LR2 Management K/S (As foreign Commr. Manager/agent of principal freight beneficiary, Torm A/S("Torm"), JAMNAGAR V. The Income Tax Officer, Inter. Taxa., RAJKOT-GUJARAT

ITA 757/RJT/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 0489 (ITAT-RAJKOT)
• Duration Of Justice: 10 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 09-10-2015
• Assessment Year: 2013-2014
• Appeal Filed On: 24-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Transfer pricing; Double taxation relief; Opportunity of being heard; Period of limitation; Time period of passing order
• Section: 143(3); 153A; 147

Judgement Text

I.T.A. NO. 757 /RJT/201 4 ASSESSMENT YEAR: 2013 - 14 PAGE 1 OF 21 IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT [CORAM: PRAMOD KUMAR AM AND RAJPAL YADAV JM ] I.T.A. NO. 75 7 /RJT/201 4 ASSESSMENT YEAR: 20 13 - 14 LR2 MANAGEMENT K/S [AS AGENT OF PRINCIPAL FREIGHT BENEFICIARY, TORM A/S , DENMA RK] . .APPELLANT INTEROCEAN SHIPPING INDIA PVT LTD - AS AGENTS FOR 301, MILESTONE, PN MARG, PANCHWATI OPP TRIVENI APARTMENTS, JAMNAGAR 361 002 [PAN: AADCT3910G] VS. INCOME TAX OFFICER (INTERNATIONAL TAXATION) RAJKOT .. . RESPONDENT APPEARAN CES BY: PORUS KAKA , AND MANISH KANTH FOR THE APPELLANT VIMAL MEHTA FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : OCTOBER 9 , 2015 DATE OF PRONOUNCING THE ORDER : OCTOBER 30 , 2015 O R D E R PER PRAMOD KUMAR , AM : 1. BY WAY OF THIS APPEAL, THE APPEL L ANT HAS CHALLENGED CORRECTNESS OF THE ORDER DATED 9 TH SEPTEMBER 2014 , PASSED BY THE CIT(A) IN THE MATTER OF ASSESSMENT UNDER SECTION 172(4) OF THE INCOME TAX ACT, 1961, IN RESPECT OF VARIOUS VESSEL VOYAGE RETURNS FILED BY THE INTEROCEAN SHIPPING INDIA P VT LTD , UNDER SECTION 172(3), RELATABLE TO THE ASSESSMENT YEAR 2009 - 10 . 2. GRIEVANCE RAISED BY THE APPELLANT IS TWOFOLD - FIRST, CHALLENGING VALIDITY OF ORDERS PASSED UNDER 172(4) WITHOUT FIRST ISSUING A DRAFT ORDER AS REQUIRED UNDER SECTION 144C AS THE ASSESSEE IS AN ELIGIBLE ASSESSEE UNDER SECTION 144(15)(B)(II) OF THE ACT; AND - SECOND, CHALLENGING ACTION OF THE AUTHORITIES I.T.A. NO. 757 /RJT/201 4 ASSESSMENT YEAR: 2013 - 14 PAGE 2 OF 21 BELOW IN DENYING THE BENEFITS OF INDIA DENMARK DOUBLE TAXATION AVOIDANCE AGREEMENT [(1989) 180 ITR (STATUTE) 1 ; INDO DANISH TAX TREATY , IN SHORT ] TO THE APPELLANT . DURING THE COURSE OF THE HEARING, LEARNED COUNSEL ALSO ARGUED AT LENGTH AS TO HOW THE PRESENT ORDER, HAVING BEEN PASSED AS QUA THE AGENT AND QUA A PARTICULAR ASSESSMENT YEAR RATHER THAN QUA A VESSEL, AS IS THE SCHEME OF SECTION 172(4), IS DE FACTO AN ASSESSMENT ORDER UNDER SECTION 143(3) , AND, THEREFORE, THE PROVISIONS OF SECTION 144C(1) APPLY FOR THIS REASON AS WELL. HOWEVER, FOR THE REASONS WE WILL SET OUT IN DETAIL, IT IS NOT REALLY NECESSARY TO DEAL WITH THIS LINE O F REASONING. 3. SO FAR AS THE FIRST ISSUE IS CONCERNED, IT LIES IN A VERY NARROW COMPASS OF MATERIAL FACTS. THERE IS NO DISPUTE THAT THE ASSESSEE BEFORE US IS A FOREIGN COMPANY. IT IS ALSO NOT IN DISPUTE THAT IN TERMS OF THE PROVISIONS OF SECTION 144C, A FOREIGN COMPANY IS REQUIRED TO BE TREATED AS AN ELIGIBLE ASSESSEE INASMUCH AS IN TERMS OF THE PROVISIONS OF SECTION 144C(1), THE ASSESSING OFFICER SHALL, NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS ACT, IN THE FIRST INSTANCE, FORWARD A DR AFT OF THE PROPOSED ORDER OF ASSESSMENT (HEREAFTER IN THIS SECTION REFERRED TO AS THE DRAFT ORDER) TO THE ELIGIBLE ASSESSEE IF HE PROPOSES TO MAKE, ON OR AFTER THE 1ST DAY OF OCTOBER, 2009, ANY VARIATION IN THE INCOME OR LOSS RETURNED WHICH IS PREJUDICIAL TO THE INTEREST OF SUCH ASSESSEE . YET, NO SUCH DRAFT ORDER UNDER SECTION 172(4) WAS FORWARDED TO THE ASSESSEE, BEFORE THE FINAL ORDER UNDER SECTION 172(4) WAS PASSED BY THE ASSESSING OFFICER, WHICH IS IMPUGNED IN THIS APPEAL, WAS PASSED IN THIS CASE. THE CASE OF THE ASSESSEE IS THAT THE IMPUGNED ORDER IS ALSO AN ASSESSMENT ORDER, AND, THEREFORE, THE ASSESSING OFFICER WAS REQUIRED TO FORWARD A DRAFT ASSESSMENT ORDER IN THIS CASE AS WELL. AGGRIEVED BY THE ASSESSING OFFICER DIRECTLY PASSING THE IMPUGNED ORDER , THE ASSESSEE DID RAISE THIS GRIEVANCE BEFORE THE CIT(A) AS WELL BUT WITHOUT ANY SUCCESS. IN HIS BRIEF ORDER, LEARNED CIT(A) SUMMARILY REJECTED THIS GRIEVANCE BY OBSERVING THAT, THIS ISSUE WAS NEVER RAISED BEFORE THE ASSESSING OFFICER . THE ASSESSEE IS A GGRIEVED AND IS IN FURTHER APPEAL BEFORE US. I.T.A. NO. 757 /RJT/201 4 ASSESSMENT YEAR: 2013 - 14 PAGE 3 OF 21 4. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED THE FACTS OF THIS CASE AS ALSO THE APPLICABLE LEGAL POSITION. 5. THE FUNDAMENTAL QUESTION THAT WE HAVE TO FIRST CONSID ER IS WHETHER AN ORDER UNDER SECTION 172(4) CAN BE SAID TO BE AN ASSESSMENT ORDER BECAUSE THE REQUIREMENT OF SERVING A DRAFT ORDER ON THE ASSESSEE IS ONLY IN RESPECT OF AN ASSESSMENT ORDER . SECTION 144C(1) CATEGORICALLY STATES THAT THE ASSESSING OFFIC ER IS REQUIRED TO FORWARD A DRAFT OF THE PROPOSED ORDER OF ASSESSMENT (HEREAFTER IN THIS SECTION REFERRED TO AS THE DRAFT ORDER) TO THE ELIGIBLE ASSESSEE AND THUS GIVE AN ELIGIBLE ASSESSEE OPTION OF APPROACHING THE DISPUTE RESOLUTION PANEL BEFORE THE FIN AL ASSESSMENT ORDER IS PASSED. UNLESS, THEREFORE, THE IMPUGNED ORDER PASSED UNDER SECTION 172(4) CAN BE TREATED AS AN ASSESSMENT ORDER , THE REQUIREMENTS OF SECTION 144C CANNOT COME INTO PLAY. 6. THIS ISSUE IS NO LONGER RES INTEGRA . IN THE CASE OF EMIR ATES SHIPPING LINE FZE VS ADIT [(2012) 349 ITR 493 (DEL)] , HON BLE DELHI HIGH COURT HAD AN OCCASION TO ADJUDICATE ON THE QUESTION WHETHER AN ORDER PASSED UNDER SECTION 172(4) CAN BE TREATED AS AN ASSESSMENT ORDER FOR THE PURPOSES OF SUBJECTING A COMPLETED ASSESSMENT TO REOPENING UNDER SECTION 147 OF THE ACT. IT WAS IN THIS CONTEXT THAT THEIR LORDSHIPS OBSERVED HELD THAT AN ORDER PASSED UNDER SECTION 172(4) IS A SUMMARY ASSESSMENT OF INCOME, THOUGH THE ASSESSEE HAS AN OPTION TO SEEK REGULAR ASSESSMENT OF INCOME UNDER SECTION 143(3), AND THAT IT IS DIFFICULT TO ACCEPT THE CONTENTION OF THE PETITIONER THAT THE PROVISIONS OF SECTION 147/148 CANNOT BE INVOKED IN THE PRESENT CASE OR IN CASES IN WHERE SUMMARY ASSESSMENT IS MADE UNDER SECTION 172(4) OF THE ACT . IT WAS ALSO NOTED THAT SECTION 147 DOES NOT REFER TO AN ASSESSMENT ORDER UNDER SECTION 143(1) OR (3) WHICH IS THE SAME POSITION SO FAR AS SECTION 144C IS CONCERNED. IT WAS THUS HELD THAT WHAT IS MATERIAL IS THAT SECTION 172(4) ASSESSES THE INCOME, EVE N THOUGH IT IS A PROVISIONAL ASSESSMENT OF INCOME WHICH CAN BE FOLLOWED BY A, WHAT IS TERMED AS. REGULAR ASSESSMENT OF INCOME UNDER SECTION 143(3). AS THE PRIVY COUNCIL POINTED OUT IN THE CASE OF SETH BADRIDAS DAGA VS. CIT [(1949) 17 ITR 209 (PC)], THE WORD ASSESS AND I.T.A. NO. 757 /RJT/201 4 ASSESSMENT YEAR: 2013 - 14 PAGE 4 OF 21 ASSESSMENT REFER PRIMARILY TO THE COMPUTATION OF INCOME. THEREFORE AN ORDER COMPUTING THE TAXABLE INCOME IS ESSENTIALLY AN ASSESSMENT ORDER. WHETHER IT IS A REGULAR ASSESSMENT OR AN ADHOC OR SUMMARY ASSESSMENT, IT IS AN ASSESSMENT NEVERTHEL ESS, AND, THEREFORE, ANY ORDER PASSED UNDER SECTION 172(4) IS ALSO AN ASSESSMENT ORDER. ONCE WE HOLD SO, IT IS NOT REALLY NECESSARY TO ADJUDICATE ON LEARNED COUNSEL S ARGUMENT THAT SINCE THE IMPUGNED ORDER IS PASSED QUA AN AGENT AND QUA AN ASSESSMENT YEA R, RATHER THAN QUA A VESSEL, IT IS DE FACTO AN ASSESSMENT ORDER UNDER SECTION 143(3). AS WE HOLD THE IMPUGNED ORDER TO BE AN ASSESSMENT ORDER , IT IS ALSO USEFUL TO TAKE NOTE OF, AS WAS TAKEN BY HON BLE DELHI HIGH COURT IN THE CASE OF EMIRATES SHIPPING LI NE FZE (SUPRA) , THE DECISION OF HON BLE SUPREME COURT IN THE CASE OF A S GLITTRE VS CIT [(1997) 225 ITR 739 (SC)] WHEREIN THE FOLLOWING OBSERVATIONS WERE MADE BY THEIR LORDSHIPS OF HON BLE SUPREME COURT: 6 . THE SCHEME OF S. 172 OF THE ACT APPEARS TO BE TH IS : S. 172(1) OF THE ACT GIVES A RIGHT TO THE ITO TO LEVY AND RECOVER TAX IN THE CASE OF ANY SHIP BELONGING TO A NON - RESIDENT, IN A SUMMARY MANNER (AD HOC ASSESSMENT) NOTWITHSTANDING ANYTHING CONTAINED IN THE OTHER PROVISIONS OF THE ACT. IT IS AN ABSOLUTE RIGHT CONFERRED ON THE ASSESSING AUTHORITY. THE ASSESSEE HAS NO RIGHT TO OBJECT TO THE SAME. NORMALLY, THIS WILL BE ASSESSMENT OF THE ASSESSEE FOR THE YEAR. BUT, UNDER S. 172(7) OF THE ACT A RIGHT IS GIVEN TO THE ASSESSEE TO CLAIM BEFORE THE EXPIRY OF THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE DATE OF DEPARTURE OF THE SHIP FROM THE INDIAN PORT FALLS, THAT AN ASSESSMENT ACCORDING TO THE PROVISIONS OF THE ACT, IN A REGULAR MANNER BE MADE. THUS A RIGHT IS GIVEN TO THE ASSESSEE TO OPT FOR A REGULAR ASSESSMENT ALTHOUGH A 'ROUGH AND READY' OR A 'SUMMARY ASSESSMENT' HAS ALREADY BEEN MADE UNDER S. 172(4) OF THE ACT. IT IS A VALUABLE RIGHT. IF THE ASSESSEE EXERCISES THE RIGHT CONFERRED ON HIM UNDER S. 172(7) OF THE ACT, THE ITO IS BOUND TO MAKE A N ASSESSMENT OF THE TOTAL INCOME OF THE PREVIOUS YEAR OF THE ASSESSEE AND THE TAX PAYABLE ON THE BASIS THEREOF 'SHOULD BE DETERMINED IN ACCORDANCE WITH THE OTHER PROVISIONS OF THE ACT' AND ANY PAYMENT MADE UNDER THE SECTION (EARLIER) ``SHALL BE TREATED AS A PAYMENT IN ADVANCE OF THE TAX'' LEVIABLE FOR THAT ASSESSMENT YEAR AND THE DIFFERENCE BETWEEN THE SUM SO PAID AND THE AMOUNT OF TAX FOUND PAYABLE BY HIM ON SUCH ASSESSMENT, SHALL BE PAID BY THE ASSESSEE OR I.T.A. NO. 757 /RJT/201 4 ASSESSMENT YEAR: 2013 - 14 PAGE 5 OF 21 REFUNDED TO HIM. THE 'ADHOC' ASSESSMENT MADE UNDE R S. 172(4) OF THE ACT IS SUPERSEDED AND A 'REGULAR ASSESSMENT' IS MADE AS PER THE PROVISIONS OF THE ACT. IN SUCH A CASE, IT IS ONLY PROPER AND APPROPRIATE TO HOLD THAT ALL 'THE PROVISIONS' OF THE ACT IN THE DETERMINATION OF THE TAX LIABILITY INCLUDING THE ANCILLARY OR INCIDENTAL OR CONSEQUENTIAL MATTERS PERTAINING TO IT ARE NECESSARILY ATTRACTED. 7. IN VIEW OF THE ABOVE DISCUSSIONS, WHILE IT WOULD INDEED SEEM THAT AN ORDER PASSED UNDER SECTION 172(4) IS REQUIRED TO BE TREATED AS AN ASSESSMENT ORDER , THER E ARE ISSUES WITH REGARD TO THE IMPLEMENTATION OF THE COROLLARIES TO THIS CONCLUSION. TO APPRECIATE THESE DIFFICULTIES, WE WILL HAVE TO TAKE A LOOK AT THE SCHEME OF REFERENCE TO DISPUTE RESOLUTION PANEL (DRP, IN SHORT) AS SET OUT IN SECTION 144(1). FOR REA DY REFERENCE, THIS SECTION IS REPRODUCED BELOW: REFERENCE TO DISPUTE RESOLUTION PANEL. 144C. (1) THE ASSESSING OFFICER SHALL, NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS ACT, IN THE FIRST INSTANCE, FORWARD A DRAFT OF THE PROPOSED ORDER OF ASSESSMENT (HEREAFTER IN THIS SECTION REFERRED TO AS THE DRAFT ORDER) TO THE ELIGIBLE ASSESSEE IF HE PROPOSES TO MAKE, ON OR AFTER THE 1ST DAY OF OCTOBER, 2009, ANY VARIATION IN THE INCOME OR LOSS RETURNED WHICH IS PREJUDICIAL TO THE INTEREST OF SUCH ASSES SEE. (2) ON RECEIPT OF THE DRAFT ORDER, THE ELIGIBLE ASSESSEE SHALL, WITHIN THIRTY DAYS OF THE RECEIPT BY HIM OF THE DRAFT ORDER, ( A ) FILE HIS ACCEPTANCE OF THE VARIATIONS TO THE ASSESSING OFFICER; OR ( B ) FILE HIS OBJECTIONS, IF ANY, TO SUCH VARIATION WIT H, ( I ) THE DISPUTE RESOLUTION PANEL; AND ( II ) THE ASSESSING OFFICER. (3) THE ASSESSING OFFICER SHALL COMPLETE THE ASSESSMENT ON THE BASIS OF THE DRAFT ORDER, IF ( A ) THE ASSESSEE INTIMATES TO THE ASSESSING OFFICER THE ACCEPTANCE OF THE VARIATION; OR ( B ) N O OBJECTIONS ARE RECEIVED WITHIN THE PERIOD SPECIFIED IN SUB - SECTION (2). (4) THE ASSESSING OFFICER SHALL, NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 153 OR SECTION 153B , PASS THE ASSESSMENT ORDER UNDER SUB - SECTION (3) WITHIN ONE MONTH FROM THE END OF THE MONTH IN WHICH, I.T.A. NO. 757 /RJT/201 4 ASSESSMENT YEAR: 2013 - 14 PAGE 6 OF 21 ( A ) THE ACCEPTANCE IS RECEIVED; OR ( B ) THE PERIOD OF FILING OF OBJECTIONS UNDER SUB - SECTION (2) EXPIRES. (5) THE DISPUTE RESOLUTION PANEL SHALL, IN A CASE WHERE ANY OBJECTION IS RECEIVED UNDER SUB - SECTION (2), ISSUE SUCH DIRECTIONS, AS IT THINKS FIT, FOR THE GUIDANCE OF THE ASSESSING OFFICER TO ENABLE HIM T O COMPLETE THE ASSESSMENT. (6) THE DISPUTE RESOLUTION PANEL SHALL ISSUE THE DIRECTIONS REFERRED TO IN SUB - SECTION (5), AFTER CONSIDERING THE FOLLOWING, NAMELY: ( A ) DRAFT ORDER; ( B ) OBJECTIONS FILED BY THE ASSESSEE; ( C ) EVIDENCE FURNISHED BY THE ASSESSEE; ( D ) REPORT, IF ANY, OF THE ASSESSING OFFICER, VALUATION OFFICER OR TRANSFER PRICING OFFICER OR ANY OTHER AUTHORITY; ( E ) RECORDS RELATING TO THE DRAFT ORDER; ( F ) EVIDENCE COLLECTED BY, OR CAUSED TO BE COLLECTED BY, IT; AND ( G ) RESULT OF ANY ENQUIRY MADE BY, OR CAUSED TO BE MADE BY, IT. (7) THE DISPUTE RESOLUTION PANEL MAY, BEFORE ISSUING ANY DIRECTIONS REFERRED TO IN SUB - SECTION (5), ( A ) MAKE SUCH FURTHER ENQUIRY, AS IT THINKS FIT; OR ( B ) CAUSE ANY FURTHER ENQUIRY TO BE MADE BY ANY INCOME - TAX AUTHORITY AND REPORT THE RESULT OF THE SAME TO IT. (8) THE DISPUTE RESOLUTION PANEL MAY CONFIRM, REDUCE OR ENHANCE THE VARIATIONS PROPOSED IN THE DRAFT ORDER SO, HOWEVER, THAT IT SHALL NOT SET ASIDE ANY PROPOSED VARIATION OR ISSUE ANY DIRECTION UNDER SUB - SECTION (5) FOR FURTHER ENQUIRY AND PASSING OF THE ASSESSMENT ORDER. EXPLANATION. FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED THAT THE POWER OF THE DISPUTE RESOLUTION PANEL TO ENHANCE THE VARIATION SHALL INCLUDE AND SHALL BE DEEMED ALWAYS TO HAVE INCLUDED THE POWER TO CONSIDER ANY MATTER ARISING OUT OF THE ASSESSMENT PROCEEDINGS RELATING TO THE DRAFT ORDER, NOTWITHSTANDING THAT SUCH MATTER WAS RAISED OR NOT BY THE ELIGIBLE ASSESSEE. (9) IF THE MEMBERS OF THE DISPUTE RESOLUTION PANEL DIFFER IN OPINION ON ANY POINT, TH E POINT SHALL BE DECIDED ACCORDING TO THE OPINION OF THE MAJORITY OF THE MEMBERS. (10) EVERY DIRECTION ISSUED BY THE DISPUTE RESOLUTION PANEL SHALL BE BINDING ON THE ASSESSING OFFICER. (11) NO DIRECTION UNDER SUB - SECTION (5) SHALL BE ISSUED UNLESS AN OPPOR TUNITY OF BEING HEARD IS GIVEN TO THE ASSESSEE AND THE ASSESSING OFFICER ON SUCH DIRECTIONS WHICH ARE PREJUDICIAL TO THE INTEREST OF THE ASSESSEE OR THE INTEREST OF THE REVENUE, RESPECTIVELY. (12) NO DIRECTION UNDER SUB - SECTION (5) SHALL BE ISSUED AFTER NI NE MONTHS FROM THE END OF THE MONTH IN WHICH THE DRAFT ORDER IS FORWARDED TO THE ELIGIBLE ASSESSEE. I.T.A. NO. 757 /RJT/201 4 ASSESSMENT YEAR: 2013 - 14 PAGE 7 OF 21 (13) UPON RECEIPT OF THE DIRECTIONS ISSUED UNDER SUB - SECTION (5), THE ASSESSING OFFICER SHALL, IN CONFORMITY WITH THE DIRECTIONS, COMPLETE, NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN SECTION 153 OR SECTION 153B , THE A SSESSMENT WITHOUT PROVIDING ANY FURTHER OPPORTUNITY OF BEING HEARD TO THE ASSESSEE, WITHIN ONE MONTH FROM THE END OF THE MONTH IN WHICH SUCH DIRECTION IS RECEIVED. (14) THE BOARD MAY MAKE RULES FOR THE PURPOSES OF THE EFFICIENT FUNCTIONING OF THE DISPUTE R ESOLUTION PANEL AND EXPEDITIOUS DISPOSAL OF THE OBJECTIONS FILED UNDER SUB - SECTION (2) BY THE ELIGIBLE ASSESSEE. (15) FOR THE PURPOSES OF THIS SECTION, ( A ) 'DISPUTE RESOLUTION PANEL' MEANS A COLLEGIUM COMPRISING OF THREE 79B [ PRINCIPAL COMMISSIONERS OR ] COMMISSIONERS OF INCOME - TAX CONSTITUTED BY THE BOARD 80 FOR THIS PURPOSE; ( B ) 'ELIGIBLE ASSESSEE' MEANS, ( I ) ANY PERSON IN WHOSE CASE THE VARIATION REFERRED TO IN SUB - SECTION (1) ARISES AS A CONSEQUENCE OF THE ORDER OF THE TRANSFER PRICING OFFICER PASSED UNDER SUB - SECTION (3) OF SECTION 92CA ; AND ( II ) ANY FOREIGN COMPANY. 8. IF THE ABOVE PROVISIONS OF REFERENCE TO THE DRP ARE TO BE APPLIED IN THE CONTEXT OF ORDERS PASSED UNDER SECTION 172(4) , IN TERMS OF THE PROVISIONS OF SECTION 144(1), IT IS INCUMBENT UPON THE ASSESSING OFFICER TO FIRST FORWA RD A DRAFT ASSESSMENT ORDER UNDER SECTION 172(4) TO THE ASSESSEE, AND IT IS ONLY WHEN THE ASSESSEE DOES NOT RAISE ANY OBJECTION UNDER SECTION 144C (2)(B) OR WHEN THE TIME LIMIT FOR RAISING SUCH OBJECTIONS EXPIRES, THE ASSESSING OFFICER CAN GO AHEAD TO PASS THE FINAL ASSESSMENT ORDER AS PROPOSED. WHILE, IN TERMS OF THE PROVISIONS OF SECTION 144C (4) AND 144C(15) , THE LIMITATION PERIOD FOR PASSING THE ASSESSMENT ORDERS GETS SUITABLY EXTENDED FOR THIS EXERCISE SO FAR AS THE ASSESSMENT ORDERS UNDER SECTION 143 , 144, 147, 148 AND 153 A ETC ARE CONCERNED, THERE IS NO SUCH ENABLING PROVISION FOR EXTENSION OF LIMITATION PERIOD. THIS ASPECT OF THE MATTER BECOMES EVEN MORE SIGNIFICANT IN CASE THE ASSESSEE INDEED OPTS FOR MAKING A REFERENCE TO THE DRP BECAUSE IN SUCH A CASE, IN ORDER TO MAKE THE PROVISIONS WORKABLE, THE LIMITATION PERIOD FOR PASSING THE ASSESSMENT ORDER HAS TO SUITABLY GET EXTENDED FOR TAKING CARE OF THE PERIOD OF TIME TAKEN BY THE DRP IN ADJUDICATING UPON THE OBJECTIONS OF THE ASSESSEE AND FOR THE PE RIOD OF TIME TAKEN BY THE ASSESSING OFFICER TO GIVE EFFECT TO SUCH I.T.A. NO. 757 /RJT/201 4 ASSESSMENT YEAR: 2013 - 14 PAGE 8 OF 21 DIRECTIONS BUT THEN THERE IS NO PROVISION IN THE STATUTE FOR SO EXTENDING THE LIMITATION PERIOD SO FAR AS THE ORDERS UNDER SECTION 172(4) ARE CONCERNED. THE TIME LIMIT FOR PASSING ORDER UN DER SECTION 172(4) IS SET OUT IN SECTION 172 (4A) WHICH PROVIDES THAT, NO ORDER ASSESSING THE INCOME AND DETERMINING THE SUM OF TAX PAYABLE THEREON SHALL BE MADE UNDER SUB - SECTION (4) AFTER THE EXPIRY OF NINE MONTHS FROM THE END OF THE FINANCIAL YEAR IN W HICH THE RETURN UNDER SUB - SECTION (3) IS FURNISHED . WHILE UNDER SECTION 144C(15), NOTWITHSTANDING TIME LIMIT SET OUT IN SECTION 153 AND 153B, THE ORDER GIVING EFFECT TO THE DIRECTIONS OF THE DRP CAN BE PASSED WITHIN ONE MONTH FROM THE END OF THE MONTH IN WHICH SUCH DIRECTIONS ARE RECEIVED, THERE IS NO STATUTORY PROVISION UNDER WHICH SUCH TIME LIMIT UNDER SECTION 172 (4A) CAN BE RELAXED. WHEN THE DRP ITSELF IS ALLOWED A PERIOD OF NINE MONTHS FROM THE DATE ON WHICH THE DRAFT ASSESSMENT ORDER IS SERVED ON THE ASSESSEE, THE ENTIRE TIME ALLOWED TO THE ASSESSING OFFICER TO PASS ORDER UNDER SECTION 172(4A) IS NINE MONTHS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE VESSEL VOYAGE RETURN, I.E. RETURN UNDER SECTION 172(3), IS RECEIVED BY THE ASSESSING OFFICER. WHE N ALL THESE PROVISIONS OF THE STATUE ARE GIVEN LITERAL INTERPRETATION, SUCH A TIME LIMIT, IN THE CASE OF DRP REFERENCE BEING ACTUALLY MADE BY THE ASSESSEE, IS WHOLLY UNWORKABLE. TO GIVE AN EXAMPLE, IF A VESSEL VOYAGE RETURN IS RECEIVED ON 30 TH MARCH OF AN YEAR, THE ASSESSING OFFICER WILL HAVE JUST ONE DAY TO FURNISH THE DRAFT ASSESSMENT ORDER UNDER SECTION 172(4) TO THE ASSESSEE, AND NOT EVEN A DAY TO IMPLEMENT THE DIRECTIONS OF THE DRP AS ISSUED UNDER SECTION 144C(8). THE REASON IS THIS. IN RESPECT OF VOYA GE VESSEL RETURNS RECEIVED IN THE MONTH OF MARCH OF AN YEAR, UNDER SECTION 172(4A), THE ASSESSING OFFICER HAS TO NECESSARILY PASS THE ORDER WITHIN DECEMBER OF THAT YEA R AND UNLESS HE FORWARDS THE DRAFT ASSESSMENT ORDER TO THE ASSESSEE WITHIN MARCH ITSELF, THE DRP CANNOT BE UNDER A STATUTORY OBLIGATION TO ISSUE DIRECTIONS ON OR BEFORE THE END OF DECEMBER THAT YEAR. SIMILARLY, WHEN A VVR IS RECEIVED AT THE CLOSING OF THE WORKING HOURS OF THE LAST WORKING DAY OF MARCH OF AN YEAR, NO ASSESSMENT CAN AT ALL BE DO NE IN THE CASE OF AN ELIGIBLE ASSESSEE. THESE RESULTS ARE CLEARLY INCONGRUOUS AND PATENTLY ABSURD. I.T.A. NO. 757 /RJT/201 4 ASSESSMENT YEAR: 2013 - 14 PAGE 9 OF 21 9 . THAT TAKES US TO THE QUESTION AS TO WHAT SHOULD THE JUDICIAL AUTHORITIES LIKE THIS TRIBUNAL TO DO WHEN FACED WITH SUCH A SITUATION. WE FIND GUIDANCE FRO M HON BLE SUPREME COURT S JUDGMENT IN THE CASE OF CIT VS HINDUSTAN BULK CARRIERS [(2003) 259 ITR 449 (SC)] , WHEREIN IT IS OBSERVED THAT, A CONSTRUCTION WHICH REDUCES THE STATUTE TO A FUTILITY HAS TO BE AVOIDED AND THAT A STATUTE OR ANY ENACTING PROVISI ON THEREIN MUST BE SO CONSTRUED AS TO MAKE IT EFFECTIVE AND OPERATIVE ON THE PRINCIPLE EXPRESSED IN MAXIM UT RES MAGIS VALEAT QUAM PEREAT I.E., A LIBERAL CONSTRUCTION SHOULD BE PUT UPON WRITTEN INSTRUMENTS, SO AS TO UPHOLD THEM, IF POSSIBLE, AND CARRY INTO EFFECT THE INTENTION OF THE PARTIES. [SEE BROOM S LEGAL MAXIMS (10TH EDITION), P. 361, CRAIES ON STATUTES (7TH EDITION) P. 95 AND MAXWELL ON STATUTES (11TH EDITION) P. 221 .] UNLESS THE RELAXATION ON THE PERIOD OF LIMITATION FOR PASSING THE ASSESSMENT ORD ERS IS READ AS INCLUDING THE RELAXATION ON THE PERIOD OF LIMITATION FOR ALL THE ASSESSMENT ORDERS, AND THE REFERENCES TO SECTION 153 AND 153 B AS ILLUSTRATIVE RATHER THAN EXHAUSTIVE, THE PROVISIONS OF SECTION 144C CANNOT BE TREATED AS INCLUDING ALL THE CA SES OF ASSESSMENT ORDERS, AND NOT MERELY FOR ASSESSMENT ORDERS UNDER SECTION 143(3) AND 153A. THE INTERPRETATION THAT RELAXATION IN TIME LIMIT FOR PASSING THE ASSESSMENT ORDERS IS ONLY UNDER SECTION 143(3) AND 153A AS THE INTENTION OF SECTION 144C WAS ONLY TO COVER THE ASSESSMENTS UNDER SECTION 143 AND 153A WILL ALSO BE CONTRARY TO THE SCHEME OF THE ACT AS EVIDENT FROM THE NOTES ON CLAUSES TO THE FINANCE BILL 2009 WHICH CLEARLY INDICATED THAT THE PROVISIONS OF SECTION 144C WERE INTENDED FOR THE FOREIGN COM PANIES IN RESPECT OF MATTERS RELATING TO INTERNATIONAL TAXATION AND TRANSFER PRICING, AND NOT MERELY FOR THE ASSESSMENTS UNDER SECTION 143(3) OR 153A - WHICH APPEARS TO BE WHOLLY IRRELEVANT IN THIS CONTEXT. THESE NOTES ON CLAUSES, AT PAGE 63 OF THE DOCUMENT ( HTTP://WWW.INDIABUDGET.NIC.IN/UB2009 - 10/FB/BILL10.PDF ), STATE AS FOLLOWS: CLAUSE 55 OF THE BILL SEEKS TO INSERT A NEW SECTION 144C IN THE INCOME - TAX ACT RELATING TO DISPUTE RESOLUTIO N PANEL. I.T.A. NO. 757 /RJT/201 4 ASSESSMENT YEAR: 2013 - 14 PAGE 10 OF 21 THE SUBJECTS OF TRANSFER PRICING AUDIT AND THE TAXATION OF FOREIGN COMPANY ARE AT NASCENT STAGE IN INDIA. OFTEN THE ASSESSING OFFICERS AND TRANSFER PRICING OFFICERS TEND TO TAKE A CONSERVATIVE VIEW. THE CORRECTION OF SUCH VIEWS TAKES VERY LONG TI ME WITH THE EXISTING APPELLATE STRUCTURE. WITH A VIEW TO PROVIDE SPEEDY DISPOSAL, IT IS PROPOSED TO AMEND THE INCOME - TAX ACT SO AS TO CREATE AN ALTERNATIVE DISPUTE RESOLUTION MECHANISM WITHIN THE INCOME - TAX DEPARTMENT AND ACCORDINGLY, SECTION 144C HAS BEEN PROPOSED TO BE INSERTED SO AS TO PROVIDE INTER ALIA THE DISPUTE RESOLUTION PANEL AS AN ALTERNATIVE DISPUTE RESOLUTION MECHANISM. 10. THERE IS THUS NO MEETING GROUND BETWEEN IMPLEMENTING THE LAW LAID DOWN BY HON BE COURTS ABOVE, WHICH IS ALSO IN HARMONY W ITH THE INTENT OF THE LEGISLATURE AS EVIDENT FROM THE ABOVE EXTRACTS FROM NOTES ON CLAUSES , AND THE LITERAL INTERPRETATION TO THE PROVISION REGARDING RELAXATION TO THE TIME LIMITS SET OUT IN SECTIONS 153 AND 153 B. THE CHOICE THAT WE NOW HAVE IS BETWEEN INTERPRETING THE CONNOTATIONS OF AN ASSESSMENT ORDER AS PER THE LAW LAID DOWN BY HON BLE COURTS ABOVE, IN FURTHERING THE SCHEME OF THE LEGISLATIVE AMENDMENT, IN INTRODUCING SECTION 144C, AND THUS READING THE REFERENCES TO SECTION 153 AND 153B, AS APPEARIN G IN SECTION 144C(4) AND 144C(15), AS ILLUSTRATIVE RATHER THAN EXHAUSTIVE, AND BETWEEN INTERPRETING THE CONNOTATIONS OF AN ASSESSMENT ORDER CONTRARY TO THE LAW LAID DOWN BY HON BLE COURTS ABOVE, IN CONSTRUING THE SCHEME OF SECTION 144C CONTRARY TO THE SCHEME OF THE LEGISLATIVE AMENDMENT, IN INSERTING SECTION 144C, AND, AND IN THUS READING THE REFERENCES TO SECTION 153 AND SECTION 153 B, AS APPEARING IN SECTION 144C(4) AND 144C(15), AS EXHAUSTIVE. IN VIEW OF THE ABOVE DISCUSSIONS, IN OUR HUMBLE AND LI MITED UNDERSTANDING, THE WAY FORWARD IS THAT WHILE UPHOLDING THE PLEA OF THE ASSESSEE IN PRINCIPLE THAT THE ASSESSING OFFICER OUGHT TO HAVE FIRST FORWARDED HIM A DRAFT ASSESSMENT ORDER UNDER SECTION 172(4) BEFORE PASSING THE IMPUGNED FINAL ASSESSMENT ORDE R UNDER SECTION 172(4), WE ALSO HOLD THAT THE REFERENCES TO SECTION 153 AND 153B, APPEARING IN SECTION 144C(4) AND 144 C(15), AS ILLUSTRATIVE RATHER THAN EXHAUSTIVE AND IN EFFECT, THUS, A REFERENCE TO SECTION 172(4A) IS TO BE READ INTO THESE PROVISIONS AS WELL. WE DO FEEL THAT THIS KIND OF A LITIGATION BEFORE JUDICIAL BODIES, I.E. WHETHER OR NOT AN ASSESSEE IS ELIGIBLE FOR APPROACHING THE DRP IN RESPECT OF ORDER UNDER SECTION 172(4), COULD BE EASILY PREVENTED BY MORE I.T.A. NO. 757 /RJT/201 4 ASSESSMENT YEAR: 2013 - 14 PAGE 11 OF 21 THOUGHTFULLY DRAFTING THE RELEVANT PR OVISION. EITHER IT COULD BE MADE CLEAR, IN THE STATURE ITSELF, THAT THE OPTION OF DRP IS ONLY WITH REFERENCE TO A SPECIFIC TYPE OF ASSESSMENT ORDERS SUCH AS UNDER SECTION 143(3) OR 153A OR THE RELAXATION ON TIME LIMIT FOR PASSING THE ORDERS, WHICH COULD BE CARRIED BEFORE THE DRP, COULD BE MORE GENERAL RATHER THAN CONFINED TO TIME LIMIT FOR SPECIFIC TYPE OF ORDERS AS IN SECTION 153 OR 153B. OF COURSE, TIME LIMIT UNDER SECTION 172(4A) BEING SET OUT IN SECTION 153 ITSELF COULD ALSO ACHIEVE THAT OBJECTIVE. IT C AN NEVER BE TOO LATE FOR THE TAX ADMINISTRATION TO TAKE A CALL IN THIS RESPECT AND TAKE A CLEAR CUT STAND ON THE MATTER. BE THAT AS IT MAY, ONCE WE HOLD THAT AN ORDER UNDER SECTION 172(4) IS ALSO COVERED BY THE SCHEME OF SECTION 144C, THE NEXT QUESTION WH ICH NEEDS TO BE ADJUDICATED BY US IS WHETHER IN A SITUATION IN WHICH AN ELIGIBLE ASSESSEE HAS NOT BEEN FORWARDED A DRAFT ASSESSMENT ORDER, THE ASSESSMENT ORDER WILL STAND QUASHED OR WHETHER THE MATTER WILL HAVE TO BE REMITTED TO THE FILE OF THE ASSESSING O FFICER FOR TAKING THE MATTER FURTHER IN ACCORDANCE WITH THE SCHEME OF SECTION 144C. LEARNED COUNSEL S SUBMISSION IS THAT THIS ASPECT OF THE MATTER IS ALSO NO LONGER RES INTEGRA INASMUCH AS HON BLE MADRAS HIGH COURT, FOLLOWING HON BLE AP HIGH COURT S JUDGME NT IN THE CASE OF ZURAI CEMENT LTD VS ACIT (UNREPORTED JUDGMENT DATED 21 ST FEBRUARY 2013 IN WP NO 5557 OF 2012) AND IN THE CASE OF VIJAY TELEVISION PVT LTD VS DRP & ORS [(2014) 369 ITR 113 (MAD)] HAS HELD THAT SUCH AN ORDER WILL BE NULL AND VOID . IT IS ALSO POINTED OUT THAT A DELHI BENCH OF THIS TRIBUNAL, IN THE CASE OF CAPSUGEL HEALTHCARE LIMITED VS ACIT AND VICE VERSA (UNREPORTED JUDGMENT DATED 30 TH SEPTEMBER 2014 IN ITA NOS. 1356 AND 1371/DEL/2012) ALSO HOLDS SO. LEARNED DEPARTMENTAL REPRESENTATIVE, O N THE OTHER HAND, SUBMITS THAT IF, IN THE WISDOM OF THE TRIBUNAL, THIS MATTER IS TO BE HELD TO BE COVERED BY THE SCHEME OF SECTION 144C, THE MATTER CAN BEST BE REMITTED TO THE FILE OF THE ASSESSING OFFICER FOR FOLLOWING THAT PATH. 11. WE HAVE NOTED THA T IN ALL THE PRECEDENTS CITED BY THE LEARNED COUNSEL, THE ASSESSMENT ORDERS IN WHICH ARM S LENGTH PRICE DETERMINATION UNDER SECTION 92CA(3) WAS DONE, WERE SUBJECT MATTER OF DISPUTE. THESE ARE THE CASES IN WHICH I.T.A. NO. 757 /RJT/201 4 ASSESSMENT YEAR: 2013 - 14 PAGE 12 OF 21 THERE WAS NO DISPUTE WITH REGARD TO THE APPL ICATION TO SECTION 144C AND THE ONLY ISSUE WAS AS TO WHAT SHOULD BE DONE IN THE CASES IN WHICH THE SCHEME OF SECTION 144C, THOUGH ADMITTEDLY APPLICABLE TO THE FACTS OF THE CASE, WAS NOT ADHERED TO. THE CASE BEFORE US, HOWEVER, IS QUALITATIVELY DIFFERENT IN ASMUCH THE VERY APPLICATION OF THE SCHEME OF SECTION 144C HAS BEEN DISPUTED ON THE FACTS OF THE CASE. LEARNED DEPARTMENTAL REPRESENTATIVE S CONTENTION IS THAT THE PROVISIONS OF SECTION 144C DOES NOT APPLY BECAUSE AN ORDER UNDER SECTION 172(4) IS NOT AN ASS ESSMENT ORDER AT ALL. WHILE WE HAVE NOT APPROVED THIS LINE OF REASONING, WE CANNOT BE OBLIVIOUS TO THE FACT THAT THE ASSESSING OFFICER MAY HAVE HAD A BONA FIDE BELIEF THAT THE PROVISIONS OF SECTION 144C WILL NOT APPLY TO THE ORDERS UNDER SECTION 172(4). AS A MATTER OF FACT, AS WE HAVE NOTED EARLIER IN THIS ORDER, WHILE THE SCHEME OF THE ACT DOES INDICATE THAT AN ORDER UNDER SECTION 172(4) IS COVERED BY THE SCHEME OF SECTION 144C, THE PROVISIONS OF SECTION 144C(4) AND 144C (15) DONOT INDICATE CORRESPONDING R EFERENCES. THERE IS, THUS, CLEARLY AN ELEMENT OF WHOLLY AVOIDABLE AMBIGUITY IN THE PHRASEOLOGY EMPLOYED IN SECTION 144C, WHICH IS IN SHARP CONTRAST WITH THE FACT SITUATION BEING DEALT WITH IN THE JUDICIAL PRECEDENTS CITED BEFORE US. THE SUBJECT MATTER OF D ISPUTE BEFORE US IS NOT AS TO WHAT IS THE CONSEQUENCE OF NOT ISSUING A DRAFT ASSESSMENT ORDER, WHEN IT WAS ADMITTEDLY REQUIRED TO BE ISSUED ON THE FACTS OF A CASE, BUT WHETHER SUCH A DRAFT ORDER WAS REQUIRED TO BE ISSUED IN THE FIRST PLACE. IN SUCH A SITUA TION AND THE RELEVANT MATERIAL FACTS BEING QUALITATIVELY DIFFERENT, IN OUR CONSIDERED VIEW, IT WOULD MEET THE ENDS OF JUSTICE THAT WE HOLD THAT DRAFT ORDER WAS REQUIRED TO BE ISSUED IN THIS CASE, AND, FOR ENABLING THE ASSESSING OFFICER FOR FOLLOWING THE PA TH ENVISAGED IN SECTION 144C RATHER THAN PROCEEDING TO PASS THE FINAL ORDER STRAIGHTAWAY UNDER SECTION 172(4), REMIT THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER. ANY OTHER VIEW OF THE MATTER WILL ALSO RESULT IN A SITUATION THAT ALMOST ALL THE ORD ERS PASSED BY THE ASSESSING OFFICERS UNDER SECTION 172(4) WILL END UP BEING REDUCED TO A NULLITY IN THE EYES OF LAW. AS WE HOLD SO, WE MAY ADD THAT, AS A LOWER JUDICIAL FORUM, EXPRESSING A VIEW CONTRARY TO THE VIEWS OF HON BLE COURTS ABOVE, IS SIMPLY UNTHI NKABLE IN JUDICIAL CONDUCT FOR US, AND, GOING A STEP FURTHER, WE ARE EXTREMELY RELUCTANT EVEN IN TAKING ANY VIEW WHICH MAY CAN EVEN REMOTELY BE PERCEIVED TO BE AT VARIANCE WITH THE ESTEEMED VIEWS I.T.A. NO. 757 /RJT/201 4 ASSESSMENT YEAR: 2013 - 14 PAGE 13 OF 21 OF HON BLE COURTS ABOVE. HOWEVER, IN OUR LIMITED BUT SINCERE UNDERSTANDING, THE VARIATIONS IN MATERIAL FACTS IS ON SUCH FUNDAMENTAL ASPECTS THAT A DIFFERENT APPROACH WAS WARRANTED ON THESE FACTS INASMUCH AS THE TWO CATEGORY OF SITUATIONS, I.E. THE SITUATIONS IN WHICH PROVISIONS OF SECTION 144C ARE ADMITTEDLY APPLIC ABLE BUT THE AO HAS NOT FORWARDED THE DRAFT ORDER AND THE SITUATIONS IN WHICH THERE IS BONAFIDE DISPUTE ABOUT APPLICABILITY OF THE PROVISIONS OF SECTION 144 AND, THEREFORE, THE AO HAS NOT FORWARDED THE DRAFT ORDER, CANNOT BE EQUATED. WE MAY ADD, AT THE COS T OF REPETITION, THAT THE POINT OF DISPUTE BEING WHETHER OR NOT THE COURSE OF ACTION 144C WAS PERMISSIBLE, A DECISION IN FAVOUR OF THE ASSESSEE IS TO BE ESSENTIALLY FOLLOWED WITH AN OPPORTUNITY BEING GIVEN TO THE ASSESSEE TO BE ALLOWED TO TRAVERSE THAT PA TH. HOWEVER, HAVING HELD SO IN PRINCIPLE, ON THE PECULIAR FACTS OF THIS CASE AND FOR THE REASONS WE WILL NOW SET OUT, THIS CONCLUSION IS SOMEWHAT ACADEMIC AS WE SEE NO NEED TO REMIT THE MATTER BACK TO THE ASSESSING OFFICER FOR THE REASON THAT THE ASSESSEE DESERVES TO SUCCEED ON MERITS. 12. COMING TO THE MERITS OF THE CASE, THE RELEVANT MATERIAL FACTS ARE AS FOLLOWS. IN THIS CASE, INTEROEAN SHIPPING INDIA PVT LTD ( ISPL , IN SHORT) FILED VARIOUS VESSEL VOYAGE RETURNS UNDER SECTION 172(3) IN RESPECT OF THE S HIPS MANAGED BY LR2 MANAGEMENT K/S, DENMARK ( LR2 , IN SHORT) WHICH CALLED PORT OF SIKKA DURING THE RELEVANT PREVIOUS YEAR. THESE FOUR VOYAGES WERE UNDERTAKEN BY FOUR VESSELS, NAMELY MT TORM HELENE , MT TORM MARINE, MT TORM MARGRETHE AND MT TORM PIPER . WHEN THE RETURNS SO FILED IN RESPECT OF THESE VESSELS CAME UP FOR SCRUTINY BY THE ASSESSING OFFICER, HE CALLED UPON THE ASSESSEE TO FILE VARIOUS DETAILS IN ORDER TO VERIFY THE EFFECTIVE CONTROL AND MANAGEMENT OF THE FREIGHT BENEFICIARY . IN THE COURSE OF THES E PROCEEDINGS BEFORE THE ASSESSING OFFICER, IT WAS SUBMITTED BY THE ASSESSEE THAT LR2 WAS FOREIGN COMMERCIAL AGENT FOR THE PRINCIPAL FREIGHT BENEFICIARY TORM A/S. IT WAS ALSO POINTED OUT THAT THE ABOVE MENTIONED VESSELS ARE OWNED/CHARTERED BY TORM A/S , T HAT THE OPERATOR AND FREIGHT BENEFICIARY OF THE ABOVE VESSELS IS TORM A/S , AND THAT, ACCORDINGLY, THE OBLIGATION TO FILE VVRS IS ON TORM A/S . THE ASSESSEE ALSO FILED CORRECTED VESSEL VOYAGE RETURNS TO TAKE ON RECORD THE ACTUAL FREIGHT BENEFICIARY. THE I.T.A. NO. 757 /RJT/201 4 ASSESSMENT YEAR: 2013 - 14 PAGE 14 OF 21 ASSESSEE ALSO SUBMITTED THAT LR2 IS A COMMERCIAL MANAGER APPOINTED BY TORM A/S FOR GLOBAL OPERATIONS OF NUMBER OF ITS TANKER VESSELS AND IT OPERATES ENTIRELY FROM OUTSIDE INDIA WITHOUT ANY PRESENCE IN INDIA. AS REGARDS TREATY PROTECTION OF THE RELATED I NCOME, THE ASSESSEE SUBMITTED THAT TORM A/S IS A PUBLIC LIMITED COMPANY LISTED IN COPENHAGEN STOCK EXCHANGE, ENGAGED IN THE BUSINESS OF SHIPPING, CHARTERING AND OTHER TRANSPORTATION SERVICES, WHICH IS INCORPORATED IN, AND TAX RESIDENT OF, DENMARK AND IT I S EFFECTIVELY MANAGED FROM DENMARK. ACCORDINGLY, UNDER ARTICLE 9 OF INDO DANISH TAX TREATY, THE INCOME FROM OPERATIONS OF SHIPS IN INTERNATIONAL TRAFFIC WAS TAXABLE ONLY IN DENMARK. AS TO THE QUESTION OF REMITTANCE OF FREIGHT IN THE ACCOUNT OF LR2 MANAGE MENT K/S, THE ASSESSEE SUBMITTED AS FOLLOWS: IT MAY BE NOTED THAT A SHIPPING COMPANY GENERALLY OPERATES ACROSS THE GLOBE THROUGH AGENTS. ....THESE AGENTS ARE AUTHORISED BY THE PRINCIPAL SHIPPING COMPANY TO COLLECT THE FREIGHT INCOME FROM CUSTOMERS ON ITS BEHALF. THUS AS A GENERAL BUSINESS PRACTICE, IN CASE OF FOREIGN SHIPPING COMPANIES, THE FREIGHT INCOME IS COLLECTED BY THE AGENT IN THE BANK ACCOUNT MAINTAINED FOR THE PRINCIPAL. THE AGENT IS FURTHER AUTHORIZED TO MEET VARIOUS EXPENSES FOR HANDLING THE CA RGO, PORT CHARGES ETC AND THEREAFTER REMIT THE SURPLUS TO THE PRINCIPAL SHIPPING COMPANY WHO IS ULTIMATE FREIGHT BENEFICIARY. IN ACCORDANCE WITH THE ABOVE, LR2, ON BEHALF OF TORM A/S, COLLECTS GROSS REVENUE, BEING HIRE, FREIGHT, DEMURRAGE ETC DUE FROM TOR M A/S , AS VESSEL OPERATION AND FREIGHT BENEFICIARY. ALL SUCH MONEY COLLECTION IS RECEIVED VY LR2 IS DEPOSITED IN A BANK ACCOUNT CENTRALLY MANAGED BY LR2. AFTER MEETING THE REQUIRED EXPENSES, THE SURPLUS FREIGHT IS REMITTED BY LR2 TO TORM A/S. EVEN IN INDI AN CONTEXT, PLEASE NOTE THAT WHEN COLLECTION OF FREIGHT IN INDIAN RUPEES IS DONE IN INDIA, IT IS GENERALLY DONE IN THE NAME OF INDIAN SHIPPING AGENT, TO BE CREDITED TO BANK ACCOUNT IN NAME OF THE INDIAN SHIPPING AGENT. IN SUCH CASES, THE INDIAN SHIPPING AG ENT IS NEVER THE FREIGHT BENEFICIARY. IT IS GLOBALLY ACCEPTED POLICY AND UNDERSTANDING THAT AGENTS MAINTAIN ACCOUNTS AND COLLECTIONS ON BEHALF OF THE PRINCIPAL . I.T.A. NO. 757 /RJT/201 4 ASSESSMENT YEAR: 2013 - 14 PAGE 15 OF 21 13. NONE OF THESE SUBMISSIONS, HOWEVER, IMPRESSED THE ASSESSING OFFICER. HE WAS OF THE VIEW THAT THERE WAS NOTHING ON THE RECORD TO SHOW THAT EFFECTIVE MANAGEMENT AND CONTROL OF LR 2 WAS IN DENMARK. IT WAS ALSO NOTED THAT THE FREIGHT AMOUNTS BILLED IN INDIA WERE RECEIVED IN LR2 S BANK ACCOUNT NO. DK2330003100104539 WITH DANSKA BANK A/S, DENMARK. THERE WAS NOTHING TO SHOW THAT THIS AMOUNT WAS RECEIVED BY TORM A/S. IN ANY EVENT, THERE WAS NOTHING TO SHOW THAT THE EFFECTIVE PLACE OF MANAGEMENT OF TORM A/S WAS IN DENMARK AND THAT TAX RESIDEN CY CERTIFICATE CANNOT BE TREATED AS AN EVIDENCE OF THE EFFECT IVE PLACE OF MANAGEMENT BEING IN DENMARK. IT WAS ALSO NOTED THAT 36.40% OF THE SHARES OF TORM A/S WERE HELD OUTSIDE DENMARK. IT WAS ALSO NOTED THAT, AS PER EVIDENCES PRODUCED BY THE ASSESSEE, THREE OF THE DIRECTORS OF TORM A/S WERE RESIDENTS OUTSIDE DENMAR K, NAMELY IN FRANCE, IRELAND AND NORWAY. FINALLY, THE ASSESSING OFFICER HELD THAT IT IS ONLY WHEN THERE IS EVIDENCE OF INCOME BEING ACTUALLY TAXED IN THE OTHER CONTRACTING STATE, I.E. DENMARK IN THIS CASE, THAT TREATY BENEFITS CAN BE GRANTED. A REFERENCE WAS MADE TO THE RULING GIVEN, WITH REFERENCE TO THE PROVISIONS OF THE INDO UAE TREATY IN THIS REGARD, IN THE CASES OF M A RAFIK IN RE [(1995) 213 ITR 317 (AAR)]. THE ASSESSING THUS DECLINED THE TREATY PROTECTION TO THE FREIGHT INCOME, AND PROCEEDED TO BRI NG TO TAX , IN INDIA, THE ENTIRE FREIGHT RECEIPTS BY THE ASSESSEE. 14. AGGRIEVED BY THE STAND SO TAKEN BY THE ASSESSING OFFICER, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) BUT WITHOUT ANY SUCCESS. LEARNED CIT(A) WAS OF THE VIEW THAT THE VESSE L VOYAGE RETURNS FILED BY THE ASSESSEE COULD NOT BE SUBJECTED TO ANY REVISION, OR EVEN CORRECTION, AND SINCE THERE WAS NO EVIDENCE IN SUPPORT OF LR2 BEING A TAX RESIDENT OF DENMARK, IT CANNOT BE ACCEPTED THAT INCOME BELONGED TO TORM A/S. QUITE INTERESTINGL Y, LEARNED CIT(A) ALSO OBSERVED THAT SINCE LR2 IS NOT THE BENEFICIAL OWNER OF THE FREIGHT REMITTED FROM INDIA, IT CANNOT AVAIL DTAA BENEFITS . LEARNED CIT(A) FURTHER ADDED THAT IN ANY EVENT NO EVIDENCES WHATSOEVER HAVE BEEN PRODUCED BY THE APPELLANT TO P ROVE THAT REMITTANCES OF FREIGHT CHARGES HAVE BEEN OFFERED TO TAX IN DENMARK , AND, FOR THIS REASON ALSO, TREATY PROTECTION COULD NOT BE EXTENDED TO THE INCOME I.T.A. NO. 757 /RJT/201 4 ASSESSMENT YEAR: 2013 - 14 PAGE 16 OF 21 EMBEDDED IN THE FREIGHT RECEIPTS. THE ASSESSEE IS NOT SATISFIED BY THE STAND SO TAKEN BY THE CIT (A) AND IS IN FURTHER APPEAL BEFORE US. 15. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE APPLICABLE LEGAL POSITION. 16. WE FIND THAT THERE IS NO DISPUTE THAT THE BUSINESS MO DEL FOLLOWED BY THE ASSESSEE IS THAT THE PRINCIPAL FREIGHT BENEFICIARY IN THIS CASE, I.E. THE COMPANY WHICH IS CARRYING ON THE BUSINESS OF OPERATIONS OF SHIPS IN INTERNATIONAL TRAFFIC, IS A DANISH TAX RESIDENT BY THE NAME OF TORM A/S BUT HE HAS CARRIED ON THIS BUSINESS THROUGH A FOREIGN COMMERCIAL MANAGER BY THE NAME OF LR2 MANAGEMENT K/S , ANOTHER DANISH TAX RESIDENT . AS A MATTER OF FACT, THERE IS A CATEGORICAL FINDING BY THE CIT(A) TO THE EFFECT THAT LR2 IS NOT A BENEFICIAL OWNER OF THE FREIGHT REMITTED FR OM INDIA AND IT IS FOR THIS REASON LR2 CANNOT AVAIL THE TREATY BENEFITS. IN THE CASE OF TORM A/S, HOWEVER, THE TREATY BENEFIT IS DECLINED, INTER ALIA, FOR THE REASON THAT THERE IS NOTHING TO SHOW THAT THE FREIGHT AMOUNTS WERE RECEIVED BY TORM A/S. THERE IS AN INHERENT CONTRADICTION IN THIS APPROACH. BE THAT AS IT MAY, THE CORE ISSUE FOR DECIDING AS TO IN WHOSE HANDS AN INCOME IS TO BE TAXED DEPENDS ON WHO IS BENEFICIAL OWNER OF THAT INCOME IN THE SENSE WHO BEARS ENTREPRENEURIAL RISK IN RESPE CT OF THAT BUSIN ESS ACTIVITY, AND NOT THE CONDUIT THROUGH WHICH INCOME PASSES. THE BANK STATEMENT EVIDENCING RECEIPT OF FREIGHT FROM LR2 BY THE ASSESSEE IS PLACED ON RECORD. HERE IS A CASE IN WHICH LR2 IS REALLY A CONDUIT IN THE SENSE IT HAS A LIMITED RISK PROFILE AS COM MERCIAL MANAGER IN RESPECT OF THE SHIPS OWNED BY TORM. THE BUSINESS OF OPERATION OF SHIPS IN INTERNATIONAL TRAFFIC IS CARRIED OUT BY TORM, AND THE RELEVANCE OF LR2 IS ONLY AS A FOREIGN COMMERCIAL MANAGER ACTING FOR TORM. IT IS ALSO AN UNCONTROVERTED POSITI ON ON THE FACTS OF THIS CASE THAT THE FREIGHT RECEIPTS IN THE HANDS OF THE LR2 ARE NOT IN ITS OWN RIGHT BUT IN A REPRESENTATIVE CAPACITY FOR TORM; ALL THE BUSINESS RISKS CONTINUE TO BE BORNE BY TORM. THE TAXABILITY IS OF PROFITS, AND NOT OF RECEIPTS, AND P ROFITS ARE THE REWARDS OF RISKS. WHEN ALL THE RISKS CONTINUE TO BE BORNE BY TORM , THE PROFITS ARE TO BE TAXED IN THE HANDS OF TORM AND THE TREATY ENTITLEMENT IS TO BE SEEN FOR TORM. I.T.A. NO. 757 /RJT/201 4 ASSESSMENT YEAR: 2013 - 14 PAGE 17 OF 21 17. AS FOR WHETHER OR NOT TORM IS ENTITLED TO THE BENEFITS OF INDO DANIS H TAX TREATY, THIS IS GOVERNED BY THE DEFINITION OF RESIDENT WHO, IN TURN, IS ENTITLED TO THE TREATY BENEFITS. ARTICLE 4(1) DEFINES RESIDENT , FOR THE PURPOSE OF THIS TREATY, AS ANY PERSON WHO, UNDER THE LAWS OF THAT STATE, IS LIABLE TO TAX THEREIN BY REASON OF HIS DOMICILE, RESIDENCE, PLACE OF MANAGEMENT OR ANY OTHER CRITERION OF A SIMILAR NATURE , THOUGH IT DOES ALSO SPECIFICALLY EXCLUDE ANY PERSON WHO IS LIABLE TO TAX IN THAT STATE IN RESPECT ONLY OF INCOME FROM SOURCES IN THAT STATE OR CAPITAL SITU ATED THEREIN . THE TRUE TEST FOR RESIDENCE STATUS THUS IS THAT THE PERSON SHOULD BE A TAXABLE UNIT, IN PRINCIPLE ON GLOBAL INCOME BASIS, RATHER THAN LIMITED SOURCE BASIS, AND THIS TAX LIABILITY SHOULD BE BY THE VIRTUE OF DOMICILE, RESIDENCE, PLACE OF MANA GEMENT OR ANY OTHER CRITERION OF SIMILAR NATURE . IN ESSENCE, THESE TESTS REFER TO BEING LIABLE TO TAX ON THE BASIS OF A LOCALITY RELATED ATTACHMENT WHICH LEADS TO RESIDENCE TYPE TAXATION. AS LONG AS THIS TEST IS SATISFIED, THE ASSESSEE IS ENTITLED TO BE TERMED AS RESIDENT. THE FACT THAT SOME OF THE SHAREHOLDERS OF THE ASSESSEE COMPANY ARE OUTSIDE THAT TAX JURISDICTION OR THE FACT, OR EVEN THE FACT THAT SOME OF THE DIRECTORS ARE NATIONALS OF OTHER THAT TAX JURISDICTION, ARE WHOLLY IRRELEVANT IN THIS C ONTEXT. THE AUTHORITIES BELOW WERE COMPLETELY IN ERROR IN BEING SWAYED BY THESE CONSIDERATIONS. WE MAY REITERATE THAT THE STATUS OF RESIDENT, FOR THE PURPOSE OF ARTICLE 4(1), IS GOVERNED SOLELY BY BEING LIABLE TO TAX , IN THAT TAX JURISDICTION - I.E. CONT RACTING STATE, BY THE REASON OF A LOCALITY RELATED ATTACHMENT WHICH LEADS TO RESIDENCE TYPE TAXATION. OF COURSE, ARTICLE 9(1) DOES REQUIRE A PERSON CLAIMING TREATY PROTECTION TO HAVE PLACE OF MANAGEMENT IN DENMARK AS THIS ARTICLE PROVIDES THAT, PROFITS DE RIVED FROM THE OPERATION OF SHIPS IN INTERNATIONAL TRAFFIC SHALL BE TAXABLE ONLY IN THE CONTRACTING STATE IN WHICH THE PLACE OF EFFECTIVE MANAGEMENT OF THE ENTERPRISE IS SITUATED BUT THEN THE ASSESSEE DID HAVE THE PLACE OF EFFECTIVE MANAGEMENT IN DENMARK . WE HAVE ALSO PERUSED THE ARTICLES OF ASSOCIATION OF THE COMPANY, AS ALSO MINUTES OF THE ANNUAL GENERAL MEETING AND THE MINUTE OF THE BOARD OF DIRECTORS AND THE DIRECTORS REPORT, WHICH SHOW THAT THE COMPANY IS EFFECTIVELY MANAGED FROM DENMARK. THE COMPANY IS A LISTED COMPANY ON THE NASDAQ COPENHAGEN. OUT OF ITS SEVEN DIRECTORS, FIVE DIRECTORS, INCLUDING ITS I.T.A. NO. 757 /RJT/201 4 ASSESSMENT YEAR: 2013 - 14 PAGE 18 OF 21 CHAIRMAN AND INCLUDING ITS EXECUTIVE DIRECTOR, ARE DANISH NATIONALS. AS REGARDS RELIANCE OF THE ASSESSING OFFICER IN THE CASE OF SMR INVESTMENTS LTD V S DDIT [(2010) TII 66 ITAT DEL] , THAT WAS A CASE IN WHICH ONE SURESH RAJPAL, DIRECTOR AND 99% SHAREHOLDER OF THE MAURITIAN COMPANY, WAS FOUND TO BE, ON THE BASIS OF STATEMENTS OF THE PERSONS HE WAS DOING BUSINESS WITH, DOING BUSINESS ON BEHALF OF THE COMPA NY OVER TELEPHONE AND THIS PERSON WAS RESIDENT IN INDIA. THERE WAS NO EVIDENCE THAT THIS PERSON WAS IN MAURITIUS ON THE POINTS OF TIME WHEN HE PLACED THE ORDERS FOR PURCHASE AND SALE OF SHARES. IT WAS IN THIS BACKDROP THAT THE MATTER WAS REMITTED TO THE FI LE OF THE ASSESSING OFFICER FOR FURTHER FACTUAL VERIFICATIONS. THERE IS NOT EVEN THE REMOTEST SUGGESTION ON THE FACTS OF THE PRESENT CASE THAT THE ASSESSEE COMPANY WAS DOING BUSINESS FROM OUTSIDE DENMARK. QUITE TO THE CONTRARY, THERE IS REASONABLE EVIDENCE ON RECORD TO SUGGEST THAT THE BUSINESS WAS BEING CARRIED ON FROM DENMARK AND THAT THE EFFECTIVE PLACE OF MANAGEMENT OF THE ASSESSEE WAS IN DENMARK. IF IN EVERY CASE, WITHOUT THERE BEING ANY SPECIFIC MATERIAL TO INDICATE THAT BUSINESS IS BEING CARRIED ON F ROM OUTSIDE THE JURISDICTION IN WHICH THE COMPANY IS ORDINARILY SITUATED, THE ASSESSEE IS ASKED TO PROVE THAT HE IS NOT CONDUCTING THE BUSINESS FROM OUTSIDE THAT JURISDICTION, THIS WILL BE ASKING THE ASSESSEE TO PROVE A NEGATIVE. AS IS THE SETTLED LEGAL P OSITION, NOBODY CAN BE EXPECTED TO PROVE A NEGATIVE. THE ASSESSEE HAS GIVEN REASONABLE EVIDENCE IN SUPPORT OF THE CONTENTION THAT THE BUSINESS IS BEING CARRIED ON FROM DENMARK AND THERE IS NO REASON TO DOUBT THESE EVIDENCES. THE BOARD MEETINGS AND ANNUAL GENERAL MEETINGS ARE HELD IN DENMARK, EXECUTIVE MANAGEMENT OF THE ASSESSEE COMPANY IS IN DENMARK, IT IS LISTED ON NASDAQ COPENHAGEN AND ITS BUSINESS IS ORDINARILY CARRIED ON FROM HERE. THERE IS NO EVIDENCE TO SUGGEST THAT THE BUSINESS IS CARRIED OUT FROM A NY OTHER PLACE. WE, THEREFORE, SEE NO MERITS IN THE STAND OF THE ASSESSING OFFICER ON THIS ASPECT OF THE MATTER. A LOT OF EMPHASIS HAS BEEN PLACED BY THE AUTHORITIES BELOW ON THE PROPOSITION THAT SINCE THERE IS NO SPECIFIC PROVISION FOR REVISION OF A RETUR N FILED UNDER SECTION 172(3), NO AMENDMENTS IN THE FACTS STATED IN SUCH A RETURN, HOWSOEVER JUSTIFIED, CAN BE ENTERTAINED . WE ARE UNABLE TO SEE ANY MERITS IN THIS HYPER TECHNICAL APPROACH ADOPTED BY THE AUTHORITIES BELOW. ALL THE INPUTS, INCLUDING THE INPU TS SET OUT IN THE RETURN FILED I.T.A. NO. 757 /RJT/201 4 ASSESSMENT YEAR: 2013 - 14 PAGE 19 OF 21 UNDER SECTION 172(3), ARE TO BE EXAMINED ON MERITS FOR ARRIVING AT THE TAXABILITY OF CORRECT AMOUNT IN THE HANDS OF THE CORRECT PERSON . THIS IS PARTICULARLY TRUE WHEN THE RETURN IS UNDER PROVISO TO SECTION 172(3) AND IS FILED BY A THIRD PARTY IN THE CAPACITY AS AGENT, BECAUSE OF THE LIMITED INFORMATION THAT MAY BE AVAILABLE TO HIM. THE PROCEEDINGS FOR ASSESSMENT OF INCOME ARE NOT ADVERSARIAL PROCEEDINGS. WE, THEREFORE, DISAPPROVE PEDANTIC APPROACH OF THE AUTHORITIES BELOW ON T HIS ASPECT. 18. WE FIND THAT THE ASSESSEE HAS PRODUCED A CERTIFICATE DATED 23 RD JANUARY 2013 WHEREBY THE DANISH BUSINESS AUTHORITY CERTIFIES AND ATTESTS TORM A/S , TUBORG HAVNEVEJ 18, DK 2900 HELLERUP, UNDER CVR NUMBER 22460218 (FORMER REGISTRATION NO. A/S 2206) IN THE MUNICIPALITY OF GENTOFTE HAS PROCESSED A LEGAL REGISTRATION AS A PUBLIC COMPANY IN THE RECORDS OF THE DANISH BUSINESS AUTHORITY IN ACCORDANCE WITH THE DANISH COMPANIES ACT . WE ALSO FIND THAT THE ASSESSEE HAS FILED CERTIFICATES DATED 12 TH JUNE 2014 AND 13 TH JUNE 2014, ISSUED BY THE DANISH CUSTOMS & TAX ADMINISTRATION CERTIFYING THAT TORM A/S, TUBORG HAVNEVEJ 18, DK 2900 HELLERUP HAS SUBMITTED TAX RETURNS FOR THE ABOVE MENTIONED INCOME YEARS (I.E. 2011 AND 2012 COVERING THE PERIOD OF 1.1 .11 TO 31.12.11 AND 1.1.12 TO 31.12.12 RESPECTIVELY) . WHILE THE CIT(A) DOES NOT DISPUTE THE TAX RESIDENCY CERTIFICATE, HE DOES NOT GRANT THE TREATY BENEFITS ON THR GROUND THAT NO PROOF HAS BEEN SUBMITTED EITHER BY LR2 OR TORM A/S THAT THE TAX ON FREIGHT HAS BEEN PAID IN DENMARK AND THAT DURING THE COURSE OF APPELLATE PROCEEDINGS, NO EVIDENCES WHATSOEVER HAVE BEEN PRODUCED BY THE APPELLANT TO PROVE THAT REMITTANCES OF FREIGHT CHARGES HAVE BEEN OFFERED TO TAX IN DENMARK . THIS APPROACH IS CLEARLY FALLACIO US INASMUCH AS THE TREATY ENTITLEMENTS ARE NOT TRIGGERED BY ACTUAL TAXATION OF AN INCOME IN THE OTHER CONTRACTING STATE BUT THE ASSESSEE BECOMES ELIGIBLE TO TREATY PROTECTION BY BEING LIABLE TO TAX ON GLOBAL INCOME BASIS, RATHER THAN LIMITED SOURCE BASIS, IN THE RESIDENCE JURISDICTION AS LONG AS SUCH A LIABILITY IS BE BY THE VIRTUE OF DOMICILE, RESIDENCE, PLACE OF MANAGEMENT OR ANY OTHER CRITERION OF SIMILAR NATURE . WHETHER AN INCOME IS ACTUALLY TAXED IN THE RESIDENCE JURISDICTION OR NOT, GIVEN THE PRESC RIPTION OF ARTICLE 4(1), IS WHOLLY IRRELEVANT. AS FOR THE RELIANCE OF THE ASSESSING OFFICER ON I.T.A. NO. 757 /RJT/201 4 ASSESSMENT YEAR: 2013 - 14 PAGE 20 OF 21 THE AAR RULING IN THE CASE OF M A RAFIK IN RE (SUPRA), SUFFICE TO SAY THAT THE AAR RULINGS ON THESE LINES WERE NOT CONSIDERED TO BE GOOD LAW BY A COORDINATE BENC H IN THE CASE OF ADIT VS GREEN EMIRATE TRAVELS [(2006) 100 ITD 203 (MUM)]. THE AAR RULINGS, WITH GREATEST RESPECT, DONOT CONSTITUTE BINDING PRECEDENTS. IN ANY EVENT, EVEN THESE RULINGS WERE IN THE CONTEXT OF THE SITUATIONS IN WHICH THE RESIDENCE JURISDICTI ONS HAVE NOT EXERCISED THE RIGHT TO TAX BY NOT INTRODUCING THE RELATED TAX LEGISLATION. THAT S NOT THE CASE BEFORE US. 19. WE HAVE NOTED THAT, AS EVIDENT FROM THE DIRECTORS REPORT OF TORM A/S - WHICH IS FILED BEFORE US IN THE PAPERBOOK, THE ASSESSEE HAS INCURRED A CLEARLY UNSATISFACTORY LOSS BEFORE TAX OF USD 579 MILLION IN 2012 . THIS REPORT ALSO STATES THAT THE ASSESSEE INCURRED AN OPERATING LOSS OF USD 253 MILLIONS WHICH WAS STATED TO BE ON ACCOUNT OF ADVERSE MARKET CONDITIONS. WHEN ASSESSEE IS INCUR RING LOSSES, IN RESPECT OF ITS GLOBAL OPERATIONS, THERE CANNOT BE AN OCCASION TO PAY TAX ON THE INCOME. IN THESE CIRCUMSTANCES, IF THE FREIGHT RECEIPTS FROM INDIA ARE NOT ACTUALLY BROUGHT TO TAX IN DENMARK, IT IS NOT BECAUSE OF THE PROFITS FROM THESE RECE IPTS NOT BEING TAXABLE IN DENMARK, IT IS BECAUSE THERE ARE NO PROFITS EMBEDDED IN THESE RECEIPTS. HOWEVER, SO FAR AS ARTICLE 4(1) OF INDO DANISH TAX TREATY IS CONCERNED, ALL THAT IS REQUIRED OF A DANISH COMPANY TO BE ENTITLED TO TREATY PROTECTION IN INDI A, IS THAT ITS PROFITS, ON GLOBAL BASIS, SHOULD BE LIABLE TO TAX IN DENMARK - IRRESPECTIVE OF WHETHER OR NOT THE ASSESSEE INDEED EARNS ANY PROFITS TAXABLE IN DENMARK OR WHETHER OR NOT SUCH PROFITS ARE ACTUALLY SUBJECTED TO TAX IN DEMARK. THAT CONDITION, IN OUR CONSIDERED VIEW AND FOR THE DETAILED REASONS SET OUT ABOVE, IS CLEARLY SATISFIED. AS FOR THE PLACE OF EFFECTIVE MANAGEMENT BEING IN DENMARK, AS REQUIRED UNDER ARTICLE 9(1), WE HAVE ALREADY TAKEN NOTE OF THE EVIDENCES IN SUPPORT OF THE PLACE OF EFFECTI VE MANAGEMENT BEING IN DENMARK . 20. IN VIEW OF THE ABOVE DISCUSSIONS, AS ALSO BEARING IN MIND ENTIRETY OF THE CASE, WE ARE OF THE CONSIDERED VIEW THAT THE PROFITS EMBEDDED IN THE FREIGHT RECEIPTS IN QUESTION WERE NOT TAXABLE IN INDIA. IN THIS VIEW OF THE MATTER, THE ASSESSING OFFICER INDEED ERRED IN BRINGING THE SAME TO TAX IN INDIA. THE CIT(A) I.T.A. NO. 757 /RJT/201 4 ASSESSMENT YEAR: 2013 - 14 PAGE 21 OF 21 SHOULD HAVE DELETED THE SAME. WE, THEREFORE, VACATE THE STAND OF THE AUTHORITIES BELOW AND DELETE THE IMPUGNED TAX DEMANDS. 21. IN THE RESULT, THE APPEAL IS ALLOW ED. PRONOUNCED TODAY ON 30 TH DAY OF OCTOBER , 2015. SD/ - SD/ - RAJPAL YADAV PRAMOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) DATED: 30 TH DAY OF OCTOBER 2015 COPIES TO: (1) THE APPELLANT (2) THE RES PONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ETC ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT