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

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ITA 6783/MUM/2017Status: DisposedITAT Mumbai28 June 2019AY 2013-145 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the assessee did not have a Permanent Establishment (PE) in India. Consequently, the business income from operations in India was not taxable under Section 44B of the Act, upholding the CIT(A)'s deletion of the addition.

What were the facts?

The assessee, a Singapore-based NVOCC, was assessed for income in India. The Assessing Officer held that the assessee had a Permanent Establishment (PE) in India and applied Section 44B of the Income Tax Act. The assessee contended it had no PE in India and thus its income was not taxable.

What were the issues?

Whether the assessee has a Permanent Establishment (PE) in India and if its income is taxable under Section 44B of the Income Tax Act based on the India-Singapore DTAA.

Which sections of the Income-tax Act were involved?

Section 44B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “I” BENCH, MUMBAI

Before: SHRI SAKTIJIT DEYAND SHRI G. MANJUNATHA

For Appellant: Ms. Geeta Ramrakhiani
For Respondent: Shri G.N. Makhwana

Captioned appeal has been filed by the Revenue challenging the 14th order dated September 2017, passed by the learned Commissioner of Income Tax (Appeals)–56, Mumbai, pertaining to the assessment year 2013–14.

The effective grounds raised by the Revenue read as under:– 2.

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 who 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 of 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 assessment 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 Taxation 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 taxable 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 orders passed for the assessment years 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 result, 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 assessee’s own case for the assessment year 2009–10 and 2011–12, the Tribunal has held that the assessee had no PE in India. Therefore, the business income is not taxable in India and further, the learned Commissioner (Appeals) has expressed similar view while deciding assessee’s 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. Whereas, learned Authorised

4 M/s. Forbes Container Line Pte Ltd.

Representative submitted that the issue has been decided in favour of the assessee by the Tribunal in assessment year 2009–10, 2011–12 and 2012–13. Copies of the orders passed by the Tribunal were 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. From 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 44B of the Act. However, 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 year 2009–10, when the dispute came up for consideration before the Tribunal in ITA no.1607/Mum./2014, the Tribunal in order dated 11th 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 assessee’s appeal in assessment year 2011–12, vide ITA no.972/Mum./2015, dated 15th July 2016. In the latest order passed for the assessment year 2012–13, in ITA no.6286/Mum./2016, dated 31st 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, assessee’s income is not taxable under section 44B of the Act. Facts being identical, respectfully following the decisions of the Co–ordinate Bench in assessee’s own 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 Court on 28.06.2019

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