DCIT (IT) 2(3)(1), MUMBAI V. FORBES CONTIANER LINE PTE LTD, MUMBAI

ITA 6783/MUM/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1957 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-06-2019
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2013-2014
• Appeal Filed On: 29-11-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: G N MAKHWANA
• Assessee Lawyers: GEETA RAMRAKHIANI
• Keywords: Business income; Double taxation relief; Permanent establishment

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHR I G. MANJUNATHA , ACCOUNTANT MEMBER IT A NO. 6783 /MUM./2017 ( ASSESSMENT YEAR : 20 13 14 ) DY. COMMISSIONER OF INCOME TAX (I.T) CIRCLE 2(3)(1), MUMBAI . APP ELL ANT V/S M/S. FORBES CONTAINER LINE PTE LTD. GROUND FLOOR, FORBES BUILDING CHARANJIT RAI MARG, FORT MUMBAI 400 001 PAN AABCF0967H . RESPONDENT ASSESSEE BY : MS. GEETA RAMRAKHIANI REVENUE BY : SHRI G.N. MAKHWANA DATE OF HEARING 24.06.2019 DATE OF ORDER 28.06.2019 O R D E R PER SAKTIJIT DEY, J.M. CAPTIONED APPEAL HAS BEEN FILED BY THE REVENUE CHALLENGING THE ORDER DATED 14 TH SEPTEMBER 2017, PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 56, MUMBAI, PERTAINING TO THE ASSESSMENT YEAR 2013 14. 2 . THE EFFECTIVE GROUNDS RAISED BY THE REVENUE READ AS UNDER: 2 M/S. FORBES CONTAINER LINE PTE LTD. 1 . WHETHER ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE ON ACCOUNT OF ESTABLISHMENT OF PE OF THE ASSESSEE IN INDIA WHEN THE ASSESSEE BEING THE PRINCIPAL AND ITS HOLDING COMPANY BEING THE AGENTS WH O WERE RELATED PARTIES AND WERE COVERED UNDER THE PROVISIONS OF PARA NO.8 OF ARTICLE 5 OF THE INDIA - SINGAPORE TREATY? 2 . WHETHER ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER WHO HAD ADOPTED THE PROVISIONS OF SECTION 44B MERELY FOR THE SAKE OF ARRIVING/ESTIMATING INCOME FROM THE BUSINESS O F THE ASSESSEE, SINCE THE ASSESSEE WAS INVOLVED IN THE CONTAINER BUSINESS WHICH IS AN ALLIED BUSINESS TO THE SHIPPING BUSINESS WHEREIN THE BUSINESS RECEIPTS ARE NOMENCLATURE AS FREIGHT RECEIPTS? 3 . BRIEF FACTS ARE, THE ASSESSEE COMPANY IS A TAX RESIDENT OF SINGAPORE. AS STATED, THE ASSESSEE WAS A NON VESSEL OPERATING COMMON CARRIER (NVOCC) AND WAS ENGAGED IN THE ACTIVITY OF FREIGHT FORWARDING AND SERVICE ALLIED TO THE TRANSPORT OF GOODS ACROSS ASIA AND MIDDLE EAST THROUGH A NETWORK OF AGENTS. DURING THE ASS ESSMENT PROCEEDINGS, IN RESPONSE TO THE QUERY RAISED BY THE ASSESSING OFFICER, IT WAS SUBMITTED THAT SINCE THE ASSESSEE IS NOT IN THE BUSINESS OF OPERATION OF SHIPS NEITHER IT IS ELIGIBLE FOR ANY BENEFIT UNDER ARTICLE 8 OF THE INDIA SINGAPORE DOUBLE TAXATI ON AVOIDANCE AGREEMENT (DTAA) NOR THE PROVISION OF SECTION 44B OF THE ACT IS NOT APPLICABLE. FURTHER, IT WAS CLAIMED BY THE ASSESSEE THAT SINCE IT DOES NOT HAVE A PERMANENT ESTABLISHMENT (PE) IN INDIA, THE BUSINESS INCOME FROM OPERATIONS IN INDIA IS NOT TA XABLE AS PER THE PROVISIONS OF ARTICLE 5 R/W ARTICLE 7 OF 3 M/S. FORBES CONTAINER LINE PTE LTD. INDIA SINGAPORE DTAA. THE ASSESSING OFFICER, HOWEVER, WAS NOT CONVINCED WITH THE SUBMISSIONS OF THE ASSESSEE. RELYING UPON THE ASSESSMENT ORDER S PASSED FOR THE ASSESSMENT YEAR S 2009 10 AND 2011 12, THE ASSESSING OFFICER HELD THAT THE ASSESSEE HAD A PE IN INDIA, THEREFORE, IS COVERED BY THE PROVISIONS OF SECTION 44B OF THE ACT. ACCORDINGLY, APPLYING THE SAID PROVISION, HE COMPUTED THE INCOME OF THE ASSESSEE FOR THE IMPUGNED ASSESSMENT YEAR. AS A RESUL T, THE TAXABLE INCOME OF THE ASSESSEE FOR THE YEAR WAS DETERMINED AT ` 2,54,10,521. BEING AGGRIEVED WITH THE ASSESSMENT ORDER SO PASSED, ASSESSEE PREFERRED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 4 . TAKING NOTE OF THE FACT THAT WHILE DECIDING THE ISSUE IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2009 10 AND 2011 12, THE TRIBUNAL HAS HELD THAT THE ASSESSEE HAD NO PE IN INDIA . T HEREFORE, THE BUSINESS INCOME IS NOT TAXABLE IN INDIA AND FURTHER , THE LEARNED COMMISSIONER (APPEALS) HAS EXPRESSED SIMILAR VIEW WHILE DECIDING ASSESSEES APPEAL FOR ASSESSMENT YEAR 2012 13, LEARNED COMMISSIONER (APPEALS) HELD THAT THE ASSESSEE HAS NO PE IN INDIA. CONSEQUENTLY, THE BUSINESS INCOME OF THE ASSESSEE CANNOT BE BROUGHT TO TAX UNDER SECTION 44B OF THE ACT. 5 . THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE OBSERVATIONS OF THE ASSESSING OFFICER . W HEREAS , LEARNED AUTHORISED 4 M/S. FORBES CONTAINER LINE PTE LTD. REPRESENTATIVE SUBMITTED THAT THE ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE B Y THE TRIBUNAL IN ASSESSMENT YEAR 2009 10, 2011 12 AND 2012 13. COP IES OF THE ORDERS PASSED BY THE TRIBUNAL W ERE ALSO SUBMITTED BEFORE THE BENCH. 6 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. AS COULD BE SEEN, THE PRIMARY FACTS PERMEATING THROUGH DIFFERENT ASSESSMENT YEARS REMAIN UNCHANGED. F ROM ASSESSMENT YEAR 2009 10 ONWARDS, IT IS THE CLAIM OF THE ASSESSEE THAT SINCE IT DOES NOT HAVE A PE IN INDIA, THE BUSINESS INCOME FROM THE OPERATIONS IN INDIA IS NOT TAXABLE UNDER SECTION 4 4B OF THE ACT . H OWEVER, THE CLAIM OF THE ASSESSEE WAS REJECTED BY THE ASSESSING OFFICER ON THE GROUND THAT THE ASSESSEE HAS A PE IN INDIA, HENCE , THE INCOME EARNED IN INDIA IS TAXABLE UNDER SECTION 44B OF THE ACT. IT IS RELEVANT TO OBSERVE , IN ASSESSMENT Y EAR 2009 10, WHEN THE DISPUTE CAME UP FOR CONSIDERATION BEFORE THE TRIBUNAL IN ITA NO.1607/MUM./2014, THE TRIBUNAL IN ORDER DATED 11 TH MARCH 2016, HELD THAT SINCE THE ASSESSEE HAS NO PE IN INDIA, ITS INCOME IS NOT TAXABLE UNDER SECTION 44B OF THE ACT. THE SAME VIEW WAS REITERATED BY THE TRIBUNAL WHILE DECIDING ASSESSEES APPEAL IN ASSESSMENT YEAR 2011 12, VIDE ITA NO.972/MUM./2015, DATED 15 TH JULY 2016. IN THE LATEST ORDER PASSED FOR THE ASSESSMENT YEAR 2012 13, IN ITA NO.6286/MUM./2016, DATED 31 ST DECEMBER 2018, THE TRIBUNAL FOLLOWING ITS EARLIER ORDERS HAVE HELD 5 M/S. FORBES CONTAINER LINE PTE LTD. THAT IN ABSENCE OF A PE IN INDIA, ASSESSEES INCOME IS NOT TAXABLE UNDER SECTION 44B OF THE ACT. FACTS BEING IDENTICAL, RESPECTFULLY FOLLOWING THE DECISION S OF THE CO ORDINATE BENCH IN ASSESSEES O WN CASE, AS REFERRED TO ABOVE, WE UPHOLD THE DECISION OF LEARNED COMMISSIONER (APPEALS) ON THE ISSUE. GROUNDS RAISED ARE DISMISSED. 7 . IN THE RESULT, APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN C OURT ON 28.06.2019 SD/ - G. MANJUNATHA ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 28.06.2019 COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); ( 4 ) THE CIT, MUMBAI CITY CONCERNED; ( 5 ) THE DR, ITAT, MUMBAI; ( 6 ) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (ASSTT. REGISTRAR) ITAT, MUMBAI