The ITO, International Taxation, GANDHIDHAM V. M/s. Sea World Shipping and Logistic Pvt. Ltd., GANDHIDHAM

ITA 98/RJT/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 67214 (ITAT-RAJKOT)
• Duration Of Justice: 1 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-04-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 29-05-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 20-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SUMIT C SHINGAL
• Keywords: Double taxation relief

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT [CONDUCTED THROUGH E-COURT AT AH MEDABAD] (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER) ITA. NO: 98/RAJKOT/2012 (ASSESSMENT YEAR: 2010-11) THE INCOME TAX OFFICER (INTERNATIONAL TAXATION), GANDHIHAM. V/S M/S SEA WORLD SHIPPING & LOGISTICS PVT. LTD., GANDHIHAM. (APPELLANT) (RESPONDENT) PAN: AABFH2614Q APPELLANT BY : SHRI PRAVIN VERMA, SR. D.R RESPONDENT BY : SHRI SUMIT C.SHINGAL, A.R ( )/ ORDER DATE OF HEARING : 29 -05-201 7 DATE OF PRONOUNCEMENT : 31 -05-2017 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. THIS APPEAL FILED BY THE REVENUE IS PREFERRED AGAI NST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS), GANDHINAGAR D ATED 12.12.2011 PERTAINING TO ASSESSMENT YEAR 2010-11. THE SUM AND SUBSTANCE OF THE ITA NO 98/RJT/2015 . A.Y. 2010-1 1 2 GRIEVANCE OF THE REVENUE IS THAT THE COMMISSIONER O F INCOME TAX (APPEALS) ERRED IN ACCEPTING THAT THE SHIP HAS BEEN GIVEN ON VOYAGE TO THE SWISS COMPANY TTMI. THE REVENUE IS FURTHER AGGRIEVED BY T HE FINDINGS OF THE COMMISSIONER OF INCOME TAX (APPEALS) WHO HELD THAT U.K-INDIA DTAA BENEFIT WAS APPLICABLE TO THE SAID TRANSACTIONS. 2. WE FIND THAT THIS IS THE SECOND ROUND OF LITIGATION . IN FIRST ROUND OF LITIGATION THE MATTER TRAVELLED UPTO THE HIGH COURT OF GANDHIN AGAR AND THE HONBLE HIGH COURT IN TAX APPEAL NO. 720 OF 2013 RESTORED T HE APPEAL TO THE TRIBUNAL WITH A DIRECTION TO CONSIDER, DECIDE AND DISPOSE OF THE APPEAL PREFERRED BY THE REVENUE, IN ACCORDANCE WITH LAW AND ON MERITS A ND CONSIDER THE LEGALITY AND VALIDITY OF THE ORDER PASSED BY THE COMMISSIONE R OF INCOME TAX (APPEALS). 3. PURSUANT TO THE DIRECTIONS OF THE HONBLE HIGH COUR T, WE HEARD THE REPRESENTATIVES OF BOTH SIDES AT LENGTH AND HAVE CA REFULLY PERUSED THE ORDER OF THE VARIOUS APPEALS. 4. THE ASSESSMENT IS MADE U/S. 172(4) OF THE ACT VIDE ORDER DATED 27.12.2010. THE FACTS EMANATING FROM THE ASSESSMENT ORDER SHOW THAT THE APPELLANT COMPANY FILED PROVISIONAL AND FINAL RETURN ON 07.10 .2009 FOR BEING FREIGHT BENEFICIARY OF THE M/S. B.P SHIPPING, U.K. WITHOUT PAYING FREIGHT TAX. WHILE SCRUTINIZING THE RETURN OF INCOME AND AFTER CONSIDE RING THE RELEVANT DETAILS FILED BY THE ASSESSEE THE A.O OBSERVED THAT THE FRE IGHT WAS REMITTED TO ITA NO 98/RJT/2015 . A.Y. 2010-1 1 3 BANK ACCOUNT IN USA. THEREFORE THE COMPANY B.P SHIP PING CANNOT CLAIM BENEFIT OF DTAA WITH U.K. AND THEREFORE THE FREIGHT INCOME SHOULD BE TAXED IN INDIA U/S. 172 OF THE ACT. THE A.O FURTHER OBSER VED THAT THE SLOT HIRE IS NOT COVERED BY ARTICLE 9 OF THE DTAA BETWEEN INDIA AND U.K. AND THE REMITTANCE IS MADE TO B.P FINANCE OF B.P. SHIPPING NEW YORK, USA AND NOT TO B.P. SHIPPING U.K. THE A.O FINALLY CONCLUDED BY HOLDING THAT THE BENEFIT OF DTAA CANNOT BE GIVEN TO THE ASSESSEE AND COMPLET ED THE ASSESSMENT BY TREATING THE TOTAL OF FREIGHT EARNED AS INCOME OF T HE ASSESSEE. 5. THE ASSESSEE STRONGLY ASSAILED THE ASSESSMENT ORDER BEFORE THE FIRST APPELLATE AUTHORITY. IT WAS STRONGLY CONTENDED THAT THE MERCHANT SHIPPING OPERATED BY B.P. SHIPPING LTD. WAS CHARTERED BY TTM I SARL IS SWISS COMPANY UNDER A VOYAGE CHARTER FOR TRANSPORTING NAP THA FROM KANDLA PORT OF INDIA TO FURTHER DESTINATION AS PER CHARTER. THE SEA WORLD SHIPPING & LOGISTIC COMPANY ACTED AS AGENT OF B.P SHIPPING LTD . THE TOTAL FREIGHT WAS EARNED BY B.P. SHIPPING LTD. WHICH WAS REMITTED TO THE BANK ACCOUNT OF B.P. SHIPPING LTD. LOCATED IN USA WITH CITIBANK, IN USA. SINCE B.P. SHIPPING LTD. WAS THE FREIGHT BENEFICIARY RESIDENCE OF U.K. THERE FORE IT WAS LIABLE TO PAY TAX IN U.K. AS PER THE DTAA BETWEEN THE INDIA AND U .K. AFTER CONSIDERING THE FACTS AND THE SUBMISSIONS THE COMMISSIONER OF I NCOME TAX (APPEALS) WAS CONVINCED THAT THE OWNER AND CHARTER OF THE SHI P IS B.P. SHIPPING LTD. U.K. WHO IS RESIDENT OF U.K. THEREFORE THERE IS NO REASON WHY BENEFIT OF INDIA-U.K. DTAA SHOULD NOT BE AVAILABLE TO IT. THE COMMISSIONER OF INCOME TAX (APPEALS) FURTHER OBSERVED THAT THE ASSESSEE HA S CLARIFIED FROM THE CITY ITA NO 98/RJT/2015 . A.Y. 2010-1 1 4 BANK THAT THE ACCOUNT IS OF B.P. SHIPPING LTD. U.K. THIS DOCUMENT WAS TRANSMITTED TO THE A.O FOR HIS COMMENT AND NO ADVER SE REPORT HAS BEEN RECEIVED FROM THE A.O. THE COMMISSIONER OF INCOME T AX (APPEALS) DIRECTED THE A.O TO ALLOW THE BENEFIT OF THE DTAA AND ALLOWE D THE APPEAL. 6. AGGRIEVED BY THIS THE REVENUE IS BEFORE US. THE D.R STRONGLY PLACED RELIANCE ON THE FINDINGS OF THE A.O. PER CONTRA THE COUNSEL FOR THE ASSESSEE REITERATED WHAT HAS BEEN STATED BEFORE THE LOWER AU THORITY. 7. THE UNDISPUTED FACT IS THAT THE MERCHANT SHIP WAS O WNED BY B.P. SHIPPING LTD, U.K. BASED COMPANY. THE CERTIFICATE OF TAX RES IDENCY ISSUED BY U.K. GOVERNMENT CLEARLY CONFIRMS THAT B.P. SHIPPING LTD. IS A TAX RESIDENT OF U.K. THE CERTIFICATE OF TAX RESIDENCY FURTHER STATES THA T ALL THE INCOME ACCRUING TO B.P. SHIPPING LTD. IS TAXABLE IN U.K. WE FAIL TO UNDERSTAND HOW THE REMITTANCE OF FREIGHT TO A BANK ACCOUNT SITUATED IN USA, WOULD MAKE THE DIFFERENCE, AS LONG AS THERE IS NO DISPUTE THAT THE FREIGHT INCOME IS TAXABLE IN U.K. AND THE RECIPIENT IS TAX RESIDENT OF U.K. T HIS ITSELF PROVES THAT THE CASE IN HAND CLEARLY FALLS UNDER THE INDIA-U.K. TRE ATY. SO FAR AS THE ALLEGATION THAT THE IMPUGNED VOYAGE WAS NOT HIRE, WE FIND THA T THE COORDINATE BENCH OF MUMBAI ITA IN THE CASE OF APL CO. PVT. LTD. IN I TA NO. 1587/MUM/2008 VIDE ORDER DATED 20.03.2013 HAD HELD THAT SLOT CHAR TER HAD TO BE CONSTRUED AS CHARTER PER SE. AS A RESULT, THE SHIPPING ARTIC LE IN A TREATY APPLIED TO INCOME FROM THE INTERNATIONAL TRANSPORTATION OF CAR GO THROUGH SLOT CHARTER. ITA NO 98/RJT/2015 . A.Y. 2010-1 1 5 8. CONSIDERING FACTS IN TOTALITY IN THE LIGHT OF THE F ACTUAL MATRIX DISCUSSED HERE IN ABOVE WE DECLINE TO INTERFERE WITH THE FINDINGS OF THE FIRST APPELLATE AUTHORITY. THE APPEAL FILED BY THE REVENUE IS DISMI SSED. 9. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN OPEN COURT ON 31- 05- 2017. SD/- SD/- (MAHAVIR PRASAD) (N. K. BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT, RAJKOT