DDIT (IT) 1(2), MUMBAI vs. DELMAS FRANCE, MUMBAI

O R D E R PER JASON P. BOAZ, AM This appeal by revenue is directed against the order of the CIT(Appeal)- 10, Mumbai dt. 27/03/2014 for Asst. year 2010-11. 2. The facts of the case, briefly stated, are as under:-

3.1 Aggrieved, by the order of the CIT(A)-10, Mumbai dt. 27/03/2014, for A.Y. 2010-11, the Revenue has preferred this appeal raising the following grounds:-

1. “On the facts and in the circumstances and in the law the Ld. CIT(A) erred in granting the relief to the assessee holding that the assessee’s income is not taxable in India under Article 9 of the DTAA with France without appreciating the fact that all the voyages carried out by the assessee did not involve owned/chartered/leased vessel but also involved feeder vessels and slot chartering.”

2. “On the facts and in the circumstances and in the law the Ld. CIT(A) erred in granting the relief to the assessee in terms of Article 9 of the DTAA with France without appreciating the fact that the assessee’s income is taxable under Article 7 based on the fixed PE as well as agency PE.”

3 Assessment Year: 2010-11

4. The Appellant craves leave to amend or alter any ground or add a new ground which may be necessary.”

3.2 At the outset of the hearing, it was submitted by the Ld. AR for the assessee that the issues raised in this appeal (supra) were covered in favour of the assessee by the decisions of the Co-ordinate benches of this Tribunal in the assessee’s own case in dt. 28/11/2016 for A.Y. 2004-05 and ITA No. 9001/Mum/2010 dt. 11/01/2012 for A.Y. 2006-07. It was further submitted that Revenue’s appeal against Tribunals order for A.Y. 2006-07 (supra) was dismissed by the Hon’ble Bombay High Court by its order in ITA No. 1648/2012 dt. 15/11/2014. It is submitted that the facts of the matter in the year under consideration are the same as in the earlier Asst. years. The aforestated position, that the issues in this appeal were covered in favour of the assessee by the above cited decisions of the co-ordinate bench of this Tribunal and the Hon’ble Bombay High Court in the assessee’s own case were fairly conceded to by the Ld. CIT DR for revenue.

3.3.1 We have heard both parties and perused and carefully considered the material on record; including the judicial pronouncements cited. We find that the issues raised by revenue in this appeal are covered in favour of the assessee by the decision of the co-ordinate bench of the Tribunal in the assessee’s own case for A.Y. 2004-05 in dt. 28/11/2016 and for A.Y. 2006-07 in ITA No. 9001/Mum/2010 dt. 11/01/2012, which order has been upheld by the Hon’ble Bombay High Court in its order in ITA No. 1648/2012 dt. 15/11/2014 by dismissing revenue’s appeal. In its order in ITA No. 6040/Mum/2014 dt. 28/11/2016, we find that the co-ordinate bench, while dismissing revenue’s appeal and thereby 4 Assessment Year: 2010-11 upholding the order of the Ld. CIT(A) in allowing the assessee’s claim for relief under Article 9 of the India-France DTAA has held as under at paras 7 and 8 thereof :-

After considering the aforesaid remand report, Ld. CIT(A) granted part relief to the assessee with regard to the linkage and also held that its agent namely M/s Barwil Forbes Shipping Services Ltd (i.e. BFSSL) does not constitute fixed PE or agency PE of the assessee company in India. It is noted by us that Ld. CIT(A) has granted appropriate relief to the assessee only to the extent which proper linkages could be established by the assessee, after calling for the remand report and verifying the facts. On the issue of PE, relevant portion of order of Ld. CIT (A) reads as unde : - “8.1 have considered the AO's order as well as the appellant's AR submission. Having taken note to the appellant's submission and the AO's order, I find that the issue involved in this ground 5 Assessment Year: 2010-11 of appeal are covered in favour of the appellant by the Jurisdictional Bombay High Court's decision in the case of DIT v Balaji Shipping UK Ltd. (253 CTR 460) and also by the decision of Jurisdictional Mumbai ITAT in the appellant's own case by the order dtd. 11th January, 2012 in AY 2006-07. Keeping reliance on the decision of jurisdictional Bombay High Court and also in the appellant’s own case, it is held that appellant is entitled for benefit of relief under. Article 9 0f the DTAA. However, after perusal of the remand report, I direct the AO to restrict the relief to the extent the appellant has given the details and established the feeder vessel, mother vessel link through production of documents in the remand report proceedings. Thus, the appellant is not entitled to the relief to the extent of Rs.1,26,95,744/- wherein the appellant could not produce any documents to establish the feeder vessel-mother vessel link. In addition to this, having taken note of the appellant's submission and the order of the Jurisdictional ITAT in the appellant's own case for A.Y 2006-07 dt. 11th January, 2012 it is held that the BFSSL does not constitute a fixed PE or agency PE for the appellant. Accordingly keeping reliance of various decisions by the appellant's AR and also the decision of the Jurisdictional Bombay High Court this issue is also decided in favour of the appellant. In the result the appellant's these grounds of appeal are partly allowed.”

8. We find that the aforesaid decision has been given by the Ld. CIT(A) after relying upon the decision of the Tribunal in assessee’s own case for A.Y. 2006-07, wherein it has been held that BFSSL did not constitute PE or agency PE of the assessee. No distinction has been made out by the Ld. DR either on facts 6 Assessment Year: 2010-11 or on law. Thus, we find that the issue before us is covered in favour of the assessee in view of the orders of the Tribunal of earlier years as were relied upon by the Ld. CIT(A) also. Thus, we do not find any reason to interfere in the order of the Ld. CIT(A) and, therefore, the same is upheld.

3.3.2 On an appreciation of the facts on record and the issues raised in this appeal in A.Y. 2010-11 (supra), we find that in this year also the facts largely remain the same as in the earlier Asst. years, and this forms the basis on which relief has been granted to the assessee by the Ld. CIT(A) in the impugned order, wherein it was held that the assessee’s agent did not constitute its PE or agency PE of the assessee. The finding rendered by the Ld. CIT(A) that Parekh Marine Agencies Pvt. Ltd. (‘PMAPL’) the assessee’s agent is not its fixed PE or agency PE, has not been controverted before us by the revenue either on facts or in law. We also observe and concur with the directions of the Ld. CIT(A) at para 7 of the impugned order wherein; while holding that the assessee is entitled to benefit under Article 9 of the India-France DTAA, has directed the A.O to grant relief to the assessee only to the extent where proper linkages could be established by the assessee after examination/verification of relevant documents to be filed by the assessee before revenue in this regard. In this factual and legal matrix of the case where the issues before us in this appeal (supra) are covered in favour of the assessee, by the orders of the co-ordinate benches of this Tribunal in the assessee’s own case for A.Y. 2004-05(supra) which were relied on by Ld. CIT(A) in the impugned order, we, find no reason to interfere with the findings rendered in the impugned order by the Ld. CIT(A) and therefore uphold the same. The A.O is accordingly directed consequently, grounds 1 to 4 raised by revenue are dismissed.