TaxTMI 
TaxTMI 
2014 (11) TMI 564
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.... Act. The petitioners pleaded by a deed of partnership dated 31st July, 1997 the petitioner nos. 1 and 2 formed a partnership firm with effect from 1st January, 1997 under the provisions of law relating to partnerships of England and Wales, having its office in the UK to carry on the business of shipping in international waters. It is the petitioners' case in their pleadings the first assessment year subsequent to the formation of the partnership was Assessment Year 1997-98. Since an incomplete return dated 19th May, 1998 was originally filed, the petitioner no. 1 under cover of its letter dated 31st March, 1999 enclosed a revised return. The contents of that letter are reproduced below:- "We enclose the Revised Return of Income for the assessment year 1997-98. With effect from 1st January, 1997 P&O Containers Ltd., U.K. and Nedlloyd Lines B.V. have pooled their business worldwide as both these companies were acquired by P&O Nedlloyd Container Ltd., U.K. The name of P&O Containers Ltd., U.K. was changed to P&O Nedlloyd Ltd. which operates in India with effect from that date. However, the return for the above....
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....r business of operation of ships in international traffic, the impugned notice was issued by the Revenue, that too without disclosing any reasons for the issuance thereof. However, since subsequently reasons were given by the Revenue by intimation thereof being annexure P-7 to the writ petition, received by the petitioner on 17th January, 2005, the objection regarding absence of reasons was not pressed. The reasons for issuance of the impugned notice as would appear from the said annexure are as under:- "M/s. P&O Nedlloyd Partnership, UK (PONP in short) filed its Return of Income arising out of shipping business in India, for the A.Y. 2002-03 on 31.10.2002 as 'New Case-1st Yr.' Meanwhile, information vide L.No.Addl.DIT (IT-2)/264/2003-04 dated 22.09.2003 has been received that PONP's Indian income from shipping business in earlier years was not disclosed to the Department. It is noted that the PONP was actually carrying on the shipping business in India. It has realised gross freight of Rs. 2,41,68,52,588 from vessels shipped at Indian ports during the period relevant to assessment ye....
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....e respective port officers where the ships arrive and leave. Without waiving such objection, he submitted, there was full and true disclosure and therefore in the facts and circumstances it cannot be said there were reasons to believe that income of the partnership had escaped assessment for the assessment year under notice. The partners thus were competent to maintain the challenge against the notice where the income of the partnership was already assessed and granted exemption since the provisions of Articles 9 and 8(A) of the India-UK and India-Netherlands Treaties do not permit taxation of income in India and specifically covers shares of joint business also. There was no failure to disclose and the notice alongwith the reasons to reopen are untenable and ought to be quashed. The late Mr. Shome, learned Senior Advocate and after him Mr. Ramesh Chowdhury, learned Advocate argued on behalf of the Revenue. The Revenue's case from its pleadings is that when the partnership had come into effect from 1st January, 1997 it was required to file its return for the relevant Assessment Year 1997-98. The notice was duly issued under section 148 of the said Act. The Revenue contended the UK....
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....bsp; (x) Commissioner of Income Tax V. Taiyo Gyogyo Kabushiki Kaisha. : 244 ITR177; (xi) Union of India And Anr. V. Azadi Bachao Andolan And Anr. : 263 ITR 706; (xii) Hindustan Lever Ltd. V. R.B. Wadkar, Assistant Commissioner of Income Tax And Ors. : 268 ITR 332; (xiii) Amiya Sales And Industries And Anr. V. Assistant Commissioner of Income Tax And Ors. : 274 ITR 25; (xiv) Commissioner of Income Tax V. Kelvinator of India Ltd. 320 ITR 561; (xv) Emirates Shipping Line, FZE V. Assistant Director of Income Tax : 349 ITR 493 and (xvi) Indivest Pte. Ltd. V. Additional Director of Income Tax. And Ors. : 350 ITR 120." None of the propositions of law laid down by the above decisions were disputed. The parties were ad idem regarding the scope and effect of section 90 of the Income Tax Act, 1961. The facts as emerged from the above are that the petitioner no.1 under cover of its letter dated 31st March, 1999 had filed a revised return of income for the Assessment Year 1997-98. It a....
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....return for the Assessment Year 2002-03 on 31st October, 2002 as 'New Case- 1st Year' the petitioners asserted the partnership business carried on by shipping in international traffic out of ports in India had yielded the said gross freight in the hands of the petitioner no.1 as income of the said partnership. In the premises the contention of the Revenue that income of the said partnership had escaped assessment as chargeable to tax necessitating issuance of the impugned notice cannot be brushed aside. This court finds by reason of income of the said partnership having escaped assessment which escapement was noticed subsequently as indicated in the reasons supplied and as the said partnership assessee had failed to disclose fully and truly all material facts necessary for its assessment for the earlier assessment years from 1997-98 onwards, the assessment under section 143(3) made earlier of the petitioner no.1 could not be relied upon as an assessment made of the relevant year relating to the said partnership. Therefore, the assessing officer's reasons to believe that income chargeable to tax of the said partnership for assessment years prior to the return filed by it for Assessme....
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.... an enterprise of a Contracting State from the operation of ships in international traffic shall be taxable only in that State. 5. The provisions of this Article shall apply also to income derived from participation in a pool a joint business or an international operating agency." The effect of the relevant provisions of the India-UK Treaty as reproduced above is the convention applies to persons who are residents of one or both of the Contracting States by operation of clauses 1(f) and 2 of Article 3 of the convention. It is found the said partnership, partners of which are registered in the UK, is not a person treated as a taxable unit under the taxation laws in force in the UK. Under section 2(31) (iv) of the Income Tax Act, 1961, person includes a firm. Under section 2(23)(i) thereof a firm shall have the meaning assigned to it in the Indian Partnership Act, 1932 and shall include a limited liability partnership as defined in the Limited Liability Partnership Act, 2008. The provisions of the Indian Partnership Act, 1932 in particular sections 4 and 69 when applied for the purpose of determining whether the said partnership is a firm within the meaning of the said Act, leads th....