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Income Tax Appellate Tribunal, “L” BENCH, MUMBAI
Before: SHRI SHAMIM YAHYA, AM & SHRI RAVISH SOOD, JM
Per Shamim Yahya, A. M.: This appeal by the Revenue is directed against order of the ld. Commissioner of Income Tax (Appeals) – 58, Mumbai dated 29.06.2016 and pertains to assessment year 2012-13.
2. The grounds of appeal read as under: 1) "Whether on the facts and in the circumstances of the case, the Ld. CIT(A) was justified in holding that income from inland transport of cargo within India was covered under Article 8(2)(b)(ii) and 8(2) (c) of the tax treaty between India and Belgium and therefore not liable for tax in India." 2) "Whether Article 8(2)(b)(ii) and 8(2) (c) of the tax treaty between India and Belgium includes within its ambit and activity of inland transportation of cargo for various places within India."
M/s. Safmarine Containers Lines N. V. 3) "The Appellant prays that the order of the CIT(A) be set aside on the above ground(s) and of the Assessing Officer be restored."
Brief facts of the case are as under:
The assessee is a Non Resident company based in Belgium, engaged in the business of Operation of ships in International Traffic. The assessing officer has passed an order under section 143(3) of the Income Tax Act holding that the revenue earned by the assessee on account of receipt of Inland Haulage Charges (IHC) in India is taxable in India as business profits since the same is not covered by section 44B of the Act or Article 8 of the DTAA between India and Belgium as discussed above. He has not accepted the contention of the assessee that such charges form a part of the freight charged from the client. Under the Treaty, the same would be taxable under Article 7 of the Treaty as business income. Since the assessee has an exclusive agent in India, through whom such business is carried out, the assessee has agency P.E, as per Article 5 of the Treaty.
4. For estimating the income earned on above receipts, the Assessing Officer called for details of expenses, if any, incurred on account of inland transportation of the freight.
The assessee has submitted that there are various expenses incurred and that collection of Inland Haulage charges is mainly to recover the actual cost incurred. The assessee has, however, failed to substantiate its statement by furnishing any documentary evidences or verifiable details. In absence of details of expenses the profitability rate of 7.5% is adopted on conservative basis. Accordingly, the Business Income of the assessee from Inland Haulage Charges was held to be Rs.6,39,92,516/- (7.5% of Rs.85,32,33,552/-).
M/s. Safmarine Containers Lines N. V. 5. Upon assessee's appeal, the ld. Commissioner of Income Tax (Appeals) noted that the issue is squarely covered in favour of the assessee by the decisions of ITAT and the decision of Hon'ble jurisdictional High Court in assessee's own case.
6. The ld. Commissioner of Income Tax (Appeals) held as under:
It is seen that the ground raised by the appellant are similar to the issues raised by the same appellant in AY 2009-10 wherein the Hon'ble ITAT vide order No. dated 19.9.2013 has considered the claims of the appellant in detail and has decided the issue. The decision of the Hon'ble ITAT is reproduced below: "we have heard both parties, perused the records and considered the matter carefully. The dispute raised in this appeal is regarding assessment of income from inland haulage charges received by the assessee company which Is a non resident company registered in Belgium and engaged In the business of operation of ships. The Income from operation of ships in international traffic is not taxable in India under Article 8 of DTAA. Article 8(2)(b) (ii) also exempts any activity directly connected with shipping. The assessee had taken the income from inland haulage charges as directly connected with shipping Income and accordingly claimed exempt which had not been accepted by the AO. CIT(A) has, however, allowed the claim following the decision of the Tribunal in assessee's own case in 2001-02 which has also been followed In subsequent years and has been upheld by the Hon'ble High Court of Mumbai by judgement dated 17.1.2013 in ITA No, 952 of 2011. ft has been held by the Tribunal that inland haulage charges are not only incidental but also closely connected with direct operations of ships. Facts in this year are identical. Therefore, respectfully following the decision of the Tribunal in assessee 'own case in the earlier years (supra), we confirm the order of CIT(A) in allowing the claim."
It is seen that the Hon'ble Bombay High Court has already considered all the issues raised by the appellant in this ground and has arrived at his decision after considering the current position of law on the issue. “In this view of the matter, we find that the reliance placed by Mr. Poms Kaka on the order of this Court dated 17th January, 2013 in Income Tax Appeal No. 952 of 2011 with Income Tax Appeal No. 147 of is fully justified and squarely covers the issue raised in the present appeal. We therefore find, that this Appeal does not give rise to any substantial question of law as projected by the ld. Counsel appearing on behalf of the appellant.We find no infirmity In the order passed by the ITAT and M/s. Safmarine Containers Lines N. V. impugned in this appeal. The appeal is therefore dismissed. No order as to costs."
8. Considering the jurisdictional ITAT and Hon'ble Bombay High Court’s order in the appellant’s own case on the similar issues, the ground is deleted in favour of the appellant.
7. Against the above order, the Revenue is in appeal before us.
We have heard both the counsel and perused the records. The learned counsel of the assessee submitted that the issue involved is squarely covered in favour of the assessee by a series of decisions of the ITAT and the Hon'ble Bombay High Court in assessee's own case.
Per Contra, the ld. Departmental Representative did not dispute the proposition that the issue stands covered in favour of the assessee.
Upon careful consideration we find that we may gainfully refer to the latest order of the Hon'ble jurisdictional High Court in of 2014 in assessee’s own case vide order 15.11.2016 has held as under:
This Appeal under Section 260-A of the Income Tax Act, 1951 (the Act) challenges the order dared 19:h September, 2013 passed by the Income Tax Appellate Tribunal (the Tribunal). The impugned order-is in respect of Assessment Year 2009-10.
The Revenue urges only the following question of taw for our consideration. :- "Whether on the facts and in the circumstances of the case and in law, the Tribunal was correct in holding that income from Inland Haulage Charges is incidental and closely connected with the direct operations of ship and hence not liable to tax in India in terms of Article 8 of the Indo-Belgium DTAA?
M/s. Safmarine Containers Lines N. V.
3. The impugned order of the Tribunal dismissed the Revenues appeal before it holding that the assessee's income From Inland Haulage charges is directly connected to the shipping Income and, therefore, no: chargeable to tax under Article 8 of the Double Tax Avoidance1 Agreement (DTAA). The impugned order of the Tribunal has followed its decision in the respondent assessee's own case for the Assessment Year 2001-02, which has been upheld by this Courts order dated 17th January, 2013 in Income Tax Appeal No.952 of 2011.
Mr. Tejveer Singh, learned Counsel for the Revenue very fairly states that the same issue was also the subject matter for consideration for the Assessment Year 2006-07 in the Revenue's appeal in respect of the same respondent assessee being Income Tax Appeal No.410 of 2012 before this Court. 3y order dated 17th July, 2014, this Court dismissed the Revenue's above appeal on identical issue. Therefore, for :he reasons spelt out in our order dated 17;n July, 2014 (Income Tax Appeal No.410 of 2012), the question as formulated does not give rise to any substantial question of law.
In view of the admitted position that issue as raised is concluded by the decisions of this Court, the question as framed does not give rise to any substantial question of law. Thus, not entertained.
Since the issue involved stands covered in favour of the assessee by the decisions of the Hon'ble jurisdictional High Court as well, we do not find any merit in this appeal filed by the Revenue.
Accordingly the Revenue’s appeal stands dismissed.
In the result, this appeal by the Revenue stands dismissed. Order pronounced in the open court on 13.08.2018