M/s Interocean Shipp. (I) P. Ltd., GANDHIDHAM V. The Income Tax Officer (Inter. Taxa.), GANDHIDHAM

SA 3/RJT/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 6481 (ITAT-RAJKOT)
• Duration Of Justice: 2 year(s) 5 month(s) 26 day(s)
• Appeal Type: Income Tax (International Taxation) Appeal
• Pronouncement Date: 04-05-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 07-02-2017
• Assessment Year: 2015-2016
• Appeal Filed On: 08-11-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: YOGESH PANDEY
• Assessee Lawyers: PAURNAMI SHETH
• Keywords: Application of stay

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL, RAJKOT [CONDUCTED THROUGH E COURT AT AHMEDABAD] BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER STAY APPLICATION NO.2/RJT/2016 IN ./ ITA.NO.409/RJT/2016 ASSTT.YEAR 2015-2016 M/S.SEASWORLD SHIPPING & LOGISTICS P.LTD. (AS AGENT OF BP SINGAPORE PTE LTD.) 115, RSISHABH CORNER, PLOT NO.93 SECTOR 8, TAGORE ROAD GANDHIDHAM. VS ITO (INTERNATIONAL TAXATION) GANDHIDHAM. STAY APPLICATION NO.3/RJT/2016 IN ./ ITA.NO.410/RJT/2016 ASSTT.YEAR 2015-2016 M/S.INTEROCEAN SHIPPING (INDIA) PVT. LTD. (AS AGENT OF BP SINGAPORE PTE LTD.) PLOT NO.72, WARD-10/A OPP: IFFCO COLONY MAIN GATE GANDHIDHAM. VS ITO (INTERNATIONAL TAXATION) GANDHIDHAM. STAY APPLICATION NO.4/RJT/2016 IN ./ ITA.NO.411/RJT/2016 ASSTT.YEAR 2015-2016 M/S.GAC SHIPPING (INDIA) PVT.LTD. (AS AGENT OF BP SINGAPORE PTE LTD.) 1/20, SONALI PARK, PLOT NO.317 WARD 12/B, GANDHIDHAM. VS ITO (INTERNATIONAL TAXATION) GANDHIDHAM. STAY APPLICATION NO.5/RJT/2016 IN ./ ITA.NO.412/RJT/2016 ASSTT.YEAR 2015-2016 M/S.ATLANTIC SHIPPING PVT.LTD. (AS AGENT OF BP SINGAPORE PTE LTD.) GOLDEN ARCADE, OFFICE NO.201 2 ND FLOOR, PLOT NO.141 & 142 SECTOR 8, GANDHIDHAM VS ITO (INTERNATIONAL TAXATION) GANDHIDHAM. STAY PETITION NO.3/RJT/2016 IN ITA NO.410/RJT/2016 & 3 OTHERS 2 DIST. KUTCH, GUJARAR370 201. '( / (APPELLANT) )* '( / (RESPONDENT) ASSESSEE BY : SHRI PAURNAMI SHETH, AR REVENUE BY : SHRI YOGESH PANDEY, CIT-DR / DATE OF HEARING : 07/02/2017 / DATE OF PRONOUNCEMENT: 07/02/2017 +,-/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: PRESENT FOUR STAY APPLICATIONS ARE DIRECTED AT THE INSTANCES OF THE ASSESSEE FOR GRANT OF AD-INTERIM STAY OF OUTSTANDIN G DEMANDS IN THE ASSTT.YEAR 20015-16. 2. FACTS ON ALL VITAL POINTS ARE COMMON, THEREFORE, FOR THE SAKE OF REFERENCE, WE TAKE UP FACTS FROM STAY APPLICATION N O.3/RJT/2016 IN THE CASE OF M/S.INTEROCEAN SHIPPING (INDIA) PVT. LTD. (INTEROC EAN FOR SHORT). 3. BEFORE EMBARKING UPON AN INQUIRY ABOUT DEMANDS R AISED AGAINST EACH ASSESSEE IN THE RESPECTIVE ASSESSMENT YEAR, WE WOUL D LIKE TO GIVE BRIEF BACKGROUNDS OF THE FACTS. 4. BP SINGAPORE PTE LTD. IS A COMPANY INCORPORATED UNDER THE TAX LAWS OF SINGAPORE AND ENGAGED IN OPERATION OF SHIPS IN INTE RNATIONAL TRAFFIC. M/S. INTEROCEAN IS A COMPANY WHO HAD FILED PROVISIONAL RETURN OF INCOME IN THE CAPACITY OF AGENT FOR BP SINGAPORE PTE LTD.(BP SIN GAPORE FOR SHORT). UNDER SIMILAR CIRCUMSTANCES, OTHER THREE COMPANIES VIZ. M/S.SEAWORLD SHIPPING & LOGISTICS P. LTD. (SEAWORLD FOR SHORT) , M/S.ATLANTIC SHIPPING STAY PETITION NO.3/RJT/2016 IN ITA NO.410/RJT/2016 & 3 OTHERS 3 PVT. LTD. (ATLANTIC FOR SHORT) AND M/S.GAC SHIPPI NG (INDIA) PVT. LTD. (GAC FOR SHORT) HAVE ALSO FILED PROVISIONAL RETUR NS IN THE CAPACITY OF AGENT FOR BP SINGAPORE. ALL THESE APPLICANTS HAVE CLAIME D BENEFIT OF ARTICLE 8 OF INDO-SINGAPORE DTA . DETAILS OF TAX DEMANDS RAISED BY THE DEPARTMENT AND AMOUNTS OF TAXES PAID BY THESE COMPANIES ARE AS UND ER: SR. NO. NAME OF ASSESSEE TAX DEMAND AMOUNT PAID BY THE ASSESSEE BALANCE TAX DEMAND SOUGHT TO BE STAYED INTEROCEAN 1,31,93,600/- 19,79,040/- 1,12,14,560/- SEAWORLD 16,85,970/- 2,52,896 14,33,075/- ATLANTIC 19,23,432/- 2,88,515/- 16,34,917/- GAC 51,72,255/- 7,75,900/- 43,96,355/- 5. THE LD.COUNSEL FOR THE ASSESSEE WHILE TAKING US THROUGH THESE STAY APPLICATIONS CONTENDED THAT ISSUE INVOLVED IN ALL T HESE APPEALS IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION O F ITAT RENDERED IN ITA NO.392/RJT/2014 IN THE CASE OF ALABRA SHIPPING PTE LTD., SINGAPORE (ALABRA FOR SHORT). SHE ALSO POINTED OUT THAT TH IS VIEW OF THE TRIBUNAL HAS BEEN UPHELD BY THE HONBLE GUJARAT HIGH COURT IN TH E CASE OF M.T. MAERSK MILKAGE & OTHERS VS. DIRECTOR OF IT (INTERNATIONAL TAXATION), SCA NO.9150 OF 2014. ACCORDING TO THE LD.COUNSEL FOR THE ASSES SEE, BP SINGAPORE IS A TAX RESIDENT OF SINGAPORE. SHE DREW OUR ATTENTION TOWA RDS PAGE NO.42 OF THE PAPER BOOK WHEREIN CERTIFICATE OF RESIDENCE FOR THE PURPOSE OF CLAIMING BENEFIT UNDER SINGAPORE/INDIA DTA FOR TRADE HAS BEE N PLACED ON RECORD. THIS CERTIFICATE HAS BEEN ISSUED BY INLAND REVENUE AUTHO RITY OF SINGAPORE. SHE POINTED OUT THAT AS PER THE ARTICLE 8 OF INDO-SINGA PORE TAX TREATY IF FREIGHT RECEIPTS IN RESPECT OF SHIPPING CONSIDERED IN THE A SSESSMENT ORDER WERE TAXABLE IN SINGAPORE, ON ACCRUAL OR RECEIPT BASIS, THEN AS PER THE ARTICLE 24 OF THE INDO-SINGAPORE TAX TREATY, SUCH AMOUNT WILL NOT BE TAXABLE IN INDIA. SHE FURTHER CONTENDED THAT FREIGHT RECEIPTS WERE TAXABL E ON ACCRUAL BASIS IN SINGAPORE, AND THEREFORE BENEFIT OF ARTICLE 24 OUGH T TO BE GIVEN. FOR STAY PETITION NO.3/RJT/2016 IN ITA NO.410/RJT/2016 & 3 OTHERS 4 BUTTRESSING HER CONTENTION SHE RELIED UPON THE ORDE R OF THE ITAT. SHE PRAYED THAT RECOVERY OF OUTSTANDING DEMANDS IN ALL THESE C ASES BE STAYED. 6. ON THE OTHER HAND, THE LD.CIT-DR CONTENDED THAT THE AO HAS RECORDED A SPECIFIC FINDING THAT THESE FREIGHTS WERE NOT REC EIVED IN SINGAPORE. THESE WERE CREDITED TO THE ACCOUNTS IN CITY BANK, NEW YOR K. THESE WERE NOT REMITTED TO A BANK IN SINGAPORE. HE FURTHER POINTE D OUT THAT IN THE PRESENT APPEALS, THE ASSESSEES HAVE NOT PRODUCED ANY DOCUME NTARY EVIDENCE EXHIBITING THE FACT THAT THESE AMOUNTS WERE SUFFERE D TAXES IN SINGAPORE. HE ALSO POINTED THAT IF THE ASSESSEE PAYS TAXES IN IND IA, THEY CAN CLAIM BENEFIT IN SINGAPORE. TAXES WILL NOT BE COLLECTED TWICE. HE DREW OUR ATTENTION TOWARDS FINDING OF THE CIT(A) WHEREIN IN PARA-5 THE LD.CIT( A) HAS OBSERVED THAT ASSESSEES HAVE FURNISHED LETTER OF KPMG HIGHLIGHTIN G INCLUSION OF FREIGHT IN INDIA FOR THE ASSESSMENT YEAR 2015-16 IN SINGAPORE. ASSESSEES HAVE NOT PRODUCED ANY DOCUMENTARY EVIDENCE EXHIBITING THESE FACTS THAT THESE AMOUNTS HAVE BEEN TAXED IN SINGAPORE. 7. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GO NE THROUGH THE RECORD CAREFULLY. AT THIS STAGE, WE ARE NOT SUPPOSED TO G O INTO MERIT OF THE CASE AND ARRIVE AT A FIRM CONCLUSION. WE ARE REQUIRED TO AS SESS WHETHER THE ASSESSEE HAS PRIMA FACIE ARGUABLE CASES OR NOT. IT IS ALSO PERTINENT TO OB SERVE THAT UNDER INCOME TAX ACT NO GUIDELINES HAVE BEEN PROVID ED AS TO HOW DISCRETIONARY POWER TO GRANT STAY IS TO BE EXERCISE D. THEREFORE, WE HAVE TO LOOK BACK TO THE SPECIFIC RELIEF ACT. ONE OF THE C ONDITIONS FOR GRANT OF STAY IS THAT IF A PERSON IS GOING TO SUFFER IRREPARABLE LOS S WHICH CANNOT BE COMPENSATED IN TERMS OF MONEY, THEN THE COURT SHOUL D EXERCISE ITS DISCRETION IN FAVOUR OF SUCH PERSON. WE WOULD APPRECIATE THAT IF BY RECOVERY OF THE AMOUNTS, BUSINESS OF THE ASSESSEE WAS GOING TO BE C LOSED DOWN, AND THEY ARE GOING TO SUFFER IRREPARABLE LOSS WHICH CANNOT BE CO MPENSATED IN TERMS OF STAY PETITION NO.3/RJT/2016 IN ITA NO.410/RJT/2016 & 3 OTHERS 5 MONEY, THEN OUR DISCRETION TO GRANT STAY SHOULD BE EXERCISED IN THEIR FAVOUR. IN THE CASE OF M/S. ATLANTIC AND SEAWORLD, THE DEMA ND IS OF RS.19,23,432/- AND RS.14,33,075/-. THESE ARE NOT VERY SUBSTANTIAL AMOUNT, RECOVERY OF WHICH WOULD NOT CLOSE DOWN BUSINESS OF BP SINGAPORE. IF THEIR APPEALS WILL BE ALLOWED THEY WILL GET REFUND WITH INTEREST. APART FROM OTHER REASONS WHICH WE ARE GOING TO ASSIGN FOR DECIDING THESE APPLICATIONS , THIS IS ONE OF THE REASONS FOR WHICH WE ARE NOT INCLINED TO GRANT STAY IN THE CASE OF ATLANTIC AND SEAWORLD. 8. THE LD.COUNSEL FOR THE ASSESSEE HAS PLACED RELIA NCE UPON THE ORDER OF THE ITAT IN THE CASE OF ALABRA (SUPRA). RELEVANT D ISCUSSION MADE BY THE ITAT IN THAT CASE IS WORTH TO NOTE. IT READS AS UN DER: 7. SO FAR AS THE CASE BEFORE US IS CONCERNED, THER E IS NO DISPUTE THAT THE BUSINESS IS BEING CARRIED ON BY THE ASSESSEE IN SINGAPORE AND THAT THE ASSESSEE IS TAX RESIDENT OF SINGAPORE. BY LETTE R DATED 31ST DECEMBER 2013 (REFERENCE NO. 200716495G), INLAND REVENUE AUT HORITY OF SINGAPORE HAS CONFIRMED THAT, IN THE CASE OF ALBARA SHIPPING PTE LTD, FREIGHT INCOME HAS BEEN REGARDED AS SINGAPORE SOUR CED INCOME AND BROUGHT TO TAX ON AN ACCRUAL BASIS (AND NOT REMITTA NCE BASIS) IN THE YEAR OF ASSESSMENT. THE ASSESSEE HAS ALSO FILED A CONFIRMATION DATED 4TH DECEMBER 2013 FROM ITS PUBLIC ACCOUNTANT THAT T HE FREIGHT OF US $ 6,71,366 EARNED ON MT ALBARAS SAILING FROM SIKKA P ORT HAS BEEN INCLUDED IN THE GLOBAL INCOME OFFERED TO TAX BY THE COMPANY IN SINGAPORE. ON THESE FACTS, IN OUR CONSIDERED VIEW, THE PROVISIONS OF ARTICLE 24 CANNOT BE PUT INTO SERVICE AS THIS PROVI SION CAN ONLY BE TRIGGERED WHEN TWIN CONDITIONS OF TREATY PROTECTION , BY LOW OR NO TAXABILITY, IN THE SOURCE JURISDICTION AND TAXABILI TY ON RECEIPT BASIS, IN THE RESIDENCE JURISDICTION, ARE FULFILLED. THERE IS NOTHING ON THE RECORD TO EVEN VAGUELY SUGGEST THAT THE FREIGHT RECEIPTS O F ASPL-S WERE TAXATION ONLY ON RECEIPT BASIS IN SINGAPORE. QUITE TO THE CONTRARY, THERE IS REASONABLE EVIDENCE TO DEMONSTRATE THAT SUCH AN INCOME WAS TAXABLE, ON ACCRUAL BASIS, IN THE HANDS OF THE ASSE SSEE. ALL THIS MATERIAL WAS DULY CONFRONTED TO THE ASSESSING OFFICER, IN TH E REMAND PROCEEDINGS, AND THE ASSESSING OFFICER COULD NOT DE MONSTRATE THAT THE STAND TAKEN BY THE ASPL-S IN THIS REGARD WAS INCORR ECT. STAY PETITION NO.3/RJT/2016 IN ITA NO.410/RJT/2016 & 3 OTHERS 6 9. A PERUSAL OF THE ABOVE WOULD INDICATE THAT BASIC REASON OR GRANT OF BENEFIT OF ARTICLE 8 OF THE INDO-SINGAPORE TREATY W AS THAT THE ASSESSEE PRODUCED TWO CERTIFICATES FROM INLAND REVENUE AUTHO RITY OF SINGAPORE EXHIBITING FACT THAT FREIGHTS HAVE BEEN TAXED IN SI NGAPORE ON ACCRUAL BASIS. WE HAVE CONFRONTED THE LD.COUNSEL FOR THE ASSESSEE TO SHOW US ANY DOCUMENTS WHICH CAN DEMONSTRATE THAT THE FREIGHT ALLEGED TO H AVE BEEN PAID TO BP SINGAPORE HAS SUFFERED TAXES IN SINGAPORE EITHER ON ACCRUAL BASIS OR RECEIPT BASIS. SHE FAILED TO SHOW ANY SUCH DOCUMENT. THUS , WE ARE OF THE VIEW THE ASSESSEES HAVE FAILED TO DEMONSTRATE PRIMA FACIE THAT THESE FREIGHT RECEIPTS HAVE SUFFERED TAXES IN SINGAPORE. THERE IS NO PRIMA FACIE CASE ON MERIT. THEREFORE, WE DO NOT SEE ANY REASONS TO EXERCISE OU R DISCRETION IN FAVOUR OF THE ASSESSEE FOR STAYING RECOVERY OF OUTSTAND DEMAN D IN ALL FOUR APPEALS. 10. THE OBSERVATIONS MADE BY US WILL NOT IMPAIR OR INJURE THE CASE OF THE AO AND WILL NOT CAUSE ANY PREJUDICE TO THE DEFENCE/ EXPLANATION OF THE ASSESSEE. 11. IN THE RESULT, ALL STAY APPLICATIONS ARE DISMIS SED AT THIS STAGE. ORDER PRONOUNCED IN THE COURT ON 7 TH FEBRUARY, 2017 AT AHMEDABAD. SD/- SD/- ( PRADIP KUMAR KEDIA ) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER