TaxTMI 
TaxTMI 
2006 (6) TMI 182
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.... 2003-04. 2. The solitary common issue raised in these appeals relates to the question whether on the facts and in the circumstances of the case the assessee was liable to deduct tax at source while remitting payments to various shipping companies under time charter agreements. 3. We have heard the rival submissions in the light of the material placed before us and the precedents relied upon. The assessee is a Tamil Nadu Government Undertaking. It is engaged in the business of transport of coal from various ports in India on behalf of the Tamil Nadu State Electricity Board, Chennai. For the transportation of coal the assessee charters vessels from India as well as from Foreign Shipping Companies (hereinafter called FSC). For this purp....
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....alty has been defined in Explanation 2 clause (iva) to section 9(1)(vi) as the consideration for the use or right to use any industrial, commercial or scientific equipment, but not including the amounts referred to in section 44BB. From this it follows that royalty includes any consideration for the use of equipment. It was contended before us that ship cannot be construed to be an equipment. The word 'equipment' is neither defined under the Act nor under the treaty. As per the New Oxford Advanced Learners Dictionary 'equipment' means 'the things that are needed for a particular purpose or activity'. As per Websters Dictionary 'equipment' means 'all fixed assets other than land and building' used in a business enterprise. A fixed asset is a....
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....icle 12(2) the earnings from bareboat charters are royalties." 8. The learned Departmental Representative invited our attention on the decision of the Tribunal rendered in the case of West Asia Maritime Ltd v. ITO [IT Appeal Nos. 2376 and 2377 (Mad.) of 2005, dated 19-5-2006]. In this case it was held that ship is an equipment. The hire charges thus partakes the character of royalty for use of the equipment under the provisions of section 9(1)(vi) of the Act. Shri Pardiwala submitted that in the aforesaid decision the Tribunal did not consider the definition of the term 'equipment' as defined under sections 44BB and 43(3) of the Act. 9. It is pertinent to note that the aforesaid definitions were rendered in the context of sections 44B....
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....ement entered into by the assessee with a FSC, which is included at page 2 of the paperbook. This agreement was approved by the New York Produce Exchange. Clause 4 of the agreement reads as under: "4. That the Charterers shall pay for the use and hire of the said vessel at the rate of USD 29,000 per day including overtime payable every 15 days in advance or pro rata for part of a day.... United States Currency commencing on and from the day of her delivery, as aforesaid and at and after the same rate for any party of a day; hire to continue until the hour of the day of her redelivery in like good order and condition, ordinary wear and tear excepted, to the Owners (unless lost) at... on dropping lasy outward sea pilot station at safe port....
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....chartered by the assessee tantamounts to a permanent establishment for the foreign shipping companies. Nothing was placed before us to refute the contention of the department. As such we do not find merit in the argument of Mr. Pardiwala on this count. 14. The assessee did file before the Commissioner (Appeals) the present appeals under section 246A(1)(ha). This section reads as under:- "246A. (1) Any assessee aggrieved by any of the following orders (whether made before or after the appointed day) may appeal to the Commissioner (Appeals) against:- (ha) an order made under section 201." These are not appeals under section 248 which prescribes for appeal by a person denying liability to deduct tax. This section reads as under:- ....
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....is not satisfied with the decision of the Assessing Officer he may ventilate his grievance by filing appeal under section 248 before the Commissioner (Appeals) in regard to the taxability of the sum and the issuance of certificate for not deducting tax or for deducting tax at a lower rate. 15. The Mumbai Bench-D of the Tribunal in the case of Dy. CIT v. Arthur Anderson & Co. [IT Appeal No. 9125 (Mad.) of 1995, dated 29-7-2003] has held that where there exists a doubt as to the chargeability of income to tax there also tax is to be deducted at source EX ABUNDANTI CAUTELA. The fact that whether income is exigible to tax or not can only be determined after the assessment. The Hon'ble Apex Court in the case of Transmission Corpn. of A.P. Ltd....