Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, “J” BENCH, MUMBAI
This appeal by assessee is arising out of the order of Disputes Resolution Panel-I, Mumbai [in short ‘DRP’] in objection No. 37 dated 04- 09-2012. The Assessment was framed by the Assistant Director of Income Tax (international Taxation) 1(1), Mumbai (in short ADIT) for the assessment year 2009-10 vide order dated 29-10-2012 under section 143(3) read with section 144C (13) of the Income Tax Act, 1961 (hereinafter ‘the Act’). APL Co. Pte Limited, (A.Y. 2009 -10) 2. At the outset, the learned Counsel for the assessee Smt. Aarati Visanji, first of all drew our attention to ground No.1.4 to 1.6 which reads as under: - “1.4 Holding that the appellant has a Permanent Establishment in India in the form of in the form of its agents/ front office, i.e. APL (India) Private Limited.
1.5 Holding that the income of 25 ships as aforesaid is not to be treated as shipping income and therefore, not covered the provisions of section 44B of the Act, 1961, as the appellant has not provided that their income is from operation of ships.
1.6 Holding that the income of the appellant has to be estimated at 10% of the gross receipts form 25 ships (wrongly mentioned by the assessing officer as 42 ships) instead of taxing it under section 44B of the Act at 7.5/% of the “gross receipts”, without prejudice to the contention that the appellant is tax resident of Singapore and is in the business of operation of ships in international traffic and its income is exempt from tax in India b virtue of Article 8 of the DTAA between India and Singapore.”
ITA No. 7401/Mum/2012 APL Co. Pte Limited, (A.Y. 2009 -10) 3. The learned Counsel for the assessee stated that the issues are squarely covered in favour of assessee by Tribunals decision in assessee’s own case. She explained that the assessee is a private Limited company and is a tax resident of Singapore and it is engaged in the business of operation of ships in international traffic, which is covered by Article 8 of the DTAA between India and Singapore. For this, she drew our attention to Para 2 of the assessment order. She further explained that during the year under consideration, the assessee has shown income from shipping in respect of 166 ships and claimed the freight income of these ships as exempt under Article 8 of the agreement of double taxation between India and Singapore. She explained that the assessee produced ship registration certificate and copies of chartered agreements and other evidences in respect of 118 ships to prove that the assessee has income from operation of ships in respect of such ships. Now, she explained that the AO has wrongly mentioned that the assessee could not produce any evidence to substantiate its claims that the income shown is from shipping in respect to 46 ships, whereas, there are 25 ships for which the assessee could not produce documents that income is from operation of ships. According to her, the AO therefore applying the provisions of section 44B of the Act in respect of these 25 ships to the gross receipts and detention charges shown by the assessee, was assessed by estimating 10% of the gross receipts from these 25 ships at ₹ 1,25,02,650/-. The DRP also agreed with the AO and finally assessment order was passed by the AO under section 143(3) read with section 144C(13) of the Act vide odder dated 29-10-2012. In such facts, the learned Counsel stated that the assessee has now filed the documents relating to 13 ships in its Paper Book consisting pages 1 to 12, and for the balance 12 ships the learned Counsel for the assessee drew our attention to the order of Tribunal for AY 2004-05 in 823 and 833/Mum/2008 and 2010 vide order dated 20-03-2013 APL Co. Pte Limited, (A.Y. 2009 -10) and Tribunal vide Para 41 and 42 directed the AO to examine the evidences as under: - “41. In the light of our detailed observations, we direct the AO to examine the evidence produced by the assessee in the light of Article 8.4 along with definition of operation of ship or aircraft in international traffic, as per Article 3.1(h) in respect of voyages impugned before us..
We further direct the AO to apply the provisions of section 44B in the case of 7 + 1 voyages for which there are no supporting documents, taking into consideration the ratio laid down in the case of A.P. Muller, Maersk P. Ltd. vs DCIT, reported in 89 ITD 563.”
In view of the above, she stated that in respect of 13 ships, where assessee is producing documents, the AO can examine. As regards to the balance 12 ships, she also stated that AO can apply the provisions of Section 44B of the Act, where there are no supporting documents taking into consideration, the ratio laid down in the case of A.P. Muller, Maersk P. Ltd. vs. DCIT 89 ITD 563.
She, further drew our attention to the Tribunal order for AY 2008-09 in for AY in assessee’s own case vide order dated 16-02-2017 to Para 18 has clearly held that Article 8 will not be available to the assessee and directed to be taxes in India in respect to balance 12 shops. The relevant Para 18 of the Tribunal order reads as under: - “18. So far as the freight receipt of Rs.1,36,89,191/- in respect of 4 ships is APL Co. Pte Limited, (A.Y. 2009 -10) concerned, it is an admitted fact that no evidence whatsoever or documents could be furnished by the assessee either before the Assessing Officer or the CIT(A) or even before us and, therefore, we hold that to the extent of freight receipt of Rs.1,36,89,191/-, the benefit of Article 8 will not be available to the assessee and same is directed to be taxed in India under the relevant statutory provisions. Thus, the issue relating to benefit of Article 8 is decided partly in favour of the assessee.”
As regards to issue of permanent establishment raised by way of ground No. 1.4, the learned Counsel for the assessee drew our attention to Tribunal’s order for AY 2008-09 in for AY in assessee’s own case vide order dated 16-02-2017 Para 19 has clearly stated that this issue has become purely academic. The relevant Para 19 reads as under: - “19. In view of our finding given above, the issue relating to Permanent Establishment (PE) and attribution of income to PE, as raised vide ground nos. 4 and 5, has become purely academic and, therefore, no separate adjudication is required. Once we have held that assessee is entitled for benefit of Article 8, then attribution of income in India through agency PE will not arise. Thus, ground nos. 4 and 5 is treated as infructuous.”
On the other hand, the learned CIT Departmental Representative stated that the issue is covered. APL Co. Pte Limited, (A.Y. 2009 -10) 7. We have heard the rival contentions and gone through the facts and circumstances of the case. We find that the plea of the assessee is quite reasonable and now, the assessee has filed documents relating to 13 ships to substantiate its claim that the income shown is from shipping and for balance 12 ships, the AO can apply the provisions of section 44AB of the Act i.e. the relevant statutory provision. We direct the AO accordingly. The appeal of the assessee is partly allowed for statistical purposes.
In the result, the appeal of assessee is partly allowed.
Order pronounced in the open court on 16-11-2017.