOT BE INDIA JUST BECAUSE THE TWO OF THE DIRECTORS WERE IN INDIA. ATTENDANT C IRCUMSTANCES AS TO WHETHER THE SAID PERSONS WERE RESIDENTS OF IN DIA OR RESIDING ABROAD OR WHETHER FUNCTIONING FROM AN OFFI CE ABROAD WERE ALL REQUIRED TO BE SEEN BEFORE COMING TO A DEC ISION REGARDING THE PLACE OF EFFECTIVE MANAGEMENT. WE AR E THEREFORE OF THE OPINION THAT THIS ASPECT REQUIRES A FRESH LOOK BY THE ASSESSING OFFICER FOR VERIFYING THE ACTUAL A ND EFFECTIVE PLACE WHERE THE DECISIONS WERE TAKEN BY THE BOARD O F DIRECTIONS WITH REGARD TO THE AFFAIRS OF THE ASSESS EE COMPANY. THEREFORE, WHILE HOLDING THAT THE SHIP WAS INDEED A QUALIFYING SHIP FOR ENJOYING THE TTS, WE REMIT THE ISSUE AS TO WHETHER ASSESSEE QUALIFIED UNDER SECTION 115VC OF THE ACT, BACK TO THE FILE OF ASSESSING OFFICER FOR CONSIDERATION AFR ESH IN ACCORDANCE WITH LAW. ORDERS OF THE LOWER AUTHORITIE S ARE SET ASIDE TO THIS EXTENT. GROUNDS OF THE REVENUE IN TH IS REGARD ARE TREATED AS PARTLY ALLOWED. IN THE INSTANT CASE, WE FIND THAT THE CIT(APPEALS) HAS NOT TAKEN INTO CONSIDERATION THIS ASPECT. WE ARE OF THE CONS IDERED VIEW THAT THIS ISSUE HAS TO BE DECIDED AFRESH BY VERIFYING TH E FACT WHETHER THE PLACE OF EFFECTIVE MANAGEMENT OF THE COMPANY IS IN INDIA OR THE BOARD OF DIRECTORS ARE TAKING DECISIONS ON THE INSTRUCTIONS OF THE MAJORITY SHAREHOLDERS? ACCORDINGLY, THIS GROUN D OF APPEAL IS REMITTED BACK TO THE CIT(APPEALS) TO DECIDE THE SAM E AFRESH IN ACCORDANCE WITH LAW. I.T.A.NOS.562, 563, 564, 565 & 566/MDS/13 13 8. WE FIND THAT IN APPEAL NO. 563/2013 RELEVANT TO THE AY. 2006-07 THE SECOND ISSUE, WHETHER THE ASSESSEE IS A QUALIFYING COMPANY U/S.115VC HAS NOT BEEN AGITATED BY THE REVE NUE, AS THIS ISSUE WAS NOT IN APPEAL BEFORE THE CIT(APPEALS). S INCE, THE ISSUE GOES TO THE ROOT FOR DECIDING THE ENTITLEMENT OF TH E ASSESSEE FOR CLAIMING BENEFIT OF TTS, WE DIRECT THE CIT(APPEALS) TO DECIDE THIS ISSUE IN RESPECT OF AY. 2006-07 AS WELL. IN THE RESULT, THE APPEALS OF THE REVENUE ARE PART LY ALLOWED FOR STATISTICAL PURPOSES IN THE AFORESAID TERMS. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF H EARING ON THURSDAY, THE 26 TH SEPTEMBER, 2013 AT CHENNAI. SD/- SD/- (DR. O.K. NARAYANAN) (VIK AS AWASTHY) VICE PRESIDENT JUDICIAL MEMBER DATED: 26 TH SEPTEMBER, 2013 TNMM COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR