DCIT -(IT)-2(2)(2), MUMBAI vs. HAPAG LLOYD AG, MUMBAI

ORDER PER G.S.PANNU,A.M: The captioned five appeals by the Revenue are directed against a common order of the DRP-1 pertaining to assessment years 2006-07, 2008-09, 2009-10, 2010-11 and 2011-12, in terms of which separate orders have been passed by the Assessing Officer under section 143(3)r.w.s 144C(13) r.w.s. 147 of the Income Tax Act, 1961 (in short ‘the Act’) all dated 19/01/2015. Since the issue involved in these appeals is identical, therefore, they have been heard together and a consolidated order is being passed for the sake of convenience and brevity.

1. Whether on the facts and in the circumstances of the case and in law, the Ld. DRP erred in allowing the applicability of benefits of Article 8 of DTAA between India and Germany on freight income of Rs.70,35,73,353/- without appreciating the fact that the Revenue had filed appeal in High Court against the order of Tribunal’s order in the case of the assessee for AY 2007-08 (i ITA No.8854/Mum/2010).

3.1 In the return of income filed for assessment year 2006-07, the assessee-company claimed that the entire income in India comprised of profits derived from operation of ships in international traffic and such income was not taxable in India in India in terms of Article-8 of the Double Taxation Avoidance Agreement (DTAA) between India and Germany. It was further asserted that such income was taxable in Germany only i.e. where the place of effective management is situated. In this manner, the total income was returned at ‘Nil’. The claim of the Assessing Officer was that though in principle assessee was eligible for the benefits under Article-8 of the India-Germany, DTAA, but the profits relating to the goods transported through feeder vessels would not qualify for the benefits of Article -8 of the treaty. The DRP has observed that in a similar situation in assessment year 2007-08, the Tribunal in assessee’s own case vide dated 14/08/2013, following the judgment of the Hon'ble Bombay High Court in the case of DIT (IT) vs. Balaji Shipping U.K. Ltd., 77 DTR 361 (Bom) held that the benefits of the DTAA between India and Germany would be available to the assessee even in respect of revenues earned from Feeder vessels obtained by the assessee by slot hire arrangements. In view of the aforesaid decision of the Tribunal dated 14/08/2013, the DRP directed the Assessing Officer to apply the decision of the Tribunal in the captioned assessment years as well while completing the final assessment. The Revenue has challenged the aforesaid directions of the DRP in the present appeal.

, is that an appeal has been preferred in the High Court against the order of the Tribunal for assessment year 2007-

08. So however, mere filing of an appeal does not distract from the fact that the order of the Tribunal dated 14/08/2013 (supra) continues to hold the field inasmuch as the same has not been altered by any higher authority. As a consequence, we find no merit in the appeal of the Revenue, which is hereby dismissed.