DDIT (IT)-1(2), MUMBAI V. M/S. CHINA NAVIGATION CO.LTD., MUMBAI

ITA 5975/MUM/2008

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 7798 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: L
• Next Hearing Date: 29-03-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 01-10-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MALATHI SHRIDHARAN
• Keywords: Double taxation relief

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES L : MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI RAJENDRA SINGH, ACCOUNTANT MEMBER ITA. NO. 5975/MUM/2008 ASSESSMENT YEAR 2003-2004 ITA. NO. 5976/MUM/2008 ASSESSMENT YEAR 2004-2005 ITA. NO. 5977/MUM/2008 ASSESSMENT YEAR 2005-2006 DY. DIT (IT)-1(2) MUMBAI. VS. M/S. CHINA NAVIGATION CO. LTD. MUMBAI 400 021 PAN AABCC9953C (APPELLANT) (RESPONDENT) FOR APPELLANT : SMT. MALATHI SHRIDHARAN (DR) FOR RESPONDENT : -NONE- ORDER PER D. MANMOHAN, V.P. 1. THESE THREE APPEALS ARE FILED AT THE INSTANCE O F THE REVENUE AND THEY INVOLVE A COMMON ISSUE. THE CASE O F THE REVENUE IS THAT THE CIT(A) WAS NOT JUSTIFIED IN HOLDING THAT T HE INCOME ON FREIGHT, PERTAINING TO SLOT ARRANGEMENTS, RECEIVED ON ACCOUN T OF USE OF VESSELS, IS ENTITLED TO RELIEF UNDER DTAA BETWEEN INDIA AND U.K, SINCE THEY WERE NEITHER OWNED AND OPERATED BY THE ASSESSEE NOR CHARTERED AND OPERATED BY THE ASSESSEE. 2. THOUGH THE CASE WAS POSTED FROM TIME TO TIME NO NE APPEARED ON BEHALF OF THE ASSESSEE. WE, THEREFORE, PROCEEDED TO DISPOSE THE APPEAL EX-PARTE, QUA THE ASSESSEE. 3. WE HAVE HEARD THE LEARNED DR AND CAREFULLY PERU SED THE RECORD. 4. FACTS NECESSARY FOR THE DISPOSAL OF THE APPEAL ARE STATED IN BRIEF. THE ASSESSEE-COMPANY IS A FOREIGN COMPANY AND A TAX RESIDENT OF U.K. IT WAS ENGAGED IN THE OPERATION OF SHIPS IN THE INTERNATIONAL TRAFFIC AND SHOWS INCOME FROM THE OPE RATION OF SHIPS. IN 2 INDIA, THE ASSESSEE-COMPANY APPOINTED ADSTEAM AGENC Y (INDIA) LTD. AS AN AGENT TO PERFORM VARIOUS ACTIVITIES ON ITS BE HALF. THE COMPANY FILED A RETURN OF INCOME THROUGH ITS AGENT REPORTIN G A TAXABLE INCOME. THE CASE OF THE COMPANY IS THAT THE FREIGHT INCOME RECEIVED WAS NOT TAXABLE IN INDIA AS PER ARTICLE 9 OF THE DTAA EXECU TED BETWEEN INDIA AND U.K. HOWEVER, THE ASSESSING OFFICER WAS OF THE VIEW THAT ASSESSEE IS NOT ENTITLED TO THE BENEFIT UNDER ARTICLE 9. IN HIS OPINION BENEFIT UNDER ARTICLE 9 IS AVAILABLE ONLY TO THE PERSON WHO IS OPERATING SHIPS I.E., EITHER OWNED OR CHARTERED AND OPERATED BY THE ASSESSEE. 5. AGGRIEVED, ASSESSEE PREFERRED APPEALS BEFORE TH E CIT(A) WHO INTURN HELD THAT THE ASSESSEE-COMPANY IS ENGAGE D IN THE BUSINESS OF OPERATION OF SHIPS AND THERE IS A DIREC T LINK BETWEEN THE MOTHER VESSELS AND FEEDER VESSELS AND THEREFORE, EN TIRE FREIGHT INCOME EARNED IN INDIA IS NOT ASSESSABLE TO TAX BY VIRTUE OF ARTICLE 9 OF THE DTAA. 6. AGGRIEVED, REVENUE IS IN APPEAL BEFORE US. LEAR NED DEPARTMENTAL REPRESENTATIVE ADMITTED THAT IDENTICAL ISSUE HAD COME UP FOR CONSIDERATION BEFORE THE ITAT, L BENCH, MU MBAI IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2001-2002 WHEREIN THE BENCH OBSERVED THAT ASSESSEE IS THE OWNER/CHARTERER OF VA RIOUS MOTHER VESSELS AND THEREFORE, ASSESSEE HAS TO BE TREATED A S AN ENTITY ENGAGED IN THE OPERATION OF SHIPS IN WHICH EVENT THE ACTIVI TY OF TRANSPORTATION IN INTERNATIONAL TRAFFIC THROUGH SLOT CHARTER AGREE MENT, WITH THE SHIPS OPERATED BY THIRD PARTIES, HAS TO BE HELD TO BE PAR T OF MAIN ACTIVITY AND HENCE, INCOME EARNED THEREFROM IS ELIGIBLE FOR THE BENEFIT UNDER ARTICLE 9 OF THE INDO-U.K. TREATY. HOWEVER, THE LEA RNED DR PLACED BEFORE US A COPY OF THE LETTER DATED 18-12-2008 TO SUBMIT THAT REVENUE PREFERRED AN APPEAL BEFORE THE HONBLE HIGH COURT AGAINST THE ORDER OF THE ITAT. BUT, NO EVIDENCE COULD BE BR OUGHT ON RECORD TO INDICATE THAT APPEAL HAS ACTUALLY BEEN PREFERRED. A T ANY RATE, IT IS NOT IN DISPUTE THAT THE ISSUE STANDS SQUARELY COVERED B Y THE ORDER OF THE TRIBUNAL (SUPRA). UNDER THE CIRCUMSTANCES, WE DO NO T FIND ANY 3 INFIRMITY IN THE ORDERS PASSED BY THE LEARNED CIT(A ). THEREFORE, AS PRONOUNCED IN THE OPEN COURT, WE AFFIRM THE ORDERS PASSED BY THE LEARNED CIT(A) AND DISMISS THE APPEALS FILED BY THE REVENUE. ORDER PRONOUNCED ACCORDINGLY IN THE OPEN COURT ON THIS THE 29 TH DAY OF MARCH, 2011. SD/- (RAJENDRA SINGH) ACCOUNTANT MEMBER SD/- (D. MANMOHAN) VICE PRESIDENT DATED : 29 TH MARCH, 2011 VBP/- COPY TO 1. DY. DIT (IT)-1(2), ROOM NO. 119, SCINDIA HOUSE, 1 ST FLOOR, BALLARD ESTATE, N.M. ROAD, MUMBAI 400 038. 2. M/S. CHINA NAVIGATION CO. LTD., LEVEL 10, 102, S AKHAR BHAVAN, NARIMAN POINT, MUMBAI 400 021 PAN AABCC9953C 3. COMMISSIONER OF INCOME TAX (APPEALS)-XXXI, MUMBA I 4. D.I.T. (I.T), MUMBAI 5. DR L BENCH 6. GUARD FILE. BY ORDER TRUE COPY ASSTT. REGISTRAR, ITAT, MUMBAI