TaxTMI 
TaxTMI 
2015 (6) TMI 709
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....ves leave to add, alter or amend any grounds of appeal at the time of hearing." 3. Vide petition dated 24th February 2014, the assessee has filed additional grounds of appeal by stating as follows: "The appellant, through oversight and inadvertently, could not raise in the original appeal memo, the following additional grounds of appeal, and, therefore, the appellant now craves the leave to raise these additional grounds of appeal before this Hon'ble ITAT. The appellant also draws your honour's attention to the fact that all the information and explanation were available before both the lower authorities and, therefore, these additional grounds can be raised before this Hon'ble ITAT: 1. The learned CIT(A) has erred both in law and on facts in erroneously invoking the provisions of Section 172 r.w.s. 163 of the Act and that too without affording any opportunity of hearing which is illegal and without any jurisdiction. 2. The learned CIT(A) further erred in law and on the facts of the case in not appreciating the fact that the learned Assessing Officer had already passed the order under section 172(6) of the Act on 23/10/2001 granting port cl....
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....he ship"; (ii) that "in this case, freight is paid to the owner in UK but through the chartered of Bahamas"; (iii) that since the freight was ultimately received by UK based owner and the taxability is of the owner, the freight income is entitled to the treaty benefits under section 90: (iv) that "the ship is under Norway flag which is also under exemption under double taxation avoidance agreement with Norway, and thus, from the point of view of flag, there is no avoidance to tax". 6. None of these submissions, however, impressed the Assessing Officer. It was noted by the Assessing Officer that, under the charter party agreement, the taxes were payable by the charterer i.e. HC Trading International Inc, Nassau, Bahamas. As for the assessee's submission that by way of a subsequent amendment, the responsibility of paying taxes was assigned to the Tramp Shipping Limited, it was noted that the "since this amendment was dated 20.10.04, it has no relevance as it was not in existence on the date of issue of NOC". The Assessing Officer, accordingly, concluded that, "In view of the above mentioned facts, it is very clear that (tax on) freight was payable by the charterer in Bahamas w....
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....ecovery of tax in the case of any ship, belonging to or chartered by a non-resident, which carries passengers, livestock, mail or goods shipped at a port in India 1631[* * *]. (2) Where such a ship carries passengers, livestock, mail or goods shipped at a port in India, 1632[seven and a half per cent] of the amount paid or payable on account of such carriage to the owner or the charterer or to any person on his behalf, whether that amount is paid or payable in or out of India, shall be deemed to be income accruing in India to the owner or charterer on account of such carriage. (3) Before the departure from any port in India of any such ship, the master of the ship shall prepare and furnish to the 1632a[Assessing Officer] a return of the full amount paid or payable to the owner or charterer or any person on his behalf, on account of the carriage of all passengers, livestock, mail or goods shipped at that port since the last arrival of the ship thereat : Provided that where the 1632a[Assessing Officer] is satisfied that it is not possible for the master of the ship to furnish the return required by this sub-section before the departure of the ship from the ....
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.... found payable by him on such assessment shall be paid by him or refunded to him, as the case may be1633c. 1633d[(8) For the purposes of this section, the amount referred to in sub-section (2) shall include the amount paid or payable by way of demurrage charge or handling charge or any other amount of similar nature.] 1631. The words "unless the Income-tax Officer is satisfied that there is an agent of the non-resident from whom the tax will be recoverable under the other provisions of this Act" omitted by Finance Act, 1975, s. 19 (w.e.f. 1-6-1975). 1632. Subs. for "one-sixth" by Finance Act, 1975, s. 19 (w.e.f. 1-6-1975). 1633. Subs. by Finance (No. 2) Act, 1967, s. 29 (w.e.f. 1-4-1967), for "rate or rates for the time being". 1633a. Ins. by Finance Act, 2007, s. 51 (retrospectively w.e.f. 1-4-2007). 1633b. "Collector of Customs" has been designated as "Commissioner of Customs" by Finance Act, 1995, s. 50, but no corresponding amendment has been made in the IT Act. 1633c. Circular No. 730, dated 14-12-1995 [(1995) 129 CTR (St) 45] clarifies that non-resident assessees engaged in the business of carriage by shipping of passengers and goods, etc., shall neither ....
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....hips in international traffic shall be taxable only in that State (i.e. UK)". In this view of the matter, and in view of the fact that it has not been the case of any of the authorities below that the income belonged to the charterer based in Bahamas and not the owner based in UK, we are unable to see any legally sustainable reasons to decline the benefit of Article 9 to the assesse before us. The grievance of the assessee must, therefore, be upheld. 10. However, before parting with the matter, we may also deal with an interesting legal issue raised by the learned counsel. We have noted that, as pointed out by Shri Hemani, the assessment under section 172(4) was framed on 29th March 2005, whereas the ship had left Indian port on 29th October 2001. The assessment was thus framed almost three years after the end of the relevant previous year. Undoubtedly, as at the relevant point of time, there was no time prescribed under the statute for framing the assessment under section 172(4) and the provisions of Section 172(4A), which set this time limit as nine months from the end of the financial year in which return under section 172(3) is filed, came into effect from 1st April 2007, bu....