Appeal details
Counselvise Citation
[2016] 133 COUNSELVISE.COM (IT) 4009 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
2 year(s) 3 month(s) 22 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
12-02-2016
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
L
Next Hearing Date
18-11-2015
Assessment Year
2010-2011
Appeal Filed On
21-10-2013
Judgement Text
, IN THE INCOME TAX APPELLATE TRIBUNAL L BENCH, MUMBAI BEFORE S/SHRI B.R.BASKARAN, AM AND PAWAN SINGH, JM ./ I.T.A. NO . 6177 / MUM/ 201 3 ( / ASSESSMENT YEA R: 20 10 - 11 ) ASSTT. DIRE CTOR OF INCOME TAX (IT), 1(1), ROOM NO.117, SCHINDIA HOUSE, 1S FLOOR, BALLARD ESTATE, N M ROAD, MUMBAI - 400038 / VS. M/S A C M SHIPPING INDIA LTD, 1118, 11 TH FLOOR , MAKER CHAMBER - V NARIMAN POINT, MUMBAI - 400021 ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN. : AAFCA8962M / REVENUE BY SHRI T R PALTE / ASSESSEE BY SHRI J P BAIRAGRA / DATE OF HEARING : 11.1 2.201 5 / DATE OF PRONOUNCEMENT: 12 .2. 201 6 / O R D E R P ER B R BASKARAN, AM : THE REVENUE HAS FILED THIS APPEAL ON BEING AGGRIEVED BY THE DECISION OF LD CIT(A) IN HOLDING THAT ONLY 10% OF THE GROSS INCOME IS ATTRIBUTABLE TO THE INDIAN OPERATIONS OF THE UK COMPANY. 2. WE HEARD THE PARTIES AND PERUSED THE RECORD. THE FACTS RELATING TO THE CASE ARE SET OUT IN BRIEF. THE ASSESSEE HEREIN IS A SUBSIDIARY OF ACM SHIPPING LTD, U.K AND IS ENGAGED IN THE BUSINESS OF SHIP BROKING A ND ARRANGES TRANSPORTATION OF CARGO FROM INDIA TO VARIOUS OTHER COUNTRIES. 6177 / M/201 3 2 THE ASSESSEES HOLDING COMPANY IS ALSO ENGAGED IN SHIP BROKING BUSINESS AT INTERNATIONAL LEVEL. THE HOLDING COMPANY PROVIDED INFORMATION TO THE ASSESSEE RELATING TO POTENTIAL INTE RNATIONAL SHIP OWNERS LOCATED OUTSIDE INDIA AND ALSO FACILITATED INTRODUCTION OF THE ASSESSEE TO VARIOUS SHIP OWNERS. THE REVENUE GENERATED BY THE ASSESSEE WAS SHARED EQUALLY BETWEEN THE ASSESSEE AND THE HOLDING COMPANY. THE ASSESSEE DEDUCTED THE COMMISS ION INCOME FROM THE FREIGHT CHARGES AT THE TIME OF REMITTING THE FREIGHT CHARGES COLLECTED BY IT ON BEHALF OF THE SHIP OWNERS. AS PER THE TERMS BETWEEN THE ASSESSEE AND THE UK COMPANY (HOLDING COMPANY), IT WAS REQUIRED TO REMIT ITS HOLDING COMPANYS SHARE ABROAD. ACCORDINGLY, IT SOUGHT FOR A NIL - DEDUCTION CERTIFICATE U/S 195(2) OF THE ACT FROM THE ASSESSING OFFICER; OTHERWISE IT WAS REQUIRED TO DEDUCT TAX AT SOURCE AT APPLICABLE RATES ON THE AMOUNT REMITTED BY IT. THE ASSESSEE SUBMITTED BEFORE THE ASSESS ING OFFICER THAT THE HOLDING COMPANY IS NOT LIABLE TO PAY TAX UNDER THE INDIAN INCOME TAX ACT AND ACCORDINGLY SOUGHT FOR NIL DEDUCTION CERTIFICATE. HOWEVER, THE ASSESSING OFFICER DID NOT AGREE WITH THE ASSESSEE AND DIRECTED THE ASSESSEE TO WITHHOLD TAX AT 1.61% FROM THE PAYMENTS REMITTED BY IT. 3. THE ASSESSEE CHALLENGED THE ORDER OF THE AO BY FILING APPEAL BEFORE AO AND THEN TO TRIBUNAL. THE ITAT, VIDE ITS ORDER DATED 10 - 06 - 2011, HELD THAT THE IMPUGNED PAYMENTS ARE TAXABLE IN INDIA UNDER DOMESTIC L AW. HOWEVER, SINCE THE APPLICABILITY OF PROVISIONS OF DTAA WAS NOT EXAMINED, THE TRIBUNAL RESTORED THE MATTER TO THE FILE OF THE LD CIT(A) TO EXAMINE ABOUT THE APPLICABILITY OF PROVISIONS OF INDO UK DTAA. ACCORDINGLY, THE LD CIT(A) PASSED A FRESH ORDER . 4. THE LD CIT(A) CONCLUDED THAT THE ASSESSEE HEREIN IS ENGAGED IN CARRYING ON BROKING BUSINESS WHOLLY OR ALMOST WHOLLY FOR ACM SHIPPING 6177 / M/201 3 3 LTD., U.K. ACCORDINGLY HE CONCLUDED THAT THE ASSESSEE HEREIN IS A DEPENDENT AGENT OF ACM SHIPPING UK LTD AS PER C LAUSE (C) OF PARAGRAPH 4 OF ARTICLE 5 OF INDO - UK DTAA AND HENCE THE UK COMPANY WAS HELD TO BE HAVING A DEPENDENT AGENCY PERMANENT ESTABLISHMENT IN INDIA. 5. WITH REGARD TO THE ATTRIBUTION OF PROFITS RELATING TO INDIAN OPERATIONS OF THE UK COMPANY, THE LD CIT(A) MADE A DETAILED ANALYSIS OF THE VARIOUS OPERATIONS CARRIED ON BY BOTH THE PARTIES, VIZ., THE ASSESSEE HEREIN AND THE UK COMPANY IN INDIA AS WELL AS OUTSIDE INDIA. THE VARIOUS ACTIVITIES HAVE BEEN TABULATED IN PARAGRAPH 15 OF THE ORDER OF LD CIT( A). BASED UPON ACTIVITIES CARRIED ON BY BOTH THE PARTIES IN INDIA AND OUTSIDE INDIA, THE LD CIT(A) HELD THAT ROUGHLY 60% OF THE WORK IS CARRIED OUT IN INDIA. SINCE THE ASSESSEE HEREIN HAS ALREADY BEEN PAID 50% OF THE INCOME, THE LD CIT(A) TOOK THE VIEW T HAT THE BALANCE AMOUNT OF 10% OF THE INCOME IS ATTRIBUTABLE TO THE OPERATIONS CARRIED ON ACM SHIPPING UK LTD IN THE INDIA. THE REVENUE IS AGGRIEVED BY THE SAID DECISION OF LD CIT(A). 6. HOWEVER, ON A CAREFUL CONSIDERATION OF THE ORDER PASSED BY LD C IT(A), WE NOTICE THAT THE FIRST APPELLATE AUTHORITY HAS MADE DETAILED ANALYSIS OF VARIOUS OPERATIONS CARRIED ON BY THE PARTIES IN INDIA AS WELL AS OUTSIDE INDIA AND HAS ACCORDINGLY GIVEN A FINDING THAT ROUGHLY 60% OF THE WORK IS CARRIED ON IN INDIA BY BOTH THE PARTIES. SINCE THE ASSESSEE HAS ALREADY TAKEN 50% OF INCOME, THE LD CIT(A) HAS HELD THAT THE BALANCE OF 10% IS ATTRIBUTABLE TO THE DEPENDENT AGENCY PE OF THE UK COMPANY. EVEN THOUGH, THE REVENUE HAS CHALLENGED THIS DECISION, YET NO MATERIAL WAS PLAC ED BEFORE US IN ORDER TO COMPEL US TO INTERFERE WITH THE DECISION RENDERED BY LD CIT(A). HENCE, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER PASSED BY LD CIT(A) AND ACCORDINGLY UPHOLD THE SAME. 6177 / M/201 3 4 7. IN THE RESULT, THE APPEAL FILED BY THE REVENU E IS DISMISSED. PRONOUNCED ACCORDINGLY ON 12TH FEB , 2 01 6 . 12TH FEB, 2 01 6 SD SD ( PAWAN S INGH ) ( B.R. BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI: 12TH FEB , 2 01 6 . . . ./ SRL , SR. PS / COPY OF THE ORDER FORWAR DED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - CONCERNED 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI CONCERNED 6. / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) , /ITAT, MUMBAI
