CMA CGM SA, MUMBAI V. DCIT (IT) 2(1)(1), MUMBAI

ITA 6649/MUM/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9900 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: L
• Assessment Year: 2014-2015
• Appeal Filed On: 20-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Double taxation relief; Permanent establishment; Onus to prove
• Section: 143(3); 12; 10; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL L BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN (AM) & SHRI RAVISH SOOD (JM) I.T.A. NO. 6649 /MUM/20 1 7 (ASSESSMENT YEAR 20 14 - 15 ) I.T.A. NO. 2185/MUM/2017 (ASSESSMENT YEAR 2013 - 14) C.O . NO. 28 0 /MUM/2017 (ASSESSMENT YEAR 201 2 - 1 3 ) CMA CG M SA C/O. CMA CGM AGENCIES (INDIA) PVT. LTD. INDIABULLS FINANCE CENTRE TOWER - 3, 8 TH FLOOR SENAPATI BAPAT MARG ELPHINSTONE ROAD (W) MUMBAI - 400 013. PAN : AABCC9048G VS. DCIT (INTERNATIONAL TAXATION) RANGE 2(1)(1) ROOM NO. 1713 17 TH FLOO R AIR INDIA BUILDING NARIMAN POINT MUMBAI - 400 021. ( APPELLANT ) ( RESPONDENT ) I.T.A. NO. 1386/MUM/2016 (ASSESSMENT YEAR 2012 - 13) DCIT (INTERNATIONAL TAXATION) RANGE 2(1)(1) ROOM NO. 1713 17 TH FLOOR AIR INDIA BUILDING NARIMAN POINT MUMBAI - 400 021. VS. CMA CGM SA C/O. CMA CGM AGENCIES (INDIA) PVT. LTD. INDIABULLS FINANCE CENTRE TOWER - 3, 8 TH FLOOR SENAPATI BAPAT MARG ELPHINSTONE ROAD (W) MUMBAI - 400 013. PAN : AABCC9048G ( APPELLANT ) ( RESPONDENT ) I.T.A. NO. 1387/MUM/2016 (ASSESSMENT YEAR 2012 - 13) D CIT (INTERNATIONAL TAXATION) RANGE 2(1)(1) ROOM NO. 114 1 ST FLOOR SCINDIA HOUSE BALLARD ESTATE MUMBAI - 400 038. VS. DELMASS SAS (NOW MERGED WITH CMA CGM SA) C/O. CMA CGM AGENCIES (INDIA) PVT. LTD. INDIABULLS FINANCE CENTRE TOWER - 3, 8 TH FLOOR SENAPATI B APAT MARG ELPHINSTONE ROAD (W) MUMBAI - 400 013. PAN : AABCD6027A ( APPELLANT ) ( RESPONDENT ) CMA CGM SA 2 C.O. NO. 282/MUM/2017 (ASSESSMENT YEAR 2012 - 13) DELMASS SAS (NOW MERGED WITH CMA CGM SA) C/O. CMA CGM AGENCIES (INDIA) PVT. LTD. INDIABULLS FINANCE CENTRE TOWER - 3 , 8 TH FLOOR SENAPATI BAPAT MARG ELPHINSTONE ROAD (W) MUMBAI - 400 013. PAN : AABCD6027A VS. DCIT (INTERNATIONAL TAXATION) RANGE 2(1)(1) ROOM NO. 114 1 ST FLOOR SCINDIA HOUSE BALLARD ESTATE MUMBAI - 400 038. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY SHR I M.P. LOHIA & SHRI NIKHIL TIWARI DEPARTMENT BY S HRI SAMUEL DARSE DATE OF HEARING 1 5 . 2 . 201 8 DATE OF PRONOUNCEMENT 14 . 3 . 201 8 O R D E R PER B.R. BASKARAN (AM) : - THESE APPEALS HAVE BEEN FILED IN THE CASES OF (A) M/S CMA CGA SA AND (B) M/S DEL MAS SAS. THE ASSESSEE DELMAS SAS HAS SINCE BEEN MERGED WITH CMA CGA SA. THESE COMPANIES ARE RESIDENTS OF FRANCE. SINCE ISSUES URGED IN THESE APPEALS ARE IDENTICAL IN NATURE, THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER, FOR THE SAKE OF CONVENIENCE. 2. WE SHALL FIRST TAKE APPEALS FILED IN THE CASE OF M/S CMA CGA SA. THE REVENUE HAS FILED APPEAL FOR ASSESSMENT YEAR 2012 - 13. THE ASSESSEE HAS FILED CROSS OBJECTION FOR AY 2012 - 13 AND APPEALS FOR AY 2013 - 14 & 2014 - 15. ALL A PPEALS ARE DIRECTED AGAINST THE ORDERS PASSED BY THE ASSESSING OFFICER U/S 144C(13) R.W.S. 143(3) OF THE ACT IN CONFORMITY WITH THE DIRECTIONS GIVEN BY LD DISPUTE RESOLUTION PANEL (DRP). 3. IN AY 2012 - 13, THE LD DRP DECIDED CERTAIN ISSUES IN FAVOUR OF THE ASSESSEE AND HENCE THE REVENUE HAS FILED APPEAL FOR THAT YEAR CHALLENGING THOSE DECISIONS. HOWEVER, IN AYS 2013 - 14 & 2014 - 15, THE LD DRP DECIDED CMA CGM SA 3 VERY SAME ISSUES AGAINST THE ASSESSEE AND HENCE THE ASSESSEE HAS FILED APPEALS FOR THOSE YEARS. THE AS SESSEE HAS ALSO FILED CROSS OBJECTION FOR AY 2012 - 13 IN RESPECT OF ONE ISSUE, VIZ., EXISTENCE OF PE. 4. AS STATED EARLIER, M/S CMA CGA SA IS A COMPANY INCORPORATED IN FRANCE AND IT IS ENGAGED IN THE BUSINESS OF OPERATION OF SHIPS IN INTERNATIONAL TRA FFIC, I.E., IT TRANSPORTS CARGOS BETWEEN PORTS LOCATED IN INDIA AND TO PORTS LOCATED OUTSIDE INDIA. ACCORDINGLY INDIA - FRANCE DTAA IS APPLICABLE TO THE ASSESSEE. IT FILED ITS RETURN OF INCOME DECLARING NIL INCOME BY CLAIMING BENEFIT OF ARTICLE 9 OF INDIA - FRANCE DTAA. 5. THE ASSESSEE CLAIMED FREIGHT COLLECTIONS RECEIVED FROM CARRIAGE OF CARGO IN INTERNATIONAL TRAFFIC AS SHIPPING INCOME NOT TAXABLE UNDER ARTICLE 9 REFERRED ABOVE. THE ASSESSEE ALSO CLAIMED FOLLOWING RECEIPTS AS PART OF INCOME FROM INTER NATIONAL TRAFFIC AND ACCORDINGLY CLAIMED RELIEF IN ALL THE THREE YEARS: - (A) RECEIPTS FROM INLAND HAULAGE CHARGES AND SERVICE TAX COLLECTED THEREON. (B) FREIGHT CHARGES RECEIVED FROM TRANSPORTATION OF CARGO THROUGH FEEDER VESSELS TO MOTHER VESSELS. WHE N THE AO REJECTED THE CLAIM OF THE ASSESSEE IN RESPECT OF ABOVE RECEIPTS AND SOUGHT TO TAX THEM U/S 44B OF THE INCOME TAX ACT, THE ASSESSEE CONTENDED THAT THE SERVICE TAX IS A STATUTORY LIABILITY COLLECTED ON BEHALF OF THE GOVERNMENT AND ACCORDINGLY CLAIME D THAT IT WILL NOT FORM PART OF GROSS RECEIPTS FOR THE PURPOSES OF SEC. 44B OF THE ACT. 6. THE AO, IN HIS DRAFT ASSESSMENT ORDERS PASSED FOR ALL THE THREE YEARS, TOOK THE VIEW THAT THE RECEIPTS FROM INLAND HAULAGE CHARGES AND FREIGHT CHARGES RECEIVE D FOR USING FEEDER VESSELS ARE NOT PART OF RECEIPTS FORMING PART OF OPERATION OF SHIPS IN INTERNATIONAL TRAFFIC. ACCORDINGLY HE REJECTED THE CLAIM FOR APPLYING THE PROVISIONS OF ARTICLE 9 OF INDIA - FRANCE DTAA TO THE ABOVE SAID RECEIPTS. ACCORDINGLY THE A O APPLIED THE PROVISIONS OF SEC. 44B OF THE ACT TO THE ABOVE RECEIPTS. AS STATED EARLIER, THE AO ALSO INCLUDED THE SERVICE TAX CMA CGM SA 4 COLLECTED BY IT AS PART OF GROSS RECEIPTS. IT IS PERTINENT TO NOTE THAT THE INCOME TAX U/S 44B OF THE ACT IS CHARGED ON GROSS R ECEIPTS AND HENCE THE AO INCLUDED SERVICE TAX ALSO AS PART OF GROSS RECEIPTS. 7. IN AY 2012 - 13, THE LD DRP DECIDED THE ABOVE SAID THREE ISSUES IN FAVOUR OF THE ASSESSEE AS UNDER: - (A) IN RESPECT OF INLAND HAULAGE CHARGES, THE LD DRP HELD THAT THE IS SUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION RENDERED BY HONBLE BOMBAY HIGH COURT IN THE CASE OF SAFMARINE CONTAINER LINES N.V (367 ITR 209) AND ACCORDINGLY HELD THAT THE INLAND HAULAGE CHARGES RECEIVED BY THE ASSESSEE ARE INCIDENTAL TO AND DI RECTLY CONNECTED WITH OPERATION OF SHIPS IN INTERNATIONAL TRAFFIC. (B) IN RESPECT OF FREIGHT RECEIVED ON FEEDER VESSELS, THE LD DRP HELD THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF HONBLE BOMBAY HIGH COURT RENDERED IN THE ASSE SSEES OWN CASE RENDERED IN ITA NO.2175 OF 2009 FOR AY 2002 - 03 AND ACCORDINGLY DIRECTED THE AO NOT TO TAX FREIGHT CHARGES RECEIVED BY THE ASSESSEE FROM TRANSPORTATION OF CARGO THROUGH FEEDER VESSEL. THE ASSESSEE HAD ALSO PLACED ITS RELIANCE ON THE DECISIO N RENDERED BY HONBLE BOMBAY HIGH COURT IN THE CASE OF BALAJI SHIPPING UK LTD (253 CTR 440). (C) IN RESPECT OF THE ISSUE OF INCLUDING SERVICE TAX IN GROSS RECEIPTS, THE LD DRP HELD THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION RENDE RED BY HONBLE DELHI HIGH COURT IN THE CASE OF MITCHELL DRILLING INTERNATIONAL PTY LTD (380 ITR 130) AND HELD THAT THE SERVICE TAX WOULD NOT FORM PART OF GROSS RECEIPTS. THE REVENUE HAS FILED APPEAL FOR AY 2012 - 13 CHALLENGING THE ABOVE DECISIONS RENDERED BY LD DRP. 8. HOWEVER, THE LD DRP TOOK DIAGONALLY OPPOSITE VIEW IN RESPECT OF THE ABOVE SAID THREE ISSUES IN AY 2013 - 14 AND 2014 - 15, AND ACCORDINGLY DECIDED ALL OF THEM AGAINST THE ASSESSEE. THE REASONING GIVEN BY LD DRP IS SUMMARIZED BELOW: - (A) IN RESPECT OF INLAND HAULAGE CHARGES, THE LD DRP TOOK THE VIEW THAT THE DECISION IN THE CASE OF SAFMARINE CONTAINER LINES N.V (SUPRA) WAS RENDERED BY HONBLE BOMBAY HIGH COURT UNDER INDIA - BELGIUM TREATY, WHEREAS THE ISSUE UNDER CONSIDERATION IS REQUIRED TO B E EXAMINED IN THE CONTEXT OF INDIA - FRANCE TREATY. THE LD DRP OBSERVED CMA CGM SA 5 THAT ARTICLE 8(B)(II) OF THE INDIA - BELGIUM TREATY STATES THAT INCOME DERIVED FROM OPERATION OF SHIPS INCLUDES, INTER ALIA, ANY OTHER ACTIVITY DIRECTLY CONNECTED WITH SUCH TRANSPORTAT ION. THE LD DRP OBSERVED THAT ARTICLE 9 OF INDIA - FRANCE ONLY TALKS ABOUT THE PROFITS DERIVED BY AN ENTERPRISE FROM THE OPERATION OF SHIPS IN INTERNATIONAL TRAFFIC. IT DOES NOT SPECIFICALLY INCLUDE ANY OTHER ACTIVITY DIRECTLY CONNECTED WITH SUCH TRANSPO RTATION. ACCORDINGLY THE LD DRP HELD THAT THE ACTIVITY RELATING TO INLAND TRANSPORTATION OF GOODS CANNOT BE CONSTRUED TO BE AN ACTIVITY WHICH IS PART AND PARCEL OF INTERNATIONAL TRAFFIC AS DEFINED IN ARTICLE 3(1)(I) OF THE TREATY, AS IT IS OTHER ACTIVITY CONNECTED WITH SUCH TRANSPORTATION. (B) IN RESPECT OF FREIGHT RECEIVED FROM FEEDER VESSELS, THE LD DRP OBSERVED THAT THE DECISIONS RENDERED IN THE ASSESSEES OWN CASE (ITA NO.2175 OF 2009 FOR AY 2002 - 03) AND IN THE CASE OF BALAJI SHIPPING (253 CTR 440) HAVE NOT BEEN ACCEPTED BY THE REVENUE AND SLP HAVE BEEN FILED BEFORE HONBLE SUPREME COURT. FURTHER THE ARTICLE 9 OF INDIA - FRANCE DTAA DOES NOT INCLUDE ANY OTHER ACTIVITY DIRECTLY CONNECTED WITH SUCH TRANSPORTATION AS DEFINED IN INDIA - BELGIUM TREATY. HENCE THE FREIGHT RECEIVED FROM FEEDER VESSELS CANNOT CONSIDERED AS RECEIPTS FROM INTERNATIONAL TRAFFIC. BUT IT SHALL BE AN INCOME FROM SHIPPING BUSINESS TAXABLE U/S 44B OF THE INCOME TAX ACT. (C) WITH REGARD TO INCLUSION OF SERVICE TAX AS PART OF GROSS RECEIPTS, THE LD DRP OBSERVED THAT THE HONBLE UTTARAKHAND HIGH COURT HAS REFERRED AN IDENTICAL ISSUE TO A LARGER BENCH IN THE CASE OF HALLIBURTON OFFSHORE SERVICES INC VS. ACIT. THE LD DRP NOTICED THAT IN THE EARLIER YEAR, IT HAS FOLLOWED THE DECISION R ENDERED BY HONBLE DELHI HIGH COURT IN THE CASE OF MITCHELL DRILLING (SUPRA). IN VIEW OF DIVERGENT VIEWS OF HIGH COURTS, THE LD DRP HELD THAT THE ISSUE RELATING TO INCLUSION OF SERVICE TAX COLLECTED IN INLAND HAULAGE CHARGES HAS NOT ATTAINED FINALITY. ACC ORDINGLY THE LD DRP HELD THAT SERVICE TAX SHALL FORM PART OF GROSS RECEIPTS SPECIFIED IN SEC. 44B(2) OF THE INCOME TAX ACT. 9 . IN ALL THE THREE YEARS, THE LD DRP HAS HELD THAT THE INDIAN AGENT OF THE ASSESSEE, VIZ., M/S CMA CGM AGENCIES (INDI A) PRIVATE LIMITED SHALL CONSTITUTE AGENCY PERMANENT ESTABLISHMENT OF THE ASSESSEE ON THE REASONING THAT CMA CGM AGENCIES (INDIA) PRIVATE LIMITED CANNOT BE CONSIDERED AS AN INDEPENDENT AGENT OF THE ASSESSEE UNDER CLAUSE 6 OF ARTICLE 5 OF INDIA - FRANCE DTA A. ACCORDINGLY THE LD DRP HELD THAT CMA CGM AGENCIES (INDIA) PRIVATE LIMITED SHALL CONSTITUTE AGENCY PE OF THE ASSESSEE. CMA CGM SA 6 10. THOUGH THE ASSESSEE HAS GOT RELIEF ON MERITS IN AY 2012 - 13, YET IT HAS FILED CROSS OBJECTION CONTESTING THE ABOVE SAID DECISIO N OF LD DRP ON AVAILABILITY OF PE IN INDIA. IN OTHER TWO YEARS, THE ASSESSEE IS CONTESTING ALL THE DECISIONS RENDERED BY LD DRP INCLUDING THE ISSUE RELATING TO PE. 11. THE FIRST ISSUE RELATES TO TAXABILITY OF INLAND HAULAGE CHARGES RECEIVED BY THE ASSESSEE. WE HAVE NOTICED EARLIER THAT THE LD DRP HAS HELD IT TO BE PART OF SHIPPING INCOME FROM INTERNATIONAL TRAFFIC IN AY 2012 - 13, BUT HELD TO BE NOT PART OF SHIPPING INCOME FROM INTERNATIONAL TRAFFIC IN AY 2013 - 14 AND 2014 - 15. THE REASON GIVEN BY LD DRP IS THAT THE INDIA - FRANCE DTAA DOES NOT STATE THAT THE INCOME DERIVED FROM OPERATION OF SHIPS WOULD INCLUDE, INTER ALIA, ANY OTHER ACTIVITY DIRECTLY CONNECTED WITH SUCH TRANSPORTATION, WHILE IT WAS SO PROVIDED IN INDIA - BELGIUM DTAA. SINCE THE DECIS ION RENDERED BY HONBLE BOMBAY HIGH COURT IN THE CASE OF SAFMARINE CONTAINERS LINES NV (SUPRA) HAS BEEN RENDERED IN THE CONTEXT OF INDIA - BELGIUM DTAA, THE LD DRP HAS HELD THAT THE SAID DECISION WILL NOT BE APPLICABLE TO THE PROVISIONS OF INDIA - FRANCE DTAA. 12. THE LD A.R REFERRED TO ARTICLE 8 OF THE MODEL TAX CONVENTION OF OECD, WHICH PRESCRIBES TAXABILITY OF INCOME FROM SHIPPING, INLAND WATERWAYS TRANSPORT AND AIR TRANSPORT. ARTICLE 8(1) IS RELEVANT HERE AND THE SAME IS EXTRACTED BELOW: - PROFITS FROM OPERATION OF SHIPS OR AIRCRAFT IN INTERNATIONAL TRAFFIC SHALL BE TAXABLE ONLY IN THE CONTRACTING STATE IN WHICH THE PLACE OF EFFECTIVE MANAGEMENT OF THE ENTERPRISE IS SITUATED. THE LD A.R SUBMITTED THAT THE COMMENTARY ON ARTICLE 8 CLARIFIES THAT THE ABO VE SAID ARTICLE WOULD ALSO COVER PROFITS FROM ACTIVITIES WHICH ARE NOT DIRECTLY CONNECTED WITH THE OPERATION OF SHIPS. FOR THE SAKE OF CONVENIENCE, WE EXTRACT BELOW THE RELEVANT PARAGRAPH FROM THE COMMENTARY: - 4. THE PROFITS COVERED CONSISTS IN THE FIR ST PLACE OF THE PROFITS DIRECTLY OBTAINED BY THE ENTERPRISE FROM THE TRANSPORTATION OF PASSENGERS OR CARGO BY SHIPS OR AIRCRAFT (WHETHER OWNED, LEASED OR OTHERWISE AT THE DISPOSAL OF THE ENTERPRISE) THAT IT OPERATES IN INTERNATIONAL TRAFFIC. HOWEVER, AS I NTERNATIONAL TRANSPORT HAS EVOLVED, SHIPPING AND AIR TRANSPORT ENTERPRISES INVARIABLY CARRY ON LARGE VARIETY OF ACTIVITIES TO CMA CGM SA 7 PERMIT, FACILITATE OR SUPPORT THEIR INTERNATIONAL TRAFFIC OPERATIONS. THE PARAGRAPH ALSO COVERS PROFITS FROM ACTIVITIES DIRECTLY CONNECTED WITH SUCH OPERATIONS AS WELL AS PROFITS FROM ACTIVITIES WHICH ARE NOT DIRECTLY CONNECTED WITH THE OPERATION OF THE ENTERPRISES SHIPS OR AIRCRAFTS IN INTERNATIONAL TRAFFIC AS LONG AS THEY ARE ANCILLARY TO SUCH OPERATION. THE LD A.R SUBMITTED THAT THE ILLUSTRATIONS GIVEN IN THE COMMENTARY WOULD ALSO MAKE IT CLEAR THAT THE INLAND HAULAGE CHARGES AND INCOME FROM FEEDER VESSELS ARE ANCILLARY TO SHIPPING OPERATIONS. IN THIS REGARD, HE DREW OUR ATTENTION TO PARAGRAPHS 6 & 7 OF THE COMMENTARY. HE FURTHER SUBMITTED THAT THE INDIA - BELGIUM TREATY HAS CLARIFIED THE MATTER EXPLICITLY, WHILE THE INDIA - FRANCE TREATY HAS NOT DONE SO. ACCORDINGLY HE SUBMITTED THAT THE LD DRP WAS NOT CORRECT IN LAW IN OBSERVING THAT THE INCOME FROM ANCILLARY OPERATIONS SHAL L BE INCLUDED IN INCOME FROM SHIPPING OPERATIONS ONLY IF IT IS PROVIDED SO IN THE DTAA. HE SUBMITTED THAT THE INTERNATIONAL UNDERSTANDING IS THAT THE INCOME FROM OPERATION OF SHIPS IN INTERNATIONAL TRAFFIC ALWAYS INCLUDED PROFITS FROM OPERATIONS NOT DIREC TLY CONNECTED WITH THE OPERATION OF SHIPS AS LONG AS THEY ARE ANCILLARY TO SUCH OPERATION. HE SUBMITTED THAT THE INLAND HAULAGE CHARGES COLLECTED BY THE ASSESSEE IS ANCILLARY TO OPERATION OF SHIPS AND HENCE IT IS ELIGIBLE FOR EXEMPTION FROM TAXATION IN INDIA AS PER ARTICLE 9 OF INDIA - FRANCE DTAA. 13. THE LD A.R SUBMITTED THAT THE ARTICLE 9 OF INDIA - DENMARK TREATY ALSO STATES THAT THE PROFITS DERIVED FROM OPERATION OF SHIPS IN INTERNATIONAL TRAFFIC IS TAXABLE ONLY IN THE CONTRACTING STATE IN WHICH TH E PLACE OF EFFECTIVE MANAGEMENT IS SITUATED. THE DEFINITION OF INTERNATIONAL TRAFFIC IS ALSO IDENTICALLY WORDED IN BOTH FRANCE TREATY AND DENMARK TREATY, I.E., IT DOES NOT SPECIFICALLY INCLUDE THE EXPRESSION ANY OTHER ACTIVITY DIRECTLY CONNECTED WITH S UCH TRANSPORTATION. THE QUESTION OF TAXABILITY OF INLAND HAULAGE CHARGES CAME TO BE CONSIDERED IN THE CASE OF A DENMARK COMPANY NAMED A.P.MOLLER MAERSK A/S BY THE ITAT ON SEVERAL OCCASIONS. IN ITS ORDER DATED 15 - 02 - 2017 PASSED IN ITA NO.1798/MUM/2015, TH E CO - ORDINATE BENCH HAS DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE AS UNDER: - CMA CGM SA 8 6. APROPOS GROUND NO. 2 - 4 ON THIS ISSUE ALSO LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISIONS OF THE TRIBUNA L IN ASSESSEE OWN CASE AND ALSO HON'BLE BOMBAY HIGH COURT ALSO FOR EARLIER YEAR. PER CONTRA LD. DR NOT DISPUTE THIS PROPOSITION. 7. UP ON CAREFUL CONSIDERATION WE FIND THAT SIMILAR ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE BY THIS TRIBUNAL AS PER ITS ORD ER DATED 7/10/2016 AS ABOVE. 8. AFTER ELABORATELY CONSIDERING THE ISSUE THE TRIBUNAL CONCLUDED AS UNDER; 'IN VIEW OF THE FACTS OF THIS CASE AND PRECEDENCE DISCUSSED ABOVE, WE ARE OF THE VIEW THAT THE ENTIRE IHC OF THE ASSESSEE IS NECESSARILY IN CONNECTION WITH TRANSPORT OF CONTAINERS EITHER DISCHARGED OR LOADABLE AT INDIAN PORTS FOR THE PURPOSE OF DELIVERY THROUGH INTERNATIONAL WATERS AND IS DIRECTLY CONNECTED WITH SUCH TRANSPORTATION WILL ALWAYS BE INCLUDED WITHIN THE TERM 'OPERATIONS OF SHIPS'. THE ACTIVI TIES OF THE IHC ARE CONNECTED DIRECTLY OR AN ANCILLARY ACTIVITY THAT PROVIDES MINOR CONTRIBUTION AND SHOULD NOT BE REGARDED AS A A.P. MOLLER MAERSK A/S ITAT NO. 1798/MUM/2015 SEPARATE BUSINESS TO THE OPERATIONS OF SHIPS. THESE ACTIVITIES ARE LINKED OR CONN ECTED TO EACH OTHER AND AS SUCH ONE CANNOT SAY THAT ONE IS TO BE CONDUCTED EFFICIENTLY WITHOUT THE OTHER AND WHICH HAVE A NEXUS TO THE MAIN BUSINESS OF THE ASSESSEE OF OPERATIONS OF SHIPS SHOULD BE CONSIDERED AS INTEGRAL PART OF INCOME FROM SHIPPING OPERAT IONS. ACCORDINGLY, WE ALLOW THE CLAIM OF ASSESSEE AND HENCE, THIS COMMON ISSUE OF ASSESSEE APPEAL IS ALLOWED AND THAT OF REVENUE DISMISSED.' 9. FURTHERMORE WE NOTE THAT HON'BLE JURISDICTIONAL HIGH COURT IN ASSESSEE'S OWN CASE IN INCOME TAX APPEAL NUMBER 13 06 AND OTHERS AS PER ORDER DATED 29/14/2015 HAS CONSIDERED THE SAME ISSUE ELABORATELY AND CONCLUDED AS UNDER; 'THE TRIBUNAL IN THE MEANWHILE HAD ALSO DECIDED (IN THE CASE THE ASSESSEE'S OWN CASE) FOR THE PREVIOUS ASSESSMENT YEAR IN FAVOUR OF THE ASSESSEE A ND, THEREFORE, UPHELD THE ORDER OF THE COMMISSIONER. THIS COURT VIDE ORDER DATED 17' JULY, 2014 TO WHICH ONE OF US (S.C. DHARMADHIKARI, J.) WAS A PARTY HELD THAT THE INLAND TRANSPORT OF CARGO WITHIN INDIA WAS COVERED UNDER ARTICLE 8(2)(B)(II) AND (C) OF DTAA BETWEEN INDIA AND BELGIUM A.P. MOLLER MAERSK A/S ITAT NO. 1798/MUM/2015 AND, THEREFORE, NOT LIABLE TO TAX IN INDIA. THE PRINCIPLES INVOLVED IN THE SAID DECISION ALSO GOVERN THE PRESENT CASE. THE MAERSK NET USED BY THE AGENTS OF THE ASSESSEE ENTAILED CERTAIN COSTS REIMBURSEMENT TO THE ASSESSEE. CMA CGM SA 9 IT WAS PART OF THE SHIPPING BUSINESS AND COULD NOT HE CAPTURED UNDER ANY OTHER PROVISIONS OF THE INCOME TAX ACT EXCEPT UNDER DTAA.' 'OUR ATTENTION IS ALSO DRAWN TO THE DECISION OF THIS COURT IN THE CASE OF COMMISSIONER OF INCOME - TAX V/S. SIEMENS AKTIONGESELLESCHAFT REPORTED IN [2009] 310 ITR 320 (BOM), WHEREI N THIS COURT HAS HELD THAT ONCE THERE IS A TREATY BETWEEN TWO SOVEREIGN NATIONS, THOUGH IT IS OPEN TO A SOVEREIGN LEGISLATURE TO AMEND ITS LAWS, A DTAA ENTERED INTO BY THE GOVERNMENT, IN EXERCISE OF THE POWERS CONFERRED BY SECTION 90(1) OF THE ACT MUST BE HONOURED. THE PROVISIONS OF SECTION 9 INCOME TAX ACT WERE APPLICABLE AND THE PROVISIONS OF DTAA, IF MORE BENEFICIAL THAN THE IT ACT , THE PROVISIONS OF DTAA WOULD PREVAIL. THUS, IN THE INSTANT CASE ALSO, IT IS NOT POSSIBLE FOR THE REVENUE TO UNILATERALLY DECIDE CONTRARY TO THE PROVISIONS OF THE DTAA. WE ARE INFORMED THAT THE AGREEMENTS INTER A.P. MOLL ER MAERSK A/S ITAT NO. 1798/MUM/2015 PARTIES HAD BEEN PERFORMED AND THE PAYMENTS WERE MADE BY THE AGENTS TO USE MAERSK NET FOR THE MAERSK GROUP'S GLOBAL SHIPPING BUSINESS AND FOR NO OTHER REASON. IT RELATED TO SHIPMENT OF CARGO AND THEIR MOVEMENT ACROSS TH E OCEANS. THE VIEWS OF THE REVENUE THAT IT AMOUNTED TO TECHNICAL SERVICE IS MISCONCEIVED. IN FACT, THE ASSESSING OFFICER RELIED UPON THE DECISION OF M/S. ARTHUR ANDERSON & CO. IN ITA NO. 9125/MUM/1995, MUMBAI, 'D' BENCH IN WHICH THE TRIBUNAL HAD OBSERVED T HAT REPAYMENT OF MONEY MAY BE CONSTRUED AS 'REIMBURSEMENT' ONLY IF IT IS BEREFT OF PROFITS FOR THE SERVICES RENDERED. THERE IS NO PROFIT ELEMENT IN THE PRO RATA COSTS PAID BY THE AGENTS OF THE ASSESSEE TO THE ASSESSEE AND ACCORDINGLY, WE HAVE NO HESITATION IN HOLDING THAT THE AMOUNTS PAID BY THE AGENTS TO UTILIZE THE AMOUNT AROSE OUT OF THE SHIPPING BUSINESS CANNOT BE BROUGHT TO TAX AS SOUGHT TO BE DONE. ' 10. THUS FROM THE ABOVE IT IS APPARENT THAT THE ISSUE INVOLVED IS SQUARELY COVERED IN FAVOUR OF THE AS SESSEE. ACCORDINGLY, WE UPHOLD THE DIRECTION OF LD. DRP IN THIS REGARD ALSO. ACCORDINGLY, THE LD A.R SUBMITTED THAT THE PRESENT ISSUE IS SQUARELY COVERED BY THE ABOVE SAID DECISION OF TRIBUNAL. ACCORDINGLY THE LD A.R SUBMITTED THAT THE DECISION RENDERED BY LD DRP ON THIS ISSUE IN AY 2012 - 13 SHOULD BE UPHELD AND THE DECISIONS RENDERED IN AY 2013 - 14 & 2014 - 15 ON THIS ISSUE SHOULD BE REVERSED. CMA CGM SA 10 14. ON THE CONTRARY, THE LD D.R SUBMITTED THAT THE INLAND HAULAGE CHARGES RECEIVED BY THE ASSESSEE IS IN RESPECT OF DOMESTIC TRAFFIC, WHERE AS ARTICLE 9 OF INDIA - FRANCE DTAA APPLIES TO INTERNATIONAL TRAFFIC. HE SUBMITTED THAT THE LD DRP HAS PLACED RELIANCE ON THE DECISION RENDERED BY HONBLE BOMBAY HIGH COURT IN THE CASE OF SAFMARINE CONTAINER LINES N V (SUPRA) IN AY 2012 - 13 AD GRANTED RELIEF. THE ABOVE SAID DECISION WAS RENDERED IN THE CONTEXT OF INDIA - BELGIUM DTAA, WHICH ARE DIFFERENTLY WORDED. HENCE THE LD DRP, IN AY 2013 - 14 AND 2014 - 15, HAS RIGHTLY BROUGHT OUT THE DIFFERENCES BETWEEN INDIA - BELGIUM DTAA AND IND IA - FRANCE DTAA. THE INDIA - BEGIUM TREATY CONTAIN SPECIFIC PROVISIONS THAT ANY OTHER ACTIVITY CONNECTED WITH SUCH TRANSPORTATION, WHILE NO SUCH PROVISION IS AVAILABLE IN INDIA - FRANCE DTAA. ACCORDINGLY THE LD D.R CONTENDED THAT THE LD DRP/AO WAS JUSTIFIED IN HOLDING THAT THE INDIAN HAULAGE CHARGES, BEING AN ACTIVITY NOT DIRECTLY CONNECTED WITH TRANSPORTATION IN INTERNATIONAL TRAFFIC, IS NOT EXEMPT UNDER ARTICLE 9. THE LD D.R FURTHER SUBMITTED THAT THE ONUS TO PROVE THAT A PARTICULAR RECEIPT IS FROM INTER NATIONAL TRAFFIC LIES UPON THE ASSESSEE. IN THIS REGARD, HE PLACED RELIANCE ON THE DECISION RENDERED BY THE CO - ORDINATE BENCH IN THE CASE OF APL DIRECTOR CO. P LTD VS. ADIT (INT. TAXATION) (2017)(167 ITD 603)(MUM). 15. WE HAVE HEARD RIVAL CONTENTION S ON THIS ISSUE AND PERUSED THE RECORD. WE NOTICE THAT THE LD DRP HAS MAINLY DECLINED TO FOLLOW ITS OWN ORDER PASSED IN AY 2012 - 13 IN THE SUBSEQUENT TWO YEARS FOR THE REASON THAT THERE IS DIFFERENCE BETWEEN ARTICLE 8 OF INDIA - BELGIUM DTAA AND ARTICLE 9 OF INDIA - FRANCE DTAA. ACCORDING TO LD DRP THAT THE INDIA - BELGIUM DTAA CONTAINS SPECIFIC PROVISIONS TO INCLUDE ANY OTHER ACTIVITY DIRECTLY CONNECTED WITH SUCH TRANSPORTATION, WHEREAS THE SAME IS ABSENT IN THE INDIA - FRANCE DTAA. THE LD A.R, ON THE CONTRARY , SUBMITTED THAT THE PRESENCE OR ABSENCE OF THE ABOVE SAID PROVISION WILL NOT MAKE ANY DIFFERENCE. IN SUPPORT OF THIS PROPOSITION, THE LD A.R PLACED RELIANCE ON OECD MODEL CONVENTIONS AND THE COMMENTARY THEREON, WHICH ARE EXTRACTED ABOVE. CMA CGM SA 11 16. WE N OTICE THAT THE DECISION IN THE CASE OF SAFMARINE CONTAINER LINES N.V (SUPRA) HAS BEEN RENDERED BY HONBLE BOMBAY HIGH COURT IN THE CONTEXT OF INDIA - BELGIUM DTAA. HOWEVER, IN THE CASE OF DIT VS. A.P.MOLLER MAERSK A/S (ITA NO.1306 OF 2013 DATED 29 - 04 - 2015) , TO WHICH INDIA - DENMARK TREATY WOULD APPLY, THE HONBLE BOMBAY HIGH COURT HAS HELD THAT THE PRINCIPLES INVOLVED IN THE DECISION OF SAFMARINE CONTAINER LINES N.V (SUPRA) ALSO GOVERN THE CASE OF A.P. MOLLER MAERSK A/S (SUPRA). THERE IS NO DISPUTE THAT THE ARTICLE 9 OF INDIA - FRANCE DTAA IS IDENTICALLY WORDED TO THE CORRESPONDING ARTICLE IN INDIA - DENMARK DTAA. 17. WE SHALL NOW DISCUSS IN BRIEF THE FACTS AVAILABLE IN M/S A.P. MOLLER MAERSK A/S CASE. THE SAID COMPANY WAS RESIDENT OF DENMARK AND HENCE INDI A - DENMARK DTAA APPLIED TO IT. IN ORDER TO HELP ITS AGENTS IN BOOKING CARGO AND CARRYING OUT CLEARING AGENT WORKS, THE ASSESSEE MAINTAINED A GLOBAL TELECOMMUNICATION FACILITY CALLED MAERSKNET, WHICH IS A VERTICALLY INTEGRATED COMMUNICATION SYSTEM. THE AS SESSEE RECOVERED PRO - RATA COSTS FROM ITS AGENTS AND ACCORDINGLY THE INDIAN AGENTS ALSO REMITTED PRO - RATA COSTS TO THE ABOVE SAID ASSESSEE. BEFORE AO, THE ASSESSEE CONTENDED THAT IT WAS MERELY A SYSTEM OF COST SHARING AND HENCE THE AMOUNT RECOVERED BY IT FROM ITS AGENTS IS IN THE NATURE OF REIMBURSEMENT OF EXPENSES. THE AO, HOWEVER, HELD TO IT TO BE FEE FOR TECHNICAL SERVICES. 18. BEFORE THE HONBLE HIGH COURT, THE ASSESSEE HAS ALSO TAKEN A PLEA THAT THE COMMUNICATION SYSTEM IS VERY MUCH AN INTEGRAL PART OF SHIPPING BUSINESS AND THEREFORE, THE INCOME RECEIVED BY THE ASSESSEE FROM THE AGENTS, DID IN FACT, AMOUNT TO INCOME FROM THE SHIPPING BUSINESS OF THE ASSESSEE AND THEREFORE, NOT CHARGEABLE TO TAX. THE HONBLE BOMBAY HIGH COURT HELD THAT THE AMOUNT RECEIVED BY THE ASSESSEE FOR USING THE COMMUNICATION SYSTEM BY THE AGENTS IS PART OF SHIPPING BUSINESS AND COULD NOT BE CAPTURED UNDER ANY OTHER PROVISIONS OF THE INCOME TAX ACT EXCEPT DTAA. THE HIGH COURT FURTHER HELD THAT IT DOES NOT AMOUNT TO TECHNICA L SERVICE. FINALLY THE HIGH COURT HELD THAT CMA CGM SA 12 THE AMOUNTS PAID BY THE AGENTS FOR USING THE COMMUNICATION SYSTEM AROSE OUT OF THE SHIPPING BUSINESS AND CANNOT BE BROUGHT TO TAX. 19. THE DECISION SO RENDERED BY HONBLE BOMBAY HIGH COURT IN THE CONTEXT OF INDIA - DENMARK DTAA CLEARLY SHOWS THAT THE ANCILLARY ACTIVITIES CONNECTED WITH THE SHIPPING BUSINESS ARE ALSO INCLUDED IN THE SHIPPING BUSINESS. THE ABOVE SAID DECISION HAS BEEN FOLLOWED BY THE CO - ORDINATE BENCH IN THE CASE OF SAME ASSESSEE, VIZ., A.P.M OLLER MAERSK A/S (ITA NO.1798/MUM/2015 DATED 15 - 02 - 2017) FOR AY 2011 - 12 TO HOLD THAT THE INLAND HAULAGE CHARGES RECEIVED BY THAT ASSESSEE SHALL ALSO FORM PART OF SHIPPING INCOME FROM INTERNATIONAL TRAFFIC. THE DECISION SO RENDERED FOR AY 2011 - 12 WAS FOLL OWED BY THE CO - ORDINATE BENCH IN THE ABOVE SAID ASSESSEES CASE IN AY 2012 - 13 IN ITA NO.1743/MUM/2016 DATED 07 - 02 - 2018. 20. BEFORE US, THE LD A.R DEMONSTRATED THAT THE ARTICLE 9 OF INDIA - FRANCE DTAA AND ARTICLE 9 OF INDIA - DENMARK DTAA ARE IDENTICALLY W ORDED. SINCE THE DECISION RENDERED BY HONBLE BOMBAY HIGH COURT IN THE CASE OF SAFMARINE CONTAINERS LINES N.V (WHICH WAS RENDERED IN THE CONTEXT OF INDIA - BELGIUM DTAA) WAS HELD TO BE APPLICABLE TO INDIA - DENMARK DTAA ALSO BY THE HONBLE BOMBAY HIGH COURT I N THE CASE OF A.P.MOLLER MAERSK A/S (ITA NO.1306 OF 2013), THE LD A.R SUBMITTED THAT THE ABSENCE OF THE EXPRESSION ANY OTHER ACTIVITY DIRECTLY CONNECTED WITH SUCH TRANSPORTATION IN THE INDIA - FRANCE DTAA WILL NOT MAKE ANY DIFFERENCE. WE NOTICE THAT THE C ONTENTIONS OF THE ASSESSEE ALSO GET SUPPORT FROM THE OECD MODEL CONVENTION DISCUSSED SUPRA. 21. IN VIEW OF THE FOREGOING DISCUSSIONS, WE AGREE WITH THE CONTENTIONS OF THE LD A.R ON THIS ISSUE. ACCORDINGLY WE HOLD THAT INLAND HAULAGE CHARGES RECEIVED BY THE ASSESSEE SHALL FORM PART OF INCOME FROM OPERATION OF SHIPS IN INTERNATIONAL TRAFFIC AND ACCORDINGLY ARTICLE 9 OF INDIA - FRANCE DTAA SHALL APPLY TO IT. ACCORDINGLY WE UPHOLD THE ORDER PASSED BY LD DRP IN AY 2012 - 13 ON THIS ISSUE AND REVERSE THE ORDE RS PASSED BY IT ON THIS ISSUE IN AY 2013 - 14 AND 2014 - 15. CMA CGM SA 13 22. THE NEXT ISSUE URGED BY THE PARTIES RELATE TO THE TAXABILITY OF FREIGHT CHARGES RECEIVED FOR TRANSPORTATION OF CARGO THROUGH FEEDER VESSELS FROM INDIAN PORTS TO THE MOTHER VESSEL STANDING IN FOREIGN PORTS/HUB PORTS. IT WAS BROUGHT TO OUR NOTICE THAT THIS ISSUE IS SQUARELY COVERED BY THE DECISION RENDERED BY HONBLE BOMBAY HIGH COURT IN THE ASSESSEES OWN CASE IN INCOME TAX APPEAL NO.2175 OF 2009 DATED 06 - 08 - 2012 FOR ASSESSMENT YEAR 2002 - 03. THE LD D.R, HOWEVER, SUBMITTED THAT THE ASSESSEE HAS NOT SHOWN THAT THE FEEDER VESSELS WERE USED ONLY TO TRANSPORT THE CARGO TO THE MOTHER VESSEL. 23. WE HEARD THE PARTIES ON THIS ISSUE. WE NOTICE THAT THE HONBLE BOMBAY HIGH COURT HAS DECIDED AN IDE NTICAL ISSUE IN THE ASSESSEES OWN CASE (REFERRED SUPRA) IN AY 2002 - 03. WE NOTICE THAT THE HIGH COURT HAS NOTED THE FACTS AS UNDER: - 8(A) IT WAS NOT DISPUTED THAT THE RESPONDENT OWNED OR CHARTERED OR OTHERWISE ACTUALLY OPERATED SHIPS THOUGH NOT WITHIN THE INDIAN TERRITORIAL WATERS. IN THIS APPEAL, THE RESPONDENT ARRANGED FOR THE CARRIAGE OF GOODS OF ITS CLIENTS BY SEA FROM PORTS IN INDIA TO FOREIGN PORTS. AS THE RESPONDENTS VESSELS DID NOT PLY IN INDIAN TERRITORIAL WATERS, IT AVAILED OF THE SLOT HIRE FACILITIES OBTAINED BY IT ON SHIPS OWNED OR CHARTERED BY OTHERS FOR THE CARRIAGE OF THE GOODS FROM THE PORTS IN INDIA UP TO THE HUB PORTS ALSO ABROAD FROM WHERE THE GOODS WERE FURTHER CARRIED ON VESSELS OWNED OR CHARTERED OR OTHERWISE OPERATED BY THE RESP ONDENT TO THE FINAL DESTINATION ALSO BEING PORTS ABROAD. THE AO HELD THAT INCOME FROM SLOT HIRE ARRANGEMENTS WOULD NOT QUALIFY FOR THE RELIEF UNDER ARTICLE 9 OF INDIA - FRANCE DTAA. 24. THE HONBLE HIGH COURT NOTICED THAT AN IDENTICAL ISSUE WAS DECID ED BY IT IN THE CASE OF DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION) VS. BALAJI SHIPPING UK LIMITED IN INCOME TAX APPEAL NO.3024 OF 2009 AND INCOME TAX APPEAL NO3215 OF 2009 IN THE CONTEXT OF INDIA - UK DTAA. THEN THE HONBLE HIGH COURT COMPARED THE RELE VANT PROVISIONS IN INDIA - FRANCE DTAA WITH THE INDIA - UK DTAA AND HELD THAT BOTH THE PROVISIONS ARE IDENTICAL IN NATURE. IN THE CASE OF BALAJI SHIPPING UK LIMITED (SUPRA), THE HONBLE HIGH COURT HAD HELD THAT WHERE THE GOODS ARE TRANSPORTED BY AN ENTERPRISE BY AVAILING OF THE SLOT HIRE FACILITY OBTAINED BY IT ON THE SHIP OF ANOTHER FROM A PORT IN INDIA UP TO CMA CGM SA 14 A HUB PORT ABROAD AND FROM THERE TRANSPORTING THE GOODS FURTHER TO THEIR FINAL DESTINATION UPON A SHIP OWNED OR CHARTERED OR OTHERWISE CONTROLLED BY IT, WOULD BE COVERED BY ARTICLE 9(1) OF INDIA - UK DTAA. SINCE THE INDIA - FRANCE DTAA IS SIMILAR THERETO, THE HONBLE HIGH COURT HELD THAT THE DECISION RENDERED IN THE CASE OF BALAJI SHIPPING UK LIMITED (SUPRA) WOULD APPLY TO THE ASSESSEE ALSO. 25. ACCO RDINGLY, BY FOLLOWING THE DECISION RENDERED BY HONBLE BOMBAY HIGH COURT IN THE ASSESSEES OWN CASE (REFERRED SUPRA), WE HOLD THAT THE FREIGHT CHARGES RECEIVED FOR TRANSPORTATION OF CARGO THROUGH FEEDER VESSELS IS PART OF SHIPPING INCOME ELIGIBLE FOR RELIE F UNDER ARTICLE 9(1) OF INDIA - FRANCE DTAA. ACCORDINGLY WE UPHOLD THE VIEW TAKEN BY THE LD DRP IN AY 2012 - 13 ON THIS ISSUE AND REVERSE ITS DECISION RENDERED IN AY 2013 - 14 AND 2014 - 15 ON THIS ISSUE. 26. THE NEXT ISSUE RELATES TO THE INCLUSION OF SERVI CE TAX AS PART OF GROSS RECEIPTS. THE ASSESSEE HAS COLLECTED SERVICE TAX ALSO ON INLAND HAULAGE CHARGES COLLECTED FROM ITS CLIENTS. SINCE WE HAVE HELD THAT THE INLAND HAULAGE CHARGES RECEIVED BY IT IS PART OF INCOME FROM OPERATION OF SHIPS IN INTERNATION AL TRAFFIC AND IS ELIGIBLE FOR RELIEF UNDER ARTICLE 9(1), THE QUESTION OF ASSESSING THE SAME U/S 44B OF THE INCOME TAX ACT WOULD NOT ARISE. CONSEQUENTLY THE QUESTION WHETHER THE SERVICE TAX WOULD FORM PART OF GROSS RECEIPTS OR NOT IN THE CONTEXT OF SEC. 4 4B OF THE ACT WOULD BECOME ACADEMIC IN NATURE. IN ANY CASE, THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION RENDERED BY HONBLE DELHI HIGH COURT IN THE CASE OF MITCHELL DRILLING INTERNATIONAL (P) LTD (2016)(380 ITR 130). WE HAVE NOTICED T HAT THE LD DRP HAS CONSIDERED THE DECISION RENDERED BY HONBLE UTTARAKHAND HIGH COURT IN THE CASE OF CIT VS. HALLIBURTON OFFSHORE SERVICES (300 ITR 265). IT IS SETTLED PRINCIPLE OF LAW THAT IN CASE OF DIVERGENT VIEWS EXPRESSED BY NON - JURISDICTIONAL HIGH C OURTS, THE VIEW IN FAVOUR OF THE ASSESSEE SHOULD BE TAKEN. ACCORDINGLY THE ASSESSEE WAS JUSTIFIED IN PLACING RELIANCE ON THE DECISION RENDERED BY HONBLE DELHI HIGH COURT IN THE CASE OF MITCHELL DRILLING INTERNATIONAL (P) LTD CMA CGM SA 15 (SUPRA). ACCORDINGLY WE UP HOLD THE VIEW TAKEN BY THE LD DRP IN AY 2012 - 13 ON THIS ISSUE AND REVERSE ITS DECISION RENDERED IN AY 2013 - 14 AND 2014 - 15 ON THIS ISSUE. 27. IN THE CROSS OBJECTION FILED BY THE ASSESSEE FOR AY 2012 - 13 AND IN THE APPEALS FILED FOR AY 2013 - 14 AND 201 4 - 15, THE ASSESSEE IS CHALLENGING THE DECISION OF LD DRP IN HOLDING THAT ITS INDIAN AGENT, VIZ., M/S CMA CGM AGENCIES (INDIA) P LTD SHALL CONSTITUTE AGENCY PE OF THE ASSESSEE. THE QUESTION RELATING TO EXISTENCE OR OTHERWISE OF PERMANENT ESTABLISHMENT SH ALL ARISE ONLY IF ANY PART OF ITS INCOME IS LIABLE TO BE TAXED AS BUSINESS INCOME OF THE ASSESSEE. SINCE WE HAVE HELD THAT THE INCOME RECEIVED BY THE ASSESSEE BY WAY OF INLAND HAULAGE CHARGES AND FEEDER VESSELS CHARGES ARE SHIPPING INCOME ELIGIBLE FOR REL IEF U/S 9(1) OF THE INDIA - FRANCE DTAA, NO INCOME OF THE ASSESSEE IS LIABLE TO BE TAXED AS BUSINESS PROFITS IN INDIA. HENCE THE QUESTION RELATING TO EXISTENCE OR OTHERWISE OF PERMANENT ESTABLISHMENT SHALL ALSO BECOME ACADEMIC IN NATURE. IN ANY CASE, IT HA S BEEN HELD BY THE TRIBUNAL IN THE ASSESSEES OWN CASE IN ITA NO.9001/MUM/2010 (144 TTJ 273) THAT IF THE INDIAN AGENT IS REMUNERATED AT ARMS LENGTH, THEN THE AGENT SHALL BE CONSTRUED AS AGENT OF INDEPENDENT STATUS AND ACCORDINGLY NO AGENCY PE WOULD EXIST I N THE CASE OF THE ASSESSEE IN INDIA. THE CASE OF THE LD A.R IS THAT THE INDIAN AGENT OF THE ASSESSEE HAS BEEN REMUNERATED AT ARMS LENGTH AND HENCE THERE DO NOT EXIST ANY AGENCY PE FOR THE ASSESSEE IN INDIA IN TERMS OF INDIA - FRANCE DTAA. ACCORDINGLY WE HO LD THAT THE INDIAN AGENT OF THE ASSESSEE CANNOT BE CONSIDERED AS AGENCY PE OF THE ASSESSEE, IF THE AGENT HAS BEEN REMUNERATED AT ARMS LENGTH IN ALL THE THREE YEARS UNDER CONSIDERATION. 28. IN THE CROSS OBJECTIONS FILED BY THE ASSESSEE FOR AY 2012 - 13, THE ASSESSEE IS SUPPORTING THE ORDER OF LD DRP IN GROUNDS 1 TO 5. THE GROUND NO.6 TO 8 RELATES TO THE ISSUE OF PERMANENT ESTABLISHMENT, WHICH WE HAVE DEALT IN THE PRECEDING PARAGRAPH. THE GROUND NO.9 - 10 RELATES TO COMPUTATIONAL ERROR IN THE INCOME COMPUTE D BY THE AO. SINCE WE HAVE DECIDED OTHER ISSUES IN FAVOUR CMA CGM SA 16 OF THE ASSESSEE, NO INCOME SHALL BE LIABLE TO BE TAXED FROM OUT OF THOSE RECEIPTS. HENCE THESE GROUNDS SHALL BECOME INFRUCTUOUS. 29. OTHER GROUNDS URGED BY THE ASSESSEE ARE EITHER CONSEQUEN TIAL IN NATURE OR NOT PRESSED. 30. WE SHALL NOW TAKE UP THE APPEALS FILED IN THE CASE OF M/S DELMAS SAS (NOW MERGED WITH CMA CGM SA). THE REVENUE HAS FILED APPEAL AND THE ASSESSEE HAS FILED CROSS OBJECTION FOR ASSESSMENT YEAR 2012 - 13. THE GROUNDS URGE D BY THE REVENUE RELATE TO (A) TAXABILITY OF INLAND HAULAGE CHARGES. (B) TAXABILITY OF FREIGHT CHARGES RECEIVED ON TRANSPORTATION OF CARGO THROUGH FEEDER VESSELS. (C) INCLUSION OF SERVICE TAX AS PART OF GROSS RECEIPTS. 31. THE DECISION RENDERED B Y US IN THE HANDS OF CMA CGM SA IN THE EARLIER PARAGRAPHS ON IDENTICAL ISSUES SHALL EQUALLY APPLY TO THE ISSUES URGED IN THE CASE OF THIS ASSESSEE ALSO. ACCORDINGLY, FOLLOWING THE DECISIONS SO RENDERED, WE CONFIRM THE ORDER PASSED BY LD DRP IN ALL THE ABO VE SAID THREE ISSUES. 32. THE LD A.R SUBMITTED THAT THE LD DRP, IN THIS CASE, HAS HELD THAT THE INDIAN AGENT OF THE ASSESSEE DOES NOT CONSTITUTE AGENCY PE OF THE ASSESSEE. HE SUBMITTED THAT THE REVENUE HAS NOT CHALLENGED THE SAID DECISION OF LD DRP A ND HENCE IT HAS ATTAINED FINALITY. IN THE ABSENCE OF ANY PE IN INDIA, THE INCOME RELATING TO THE THREE ISSUES WOULD NOT BECOME TAXABLE IN INDIA, IN WHICH CASE, ALL THE THREE ISSUES URGED BY THE REVENUE WOULD BECOME ACADEMIC IN NATURE. 33. IN THE CROSS OBJECTION FILED, THE ASSESSEE IS SUPPORTING THE ORDER OF LD DRP IN GROUNDS 1 TO 5. THE GROUND NO.6 - 7 RELATES TO COMPUTATIONAL ERROR IN THE INCOME COMPUTED BY THE AO. SINCE WE HAVE DECIDED OTHER ISSUES IN FAVOUR OF THE ASSESSEE, NO INCOME SHALL BE LIABLE TO BE TAXED FROM OUT OF THOSE RECEIPTS. HENCE THESE GROUNDS SHALL BECOME INFRUCTUOUS. THE GROUND NO. 8 & 9 RELATES TO THE CHARGEABILITY OF INTEREST, WHICH WILL ALSO BECOME INFRUCTUOUS. CMA CGM SA 17 34. IN THE RESULT, ALL THE APPEALS OF THE REVENUE ARE DISMISSED . THE APPEALS OF THE ASSESSEE AND THE CROSS OBJECTIONS OF THE ASSESSEE ARE TREATED AS ALLOWED. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 14 . 3 .201 8 . SD/ - SD/ - (RAVISH SOOD ) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 14 / 3 / 20 1 8 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// ( SENIOR PRIVATE SECRETARY ) PS ITAT, MUMBAI