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Income Tax Appellate Tribunal, MUMBAI BENCH “I”, MUMBAI
Before: SHRI G.S.PANNU & SHRI AMARJIT SINGH.
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.
Since the issue involved in all the appeals is identical, we may take up for discussion the facts relating to the assessment year 2006-07, where vide Ground of appeal raised by the Revenue reads as under:-
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).
Briefly put, the relevant facts are that the respondent assessee is a foreign shipping company which is a tax resident of Germany. It is in the business of operation of ships and it transports cargo from/to ports in India. For the purposes of cargo transportation it uses own/chartered/pooled vessels including slot arrangements with other vessels. The factual matrix reveals that sometimes the vessels of the assessee- company or its consortium partners do not come to the Indian Ports. In such situations, assessee – company engages feeder vessels to transport cargo from the originating port to the hub port (i.e. the intermediary port where vessels owned/chartered/pooled by assessee- company are anchored). From the hub to the destination port, the cargo is transported on vessels owned/chartered/pooled by the assessee- company. In the course of such business operations, assessee- company transports cargo on slot arrangements from origin port to the destination port.
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.
Ostensibly, the direction of the DRP, which has been sought to be challenged by the Revenue before us, are based on the order of the Tribunal dated 14/08/2013(supra) in the assessee’s own case for assessment year 2007-08, which continues to subsist. As a consequence, we find no reason to interfere in the directions made by the DRP. The only plea of the Revenue, as manifested in the above stated Ground of 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.
Since the facts and circumstances in the appeals of the Revenue for assessment years 2008-09, 2009-10, 2010-11 and 2011-12 are pari- materia to those considered by us in the appeal for assessment year 2006-07, our decision in the Revenue’s appeal for assessment year 2006-07 shall apply mutatis mutandis in other captioned appeals assessment years also.
Resultantly, all the captioned appeals of the Revenue are dismissed.