DDIT (IT) 1(2), MUMBAI V. DELMAS FRANCE, MUMBAI

ITA 6041/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 7902 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: L
• Next Hearing Date: 20-03-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 29-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JASBIR CHAWHAN
• Keywords: Business income; Double taxation relief
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES L, MUMBAI BEFORE SHRI JASON P. BOAZ (AM) AND SHRI PAWAN SINGH ( JM) ITA NO. 6041 /MUM/2014 ASSESSMENT YEAR: 2010-11 THE DY. DIT (IT)-1(2), ROOM NO. 119, 1 ST FLOOR, SCINDIA HOUSE, N.M.ROAD, BALLARD ESTATE, MUMBAI- 400 038. VS. M/S. DELMAS FRANCE. C/O-PAREKH MARINE AGENCIES PVT. LTD. ANCHORAGE, NEAR AMARNATH PATIL GROUND, OFF. GOVANDI STATION ROAD (E), MUMBAI- 400 038 PAN : AABCD6027A (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI. JASBIR CHAWHAN RESPONDENT BY : SHRI. NIKHIL TIWARI DATE OF HEARING: 2 0/03/2017 DATE OF PRONOUNCEMENT: 22/03/20 17 O R D E R PER JASON P. BOAZ, AM THIS APPEAL BY REVENUE IS DIRECTED AGAINST THE ORD ER OF THE CIT(APPEAL)- 10, MUMBAI DT. 27/03/2014 FOR ASST. YEAR 2010-11. 2. THE FACTS OF THE CASE, BRIEFLY STATED, ARE AS UN DER:- 2.1 THE ASSESSEE, A FOREIGN COMPANY ENGAGED IN THE BUSINESS OF SHIPPING IN INTERNATIONAL WATERS, FILED ITS RETURN OF INCOME FO R A.Y. 2010-11 ON 29/09/2010 DECLARING TOTAL INCOME OF RS. 18,42,60,180/- CLAIMI NG THAT NIL TAX AND INTEREST WAS PAYABLE THEREON, CLAIMING 100% RELIEF AS PER A RTICLE 9 OF DTAA BETWEEN 2 ITA NO. 6041/MUM/2014 ASSESSMENT YEA R: 2010-11 INDIA AND FRANCE. THE ASSESSING OFFICER (A.O) WAS O F THE VIEW THAT SINCE THE BENEFIT UNDER ARTICLE 9 OF THE DTAA BETWEEN INDIA-F RANCE IS ONLY AVAILABLE TO SUCH PERSON WHO IS OPERATING THE SHIP, I.E. EITHER THE OWNER OR THE CHARTERER OR THE LESSEE OF THE SHIPS, THE ASSESSEE IS NOT ENTITL ED FOR BENEFIT UNDER ARTICLE 9 OF THE SAID DTAA; HAVING EARNED FREIGHT THROUGH FEEDER VESSELS WHICH ARE NEITHER OWNED OR CHARTERED OR LEASED BY THE ASSESSEE, BUT O PERATED THROUGH LOCAL AGENTS REPRESENTING IT, WHICH CONSTITUTED A PERMANE NT ESTABLISHMENT (PE). IN THAT VIEW OF THE MATTER, THE A.O TAXED THE BUSINESS INCOME OF THE ASSESSEE @10% OF SUCH RECEIPTS OF RS. 1,42,52,76,848/-. THE ORDER OF ASSESSMENT FOR A.Y. 2010-11 WAS ACCORDINGLY COMPLETED U/S 143(3) R .W.S 144C (3) OF THE ACT VIDE ORDER DT. 10/05/2013. ON APPEAL, THE CIT(A)-10 , MUMBAI VIDE THE IMPUGNED ORDER DT. 27/03/2014 ALLOWED THE ASSESSEE PARTIAL RELIEF. 3.1 AGGRIEVED, BY THE ORDER OF THE CIT(A)-10, MUMBA I DT. 27/03/2014, FOR A.Y. 2010-11, THE REVENUE HAS PREFERRED THIS APPEAL RAISING THE FOLLOWING GROUNDS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES AND IN TH E LAW THE LD. CIT(A) ERRED IN GRANTING THE RELIEF TO THE ASSESSEE HOLDING THAT THE ASSESSEES INCOME IS NOT TAXABLE IN INDIA UNDER AR TICLE 9 OF THE DTAA WITH FRANCE WITHOUT APPRECIATING THE FACT THAT ALL THE VOYAGES CARRIED OUT BY THE ASSESSEE DID NOT INVOLVE OWNED/C HARTERED/LEASED VESSEL BUT ALSO INVOLVED FEEDER VESSELS AND SLOT CH ARTERING. 2. ON THE FACTS AND IN THE CIRCUMSTANCES AND IN TH E LAW THE LD. CIT(A) ERRED IN GRANTING THE RELIEF TO THE ASSESSEE IN TERMS OF ARTICLE 9 OF THE DTAA WITH FRANCE WITHOUT APPRECIATING THE FA CT THAT THE ASSESSEES INCOME IS TAXABLE UNDER ARTICLE 7 BASED ON THE FIXED PE AS WELL AS AGENCY PE. 3 ITA NO. 6041/MUM/2014 ASSESSMENT YEA R: 2010-11 3. THE APPELLANT PRAYS THAT THE ORDER OF THE LD. CI T(A) BE SET ASIDE ON THE ABOVE GROUNDS AND THAT OF THE ASSESSING OFFI CER BE RESTORED. 4. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 3.2 AT THE OUTSET OF THE HEARING, IT WAS SUBMITTE D BY THE LD. AR FOR THE ASSESSEE THAT THE ISSUES RAISED IN THIS APPEAL (SUP RA) WERE COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISIONS OF THE CO-ORDINATE BE NCHES OF THIS TRIBUNAL IN THE ASSESSEES OWN CASE IN ITA NOS. 6040/MUM/2014 DT. 2 8/11/2016 FOR A.Y. 2004-05 AND ITA NO. 9001/MUM/2010 DT. 11/01/2012 FO R A.Y. 2006-07. IT WAS FURTHER SUBMITTED THAT REVENUES APPEAL AGAINST TRIBUNALS ORDER FOR A.Y. 2006-07 (SUPRA) WAS DISMISSED BY THE HONBLE BOMBAY HIGH COURT BY ITS ORDER IN ITA NO. 1648/2012 DT. 15/11/2014. IT IS SUBMITTE D THAT THE FACTS OF THE MATTER IN THE YEAR UNDER CONSIDERATION ARE THE SAME AS IN THE EARLIER ASST. YEARS. THE AFORESTATED POSITION, THAT THE ISSUES I N THIS APPEAL WERE COVERED IN FAVOUR OF THE ASSESSEE BY THE ABOVE CITED DECISIONS OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL AND THE HONBLE BOMBAY HIGH COURT IN THE ASSESSEES OWN CASE WERE FAIRLY CONCEDED TO BY THE LD. CIT DR FOR REVEN UE. 3.3.1 WE HAVE HEARD BOTH PARTIES AND PERUSED AND CA REFULLY CONSIDERED THE MATERIAL ON RECORD; INCLUDING THE JUDICIAL PRONOUNC EMENTS CITED. WE FIND THAT THE ISSUES RAISED BY REVENUE IN THIS APPEAL ARE COV ERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE CO-ORDINATE BENCH O F THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR A.Y. 2004-05 IN ITA NO. 604 0/MUM/2014 DT. 28/11/2016 AND FOR A.Y. 2006-07 IN ITA NO. 9001/MUM /2010 DT. 11/01/2012, WHICH ORDER HAS BEEN UPHELD BY THE HON BLE BOMBAY HIGH COURT IN ITS ORDER IN ITA NO. 1648/2012 DT. 15/11/2014 BY DISMISSING REVENUES APPEAL. IN ITS ORDER IN ITA NO. 6040/MUM/2014 DT. 28/11/2016, WE FIND THAT THE CO-ORDINATE BENCH, WHILE DISMISSING REVENUES APPEAL AND THEREBY 4 ITA NO. 6041/MUM/2014 ASSESSMENT YEA R: 2010-11 UPHOLDING THE ORDER OF THE LD. CIT(A) IN ALLOWING T HE ASSESSEES CLAIM FOR RELIEF UNDER ARTICLE 9 OF THE INDIA-FRANCE DTAA HAS HELD AS UNDER AT PARAS 7 AND 8 THEREOF :- 7. WE HAVE GONE THROUGH THE ENTIRE FACTS OF THE CAS E. THE LD. COUNSEL OF THE ASSESSEE PLACED BEFORE US COPY OF TH E REMAND REPORT SENT BY THE AO ON 07-03-2014 TO THE CIT(A) W HICH READS AS UNDER : - IN THIS REGARD, IT IS SUBMITTED THAT THE ASSESSEE HAS PRODUCED NECESSARY DOCUMENTS/DETAILS TO ESTABLISH THE FEEDER VESSEL - MOTHER VESSEL LINK IN RESPECT OF VOYAGES INVOLVING FEEDER VESSELS, HOWEVER, IN RESPECT OF FREIGHT OF RS.1,26, 95,744 IT HAS NOT BEEN ABLE TO PRODUCE ANY DOCUMENTS TO ESTABLISH THE FEEDER VESSEL - MOTHER VESSEL LINK. AFTER CONSIDERING THE AFORESAID REMAND REPORT, LD. CIT(A) GRANTED PART RELIEF TO THE ASSESSEE WITH REGARD TO THE LINKAGE AND ALSO HELD THAT ITS AGENT NAMELY M/S BARWIL FORB ES SHIPPING SERVICES LTD (I.E. BFSSL) DOES NOT CONSTITUTE FIXED PE OR AGENCY PE OF THE ASSESSEE COMPANY IN INDIA. IT IS NOTED BY US THAT LD. CIT(A) HAS GRANTED APPROPRIATE RELIEF TO THE ASSESS EE ONLY TO THE EXTENT WHICH PROPER LINKAGES COULD BE ESTABLISHED BY THE ASSESSEE, AFTER CALLING FOR THE REMAND REPORT AND V ERIFYING THE FACTS. ON THE ISSUE OF PE, RELEVANT PORTION OF ORDE R OF LD. CIT (A) READS AS UNDE : - 8.1 HAVE CONSIDERED THE AO'S ORDER AS WELL AS THE APPELLANT'S AR SUBMISSION. HAVING TAKEN NOTE TO THE APPELLANT'S SUBMISSION AND THE AO'S ORDER, I FIND THAT THE ISSUE INVOLVED IN THIS GROUND 5 ITA NO. 6041/MUM/2014 ASSESSMENT YEA R: 2010-11 OF APPEAL ARE COVERED IN FAVOUR OF THE APPELLANT BY THE JURISDICTIONAL BOMBAY HIGH COURT'S DECISION IN THE CASE OF DIT V BALAJI SHIPPING UK LTD. (253 CTR 460) AND ALSO BY T HE DECISION OF JURISDICTIONAL MUMBAI ITAT IN THE APPELLANT'S OW N CASE BY THE ORDER DTD. 11TH JANUARY, 2012 IN AY 2006-07. KEEPIN G RELIANCE ON THE DECISION OF JURISDICTIONAL BOMBAY HIGH COURT AND ALSO IN THE APPELLANTS OWN CASE, IT IS HELD THAT APPELLANT IS ENTITLED FOR BENEFIT OF RELIEF UNDER. ARTICLE 9 0F THE DTAA. HO WEVER, AFTER PERUSAL OF THE REMAND REPORT, I DIRECT THE AO TO RE STRICT THE RELIEF TO THE EXTENT THE APPELLANT HAS GIVEN THE DETAILS A ND ESTABLISHED THE FEEDER VESSEL, MOTHER VESSEL LINK THROUGH PRODU CTION OF DOCUMENTS IN THE REMAND REPORT PROCEEDINGS. THUS, T HE APPELLANT IS NOT ENTITLED TO THE RELIEF TO THE EXTE NT OF RS.1,26,95,744/- WHEREIN THE APPELLANT COULD NOT PR ODUCE ANY DOCUMENTS TO ESTABLISH THE FEEDER VESSEL-MOTHER VES SEL LINK. IN ADDITION TO THIS, HAVING TAKEN NOTE OF THE APPELLAN T'S SUBMISSION AND THE ORDER OF THE JURISDICTIONAL ITAT IN THE APP ELLANT'S OWN CASE FOR A.Y 2006-07 DT. 11TH JANUARY, 2012 IT IS H ELD THAT THE BFSSL DOES NOT CONSTITUTE A FIXED PE OR AGENCY PE F OR THE APPELLANT. ACCORDINGLY KEEPING RELIANCE OF VARIOUS DECISIONS BY THE APPELLANT'S AR AND ALSO THE DECISION OF THE JUR ISDICTIONAL BOMBAY HIGH COURT THIS ISSUE IS ALSO DECIDED IN FAV OUR OF THE APPELLANT. IN THE RESULT THE APPELLANT'S THESE GROU NDS OF APPEAL ARE PARTLY ALLOWED. 8. WE FIND THAT THE AFORESAID DECISION HAS BEEN GIV EN BY THE LD. CIT(A) AFTER RELYING UPON THE DECISION OF THE TRIBU NAL IN ASSESSEES OWN CASE FOR A.Y. 2006-07, WHEREIN IT HA S BEEN HELD THAT BFSSL DID NOT CONSTITUTE PE OR AGENCY PE OF TH E ASSESSEE. NO DISTINCTION HAS BEEN MADE OUT BY THE LD. DR EITH ER ON FACTS 6 ITA NO. 6041/MUM/2014 ASSESSMENT YEA R: 2010-11 OR ON LAW. THUS, WE FIND THAT THE ISSUE BEFORE US I S COVERED IN FAVOUR OF THE ASSESSEE IN VIEW OF THE ORDERS OF THE TRIBUNAL OF EARLIER YEARS AS WERE RELIED UPON BY THE LD. CIT(A) ALSO. THUS, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF THE LD. CIT(A) AND, THEREFORE, THE SAME IS UPHELD. 3.3.2 ON AN APPRECIATION OF THE FACTS ON RECORD A ND THE ISSUES RAISED IN THIS APPEAL IN A.Y. 2010-11 (SUPRA), WE FIND THAT IN THI S YEAR ALSO THE FACTS LARGELY REMAIN THE SAME AS IN THE EARLIER ASST. YEARS, AND THIS FORMS THE BASIS ON WHICH RELIEF HAS BEEN GRANTED TO THE ASSESSEE BY TH E LD. CIT(A) IN THE IMPUGNED ORDER, WHEREIN IT WAS HELD THAT THE ASSESSEES AGE NT DID NOT CONSTITUTE ITS PE OR AGENCY PE OF THE ASSESSEE. THE FINDING RENDERED BY THE LD. CIT(A) THAT PAREKH MARINE AGENCIES PVT. LTD. (PMAPL) THE ASSE SSEES AGENT IS NOT ITS FIXED PE OR AGENCY PE, HAS NOT BEEN CONTROVERTED BEFORE U S BY THE REVENUE EITHER ON FACTS OR IN LAW. WE ALSO OBSERVE AND CONCUR WITH TH E DIRECTIONS OF THE LD. CIT(A) AT PARA 7 OF THE IMPUGNED ORDER WHEREIN; WHILE HOLD ING THAT THE ASSESSEE IS ENTITLED TO BENEFIT UNDER ARTICLE 9 OF THE INDIA-F RANCE DTAA, HAS DIRECTED THE A.O TO GRANT RELIEF TO THE ASSESSEE ONLY TO THE EX TENT WHERE PROPER LINKAGES COULD BE ESTABLISHED BY THE ASSESSEE AFTER EXAMINA TION/VERIFICATION OF RELEVANT DOCUMENTS TO BE FILED BY THE ASSESSEE BEFORE REVENU E IN THIS REGARD. IN THIS FACTUAL AND LEGAL MATRIX OF THE CASE WHERE THE ISSU ES BEFORE US IN THIS APPEAL (SUPRA) ARE COVERED IN FAVOUR OF THE ASSESSEE, BY T HE ORDERS OF THE CO-ORDINATE BENCHES OF THIS TRIBUNAL IN THE ASSESSEES OWN CASE FOR A.Y. 2004-05(SUPRA) WHICH WERE RELIED ON BY LD. CIT(A) IN THE IMPUGNED ORDER, WE, FIND NO REASON TO INTERFERE WITH THE FINDINGS RENDERED IN THE IMPUGNE D ORDER BY THE LD. CIT(A) AND THEREFORE UPHOLD THE SAME. THE A.O IS ACCORDING LY DIRECTED CONSEQUENTLY, GROUNDS 1 TO 4 RAISED BY REVENUE ARE DISMISSED. 4. IN THE RESULT, REVENUES APPEAL FOR ASST. YEAR 2 010-11 IS DISMISSED. 7 ITA NO. 6041/MUM/2014 ASSESSMENT YEA R: 2010-11 ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND MARCH, 2017 SD/- SD/- ( PAWAN SINGH ) (JASON P.BOAZ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED: 22/03/2017 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A)- 4. / CIT 5. ! , # !$ , / DR, ITAT, MUMBAI 6. %& ' / GUARD FILE. / BY ORDER, ) //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI PRAMILA