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Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI
Before: SHRI GEORGE MATHAN & SHRI S. JAYARAMAN
: Department by Mr.S.Nataraja, JCIT Mr.D.Prabhu Mukunth- Arun Kumar, Jr. Standing Counsel Assessee by : Mr.G.Baskar, Adv. : सुनवाई क+ तार"ख/Date of Hearing 12.02.2018 घोषणा क+ तार"ख / : 12.02.2018 Date of Pronouncement आदेश / O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER: filed by the Revenue against the Order of Commissioner of Income Tax (Appeals)-6, Chennai, in dated 03.03.2016 for the AY 2005-06, ITA No.288/CIT(A)-6/2015-16 dated 03.03.2016 for ITA Nos.1426 to 1430/Chny/2016 :- 2 -: the AY 2006-07, ITA No.287/CIT(A)-6/2015-16 dated 03.03.2016 for the AY 2007-08, ITA No.284/CIT(A)-6/2015-16 dated 03.03.2016 for the AY 2008-09 & ITA No.286/CIT(A)-6/2015-16 dated 03.03.2016 for the AY 2009-10 respectively.
Shri S.Nataraj, JCIT & Shri D.Prabhu Mukunth Arun Kumar, Jr.Standing Counsel, represented on behalf of the Revenue and Shri G.Baskar, Adv., represented on behalf of the assessee.
In the Revenue’s appeal, the Revenue has raised the following grounds:
The Order of the Commissioner of Income Tax(Appeals) is contrary to the Law and facts of the case.
2. The CIT(A) erred in treating the assessee company as a qualifying company irrespective of the fact that 99.99% of the share of the assessee company are held by two companies based in Dubai.
2.1 The CIT(A) erred in holding that the assessee company is a qualifying company as the effective control over the assessee company lies in Dubai and not in India as per the shareholding pattern mentioned supra.
2.2 The CIT(A) ought to have appreciated that the Board of Directors constitute M/s.Trans Arab Maritime (LLC), Dubai and M/s. Emirates Trading Agency, LLC, Dubai as the two major share holders. Hence, the day to day functioning of the company is controlled by these two companies from Dubai.
2.3 The CIT(A) erred in holding that the Board of Directors who are residents in India having shareholding to the tune of only 0.01 % of the shares of the Assessee company are competent to take independent decision making process without the concurrence of the other two non-resident directors who are holding 99.99% of the shares of the assessee company.
2.4 The CIT(A) erred in treating the assessee company as a qualifying company though the assessee company had violated the conditions stipulated in section 115VC of the Act.
2.5 The CIT(A) ought to have afforded an opportunity to the AO under Rule 46A, while admitting fresh evidences before allowing the appeal of the assessee that which were not produced before the AO.
3 For these and other grounds that may be adduced at the time of hearing, it is prayed that the Order of the Commissioner of Income Tax (Appeals) be set aside and that of the Assessing Officer be restored. to 1430/Chny/2016 :- 3 -:
It was submitted by the Ld.DR that in the course of the assessment, the AO had held that provisions of Sec.115VC applied and as the 99.99% of the shares in the assessee’s company was held by two foreign companies effective control management of the assessee company was outside India and consequently, Tonnage Tax Scheme as per the provisions of Sec.115VG did not apply in respect of the ship M.V. Gem of Ennore. It was a submission that before the Ld.CIT(A) the assessee had produced evidences in the form of various minutes of board meetings and other details as has been extracted by the Ld.CIT(A) from Page Nos.6 to 12 of his order. It was a submission that these evidences were not before the AO in the course of the assessment proceedings and the Ld.CIT(A) had also not sent these evidences to the AO for his rebuttal. It was a submission that there was a violation of the provisions of Rule 46A.
In reply, Ld.AR submitted that he had no objection if the issues are restored to the file of the of the AO for re-adjudication in view of the evidences produced before the Ld.CIT(A).
We have considered the rival submissions.
As it is noticed that the evidences in respect of the management of the company owning ship M.V. Gem of Ennore being the assessee herein was not before the AO but has been produced before the Ld.CIT(A), in the interest of natural justice, these issues are restored to the file of the AO to 1430/Chny/2016 :- 4 -: for re-adjudication after granting the assessee adequate opportunity to substantiate his case.
In the result, the appeals filed by the Revenue in to 1430/Chny/2016 are partly allowed for statistical purposes.
Order pronounced in the Open Court on February 12, 2018, at Chennai. (एस जयरामन) (जॉज" माथन) (S. JAYARAMAN) (GEORGE MATHAN) लेखा सद य/ACCOUNTANT MEMBER "या"यक सद य/JUDICIAL MEMBER