DDIT (I.T) -1(1), MUMBAI V. M/s. ARC LINE (MAURITIUS), MUMBAI

ITA 5684/MUM/2006

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 1545 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: L
• Assessment Year: 1999-2000
• Appeal Filed On: 31-10-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S B MOREY
• Assessee Lawyers: JIGER SAIYA
• Keywords: Double taxation relief
• Section: 234B; 264

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH L, MUMBAI BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER A ND SHRI J.SUDHAKAR REDDY, ACCOUNTANT MEMBER. I.T.A. NO. 5684 & 5685/MUM/2006 ASSESSMENT YEAR : 1999-2 000 & 2000-01. DY. DIRECTOR OF INCOME TAX, M/ S ARC LINE (MAURITIUS) (INTERNATIONAL TAXATION)-1(1) VS. C/O FREIGHT CONNECTION INDIA MUMBAI. PVT. LTD., COMHATA BLDG., 4 TH FLOOR, 101 M.K. ROAD, CHURCHGATE,MUMBAI-400 020. PAN : AADCA0878J. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.B. MOREY. RESPONDENT BY : SHR I JIGER SAIYA. O R D E R PER J. SUDHAKAR REDDY, A.M. : BOTH THESE APPEALS ARE FILED BY THE REVENUE AGAIN ST THE ORDERS OF THE CIT(APPEALS)-XXXI, MUMBAI DATED 31-07 -2006 FOR THE ASSESSMENT YEARS 1999-2000 AND 2000-2001. A COMMON GROUND RAISED BY THE REVENUE READS AS FOLLOWS : ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN HOLDING THAT THE ASSES SEE IS NOT LIABLE TO INTEREST U/ 234B OF THE INCOME TAX ACT, 1961 AS IT COULD NOT VISUALIZE THAT ITS INCOME WAS TAXABLE IN INDIA AS D IT RELIEF CERTIFICATE WAS ISSUED. 2. WE HAVE HEARD MR. S.B. MOREY, THE LEARNED DR AN D MR. JIGER SAIYA, LEARNED COUNSEL FOR THE ASSESSEE. 2 3. ON A CAREFUL CONSIDERATION OF THE FACTS AND CIR CUMSTANCES OF THE CASE AND ON A PERUSAL OF THE PAPERS ON RECOR D AND THE ORDERS OF THE AUTHORITIES BELOW, WE HOLD AS FOLLOWS : 4. THE ASSESSEE IS A NON RESIDENT OF MAURITIUS AN D IS ENGAGED IN THE BUSINESS OF SHIPPING. THE AGENT OF THE ASSESSEE WAS GRANTED 100% DIT RELIEF BY THE AO IN RESPECT OF FO REIGN INCOME AS PER ARTICLE 8 OF THE INDIA MAURITIUS DTAA AND ACCORDING LY THE RETURN OF INCOME WAS FILED DECLARING NIL INCOME. THE ISSUE BE FORE US IS WHETHER THE ASSESSEE WAS LIABLE TO PAY INTEREST U/S 234B, F OR SHORTFALL OR NON PAYMENT OF ADVANCE TAX. 5. THE ASSESSEES CASE IS THAT IT WAS UNDER AN IMP RESSION THAT NO ADVANCE TAX IS REQUIRED TO BE PAID AND THE TAX L IABILITY IS NIL FOR THE SPECIFIC REASON THAT DIT RELIEF CERTIFICATE WAS ISS UED BY THE AO TO THE APPELLANT. RELIANCE WAS PLACED ON THE FOLLOWING DEC ISIONS : I) CIT V. SEDCO FOREX INTERNATIONAL DRILLING CO. LT D. 264 ITR 320(UTTARANCHAL). II) CIT V. RANOLI INVESTMENTS P.LTD. 235 ITR 433 (G UJ). III) BHPE KINHILL JOINT VENTURE V. ADIT, 23 SOT 209 (DEL). IV) IBM INDIA LTD. V. CIT 290 ITR 183 (AT) (BANG). V) HARYANA WAREHOUSING CORPORATION V. DOT 252 ITR 34 (AT)(DEL.). VI) ACIT V. NORASIA LINES (MALTA) LTD. 107 ITD 301 (COCHIN) (SB). VII) DIT V. PIPELINE ENGINEERING GMBH, 28 SOT 121 ( MUM). VIII) DDIT V. THORESEN CHARTERING SINGAPORE (PTE) LTD. 118 ITD 416 (MUM). 6. THE FIRST APPELLATE AUTHORITY AT PARA 4.3 PAGE 8 OBSERVED AS FOLLOWS : I HAVE EXAMINED THE ARS ARGUMENTS. IT IS CLEAR T HAT THE DIT RELIEF CERTIFICATE WAS ISSUED BY THE AO TO THE APPELLANT WHICH CREATED AN IMPRESSION IN THE MIND OF TAXPAYER THAT NO ADVANCE TAX IS REQUIRED TO BE PAID AS THE TAX LIABILITY IS ZERO. SUBSEQUENTLY IN THE COURSE OF ASSESSMENT OF LATER ASSESSMENT YEA RS, IT HAS BEEN HELD THAT THE APPELLANT IS NOT ENTITLED TO BEN EFIT OF ARTICLE- 8 3 OF THE DTAA AND ACCORDINGLY ITS INCOME IS TAXABLE I N INDIA. SUCH CHANGE OF CIRCUMSTANCES COULD NOT HAVE BEEN ANTICIP ATED BY THE ASSESSEE IN THE RELEVANT PREVIOUS YEAR. ACCORDINGLY THE APPELLANT CANNOT BE SADDLED WITH THE LIABILITY TO PAY ADVANCE TAX. MY PREDECESSOR IN A.Y. 2001-02 IN HIS ORDER DATED 31.1 2.2004 IN APPEAL NO. CIT(A)XXXI/DDIT(IT)1/IT-83/03-04 HAS HEL D THAT NO INTEREST IS PAYABLE U/S 234B IN THESE CIRCUMSTANCES . I HAVE PERUSED HIS ORDER AND I AM IN AGREEMENT WITH HIM TH AT IN VIEW OF THE 100% DIT RELIEF CERTIFICATE HAVING BEEN ISSUED THE APPELLANT COULD NOT ANTICIPATE HIS LIABILITY TO PAY ADVANCE A ND ACCORDINGLY HIS LIABILITY TO PAY INTEREST U/S 234B DOES NOT ARI SE. APPEAL ON THIS GROUND IS ACCORDINGLY ALLOWED. INTEREST LEVIED U/S 234B OFRS.14,77,653/- IS DELETED 7. WE FULLY AGREE WITH THESE FINDINGS AS THEY ARE IN THE LINE WITH THE JUDGMENT OF HONBLE UTTARANCHAL HIGH COURT IN THE CASE OF SEDCO FOREX INTERNATIONAL DRILLING CO. LTD. (SUPRA) . 8. IN THE RESULT, WE UPHOLD THE ORDERS OF THE FIRS T APPELLATE AUTHORITY AND DISMISS BOTH THE APPEALS OF THE REVEN UE. ORDER PRONOUNCED ON THIS 30 TH DAY OF NOVEMBER, 2009. SD/- SD/- (N.V. VASUDEVAN)) (J. SUDHAKAR R EDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT: 30 TH NOVEMBER, 2009 WAKODE COPY TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR, L-BENCH (TRUE COPY) BY ORDER ASSTT.REGISTRAR, ITAT, MUMBAI BENCHES 4