TaxTMI 
TaxTMI 
2012 (11) TMI 510
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....ing them together, on 20.7.2012. Both parties agreed to argue the matter on 20.7.2012. The entire bunch of appeals was accordingly heard on 20.7.2012. 2. As already stated earlier, the grounds taken in all the appeals are identical. They read as under: "(i) The ld. CIT(A) has erred in law and on facts in holding that the order of the AO is null and void and that the assessee is assessable u/s 172(7) of the Act. (ii) The Ld. CIT(A) has further erred in law and on facts in not directing the jurisdictional AO to tax the income of the assessee from the business of handling cargo transportation (including slot chartering business), as per normal provisions of the Act, while holding that the order passed u/s 172(4) is null and void." 3. Facts of the case, in brief, in so far as they are relevant for disposal of the present bunch of appeals are that the Respondent-company, namely, M/s CMA CGM Agencies (India) Pvt. Ltd., acts as agent for the freight beneficiary, namely, M/s CMA CGM SA France. In the assessment year under appeal also, it acted as agent of the said freight beneficiary. The freight beneficiary, i.e., M/s CMA CGM SA France, is engaged in the business o....
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....nt year 2002 -03 went up to the Hon. ITAT, Mumbai and is a reported case, 24 DTR 37) and had filed the return for the assessment year under question much before the 172 (4) order was passed. Since, the appellant has opted for the option to be assessed u/s 172(7) by filing return of income u/s 139(1); it is established that the appellant is in regular shipping business and liable to be assessed under other provisions of the Act including 44B; and not u/s 172(4). Thus, the combined order passed u/s 172(4) by the Income Tax Officer is null and void as assessee's claim that it is not engaged in occasional shipping business is backed by its taking the alternate recourse provided in section 172(7) itself. It is liable to be assessed on the basis of return filed u/s 139(1) for its entire income. One more aspect here is that once the AO says that the appellant is not owner/charter of the vessel; then he could not have taken recourse to section 172 itself as the section applies to freight income paid/payable to the owner/character only (or any person on its behalf). The subsection (1) reads as under: "172. (1) The provisions of this section shall, notwithstanding anything contained....
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....case. According to him, tax effect in each case/appeal was less than Rs. 3 lakhs and hence 30 out of 40 appeals filed by the Department were not maintainable as they have been filed in contravention of the aforesaid instructions issued by the CBDT. 7. Per contra, the ld. CIT-DR referred to Para 5 of the aforesaid instructions and submitted that tax effect has to be seen with reference to each case which, according to him, referred to an assessee. His second submission was that the issue under appeal was common in all the appeals and therefore tax effect should be seen with reference to the disputed issue under appeal in the case of the assessee and not with reference to each of the appeals. According to him, all the 40 appeals filed by the Department were strictly in conformity with the aforesaid instructions and therefore they were maintainable. 8. As regards the issues taken by the Department in its Grounds of appeal, the ld. CIT-DR submitted that the ld. CIT(A) has brought no foundational fact on record to support his view that the respondent-company has already filed its return of income u/s 139(1) and therefore the ld. CIT(A) was not justified in invoking the provisions ....
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....ions issued by the Central Board of Direct Taxes. The case of the Revenue, on the other hand, is that the tax effect is more than Rs. 3 lakhs with reference to the disputed issue in the case of the Respondent-company in the assessment year under appeal and therefore all the aforesaid appeals are maintainable in terms of the aforesaid instructions of the Board. Paragraphs 2-5 of Instruction No. 3/2011 dated 9.2.2011 issued by the CBDT are relevant for adjudicating upon the issue under consideration. They read as under: "2. In supersession of the above instruction, it has been decided by the Board that departmental appeals may be filed on merits before Appellate Tribunal, High Courts and Supreme Court keeping in view the monetary limits and conditions specified below. 3. Henceforth appeals shall not be filed in cases where the tax effect does not exceed the monetary limits given hereunder:- S.No. Appeals in Income Tax Matters Monetary Limit (In Rs.) 1 Appeal before Appellate Tribunal 3,00,000 2 Appeal u/ s 260A before High Court 10,00,000 3 Appeal before Supreme Court 25,00,000 It is clarified that an appeal should not be....
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...." where tax effect is more than Rs.3 lakhs. "Tax effect" has been defined in paragraph 4 of the said instructions as the difference between the tax on the total income assessed and the tax that would have been chargeable had such total income been reduced by the amount of income in respect of the issues against which appeal is intended to be filed ("disputed issues"). It is clarified in paragraph 4 of the aforesaid instructions that "tax" shall not include any interest thereon, except where "chargeability of interest" itself is in dispute. Paragraph 5 of the aforesaid instructions is quite relevant for deciding the issue before us. Opening lines of Para 5 require that "tax effect" should be calculated separately for "every assessment year in respect of the disputed issues in the case of every assessee." Paragraph 5 of the said Instructions further states: "In other words, henceforth, appeals can be filed only with reference to the tax effect in the relevant assessment year." It is thus clear that tax effect in a case has to be seen in respect of the disputed issues in every assessment year in the case of an assessee. Paragraph 5 enables the Department to file appeal(s) if the tax e....
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....e, the shipping business being carried on by the freight beneficiary is not occasional shipping business but regular shipping business and hence the income there-from is liable to be assessed under the normal provisions of the I-T Act and not u/s 172(4) thereof. Two, the respondent-company is filing its return of income u/s 139 and is being assessed as such in respect of income from shipping business and hence the provisions of section 172(4) are inapplicable to it. Three, the respondent-company has already filed its return of income u/s 139 at Mumbai and thus exercised its option in terms of section 172(7) for being assessed under the normal provisions of the I-T Act. Four, the I-T Act does not contemplate multiple assessments in the case of the same person and/or in respect of the same income in the hands of the same person. 15. Before proceeding further, it is considered useful to refer to the scheme of taxation u/s 172, which falls under Chapter XV of the Income-tax Act 1961. Chapter XV deals with "Liability in Special Cases". Part "H" of Chapter XV contains only one section, i.e., section 172. It deals with "Profits of non-residents from occasional shipping business". It th....
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....e I-T Act, and if he so claims, any payment made by him u/s 172 shall be treated as payment in advance of the tax leviable for that assessment year, and the difference between the sum so paid and the amount of tax found payable by him on such assessment shall be paid by him or refunded to him, as the case may be. 16. The scheme of taxation u/s 172 has been explained by the Hon'ble jurisdictional High Court in Arabian Express Line Ltd. of United Kingdom v. Union of India [1995] (Guj.) as under: "............ It is to be noted that section 172 of the Income-tax Act occurs in Chapter XV which provides for liability in various special cases. The sub-heading of section 172 is "Profits of non-residents from occasional shipping business". This section provides that the profits made by non-residents from occasional shipping shall be taxed by adopting the summary method of assessment by holding that 7 ½ per cent of the amount paid or payable on account of such carriage to the owner or the charterer is deemed to be income accruing in India to the owner or charterer on account of such carriage. It also provides that before departure of the ship, the master of the ship has to furn....
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....nal shipping business but in regular shipping business and hence would be outside the scope of section 172 cannot be said to be untenable on facts and in law. His finding in this behalf is therefore confirmed. Similarly, the Department has not placed any material on record to rebut the finding recorded by the CIT(A) that the respondent-company has already filed its return of income at Mumbai. That being the position, the provisions of section 172(7) would apply to the respondent-company. Besides, as rightly observed by the CIT(A), the Income-tax Act does not permit multiple assessments in the hands of the same taxable entity and that too in respect of income from the same business. On these facts, we are unable to disturb the finding recorded by the CIT(A). The order of the CIT(A) that the respondent-company is liable to be assessed on the basis of return filed u/s 139(1) for its entire income is therefore confirmed. His further order quashing the order passed by the AO u/s 172(4) is also resultantly confirmed. 19. As stated earlier, the Hon'ble jurisdictional High Court has held in Arabian Express Line Ltd. of United Kingdom (supra) that the procedure contemplated by section 17....