TaxTMI 
TaxTMI 
2016 (1) TMI 74
X X X X Extracts X X X X
X X X X Extracts X X X X
....d that the Assessing Officer completed the original assessment u/s 143(3) of the Act by an order dated 29.3.2005. The Assessing Officer found that the income other chargeable to tax has escaped assessment since the assessee has not fully and truly disclosed all the material facts relevant for completing the assessment. Therefore, the assessment was reopened by issuing notice u/s 148 of the Act on 31.3.2009. Referring to the reasons recorded by the Assessing Officer for reopening the assessment which was extracted in the assessment order at pages 1&2, the ld. DR submitted that the assessee has paid Rs. 1.54 crores towards lease expenses to M/s Crono Containers Ltd, United Kingdom, without deduction of tax. The Assessing Officer also found that the assessee has not disclosed the above payment in the return of income. Even the name of the recipient was not disclosed to the Department at the time of original assessment. Therefore, the Assessing Officer reopened the assessment u/s 147 and completed the assessment after giving reasonable opportunity to the assessee. However, on appeal by the assessee, the CIT(A) found that there was a change of opinion, therefore, the reopening of assess....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y liability. In this case also, according to the ld. Counsel, the assessee has furnished all details, therefore, reopening of assessment after expiry of four years is not justified. On a query from the Bench when the Assessing Officer specifically claims that the assessee has not furnished the name of the recipient and the nature of payment, whether such details were filed before the Assessing Officer in response to the questionnaire issued, the ld. Counsel submitted that all the details were furnished before the Assessing Officer. When it was brought to the notice of the ld. Counsel for the assessee that the reply filed by the assessee before the Assessing Officer does not contain any such details, the ld. Counsel clarified that the books of account were produced before the Assessing Officer. The ld. Counsel has also clarified that if necessary, the assessee is ready to produce the books of account before this Tribunal also. The ld. Counsel further submitted that if the assessee has not furnished the name of the recipient, how the Assessing Officer was able to refer the name of the recipient while recording reasons for reopening the assessment. The very fact that the Assessing Off....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the course of regular assessment proceedings, the assessee could not furnish the name of the recipient, nature of payment and the details of tax deducted at source. Therefore, as rightly found by the Assessing Officer, there was a negligence on the part of the assessee in furnishing fully and truly all the material facts relevant for completing the assessment. 7. Let us now see whether there is a change of opinion as found by the CIT(A). We have carefully gone through the assessment order dated 29.3.2005. There is no discussion about the expenditure incurred by the assessee with regard to payment of lease rentals to non-resident and the claim of depreciation. Therefore, it is obvious that the Assessing Officer has not formed any opinion with regard to this issue. When the Assessing Officer has not formed any opinion, it cannot be said that there was a change of opinion as found by the CIT(A). In the case before the Apex Court in Kelvinator of India Ltd (supra), the Assessing Officer has taken one of the possible views, therefore, the Apex Court found that once a view was taken it cannot be changed by the Assessing Officer by reopening the assessment. In this case, it is not a ca....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... Counsel submitted that the assessee is engaged in leasing of containers. The ld. Counsel clarified that the assessee is not hiring any ship for transport of container. The business of the assessee is exclusively to take containers on lease and provide the same to other persons who require containers for transportation of materials. According to the ld. Counsel, the foreign company namely, M/s ABC Containers Pvt. Ltd. Colombo, has not rendered any service in India, hence, the payment of Rs. 3,78,342/- does not require any tax to be deducted. Therefore, the disallowance made by the Assessing Officer u/s 40(a)(i) is not called for. 13. On the contrary, Shri P. Radhakrishnan, ld. DR submitted that the containers taken on lease by the assessee might have reached Indian territory at one point of time, therefore, it cannot be said that the foreign company has not rendered any service in India. Moreover, no material was produced before the Assessing Officer and the CIT(A), therefore, the CIT(A) found that the payment of Rs. 3,78,342/- made to M/s ABC Containers Pvt. Ltd. Colombo, has to be treated as deemed income accrued in India u/s 9 of the Act and the assessee is liable to deduct ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....allowed the claim of the assessee u/s 40(a)(i) of the Act. However, on appeal by the assessee, the CIT(A) found that since the non-resident company has not rendered any service in India therefore, there is no need for deduction of tax u/s 195 of the Act. The ld. DR pointed out that in the course of its business activity, the containers might have reached Indian territory at any point of time, therefore, it cannot be said that the foreign company has not rendered any services in India. 16. On the contrary, Shri S Sridhar, ld. Counsel submitted that the Assessing Officer, after considering the agreement entered into with M/s Crono Containers Ltd, found that the assessee took marine containers on lease from M/s Crono Containers Ltd, and in turn leases out the same to various customers. Referring to Article 9 of Double Taxation Avoidance Agreement (DTAA) between India and United Kingdom, the ld. Counsel submitted that in view of Article 9, in respect of income arising out of leasing of containers is liable for taxation in the contracting State, therefore, the income of M/s Crono Containers Ltd is liable to be taxed only in United Kingdom. Hence, the assessee is not liable to deduct ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 18. Sub clause (4) of Article 9 clearly says that clause (1) and (2) of Article will apply to income of an enterprise of a Contracting State from the use, maintenance or rental of containers. In this case, the non-resident company, M/s Crono Containers Ltd, UK, admittedly, leased out the container to the assessee and the assessee is paying lease rentals for use of the container belonged to M/s Crono Containers Ltd, UK. Therefore, the lease rental of the container is subjected to tax in the Contracting State namely, UK, in view of Article 9 of the DTAA. It is well settled principles of law that DTAA will prevail over the domestic law namely, Indian Income-tax Act. It is open to the parties to take advantage of the beneficial provisions under the Income-tax Act, 1961, in view of sec. 90(2) of the Act. In view of the DTAA, lease rental received by M/s Crono Containers Ltd, from the assessee is not taxable in India, therefore, there is no liability for the assessee to deduct tax u/s 195 of the Act in view of the judgment of the Apex Court in GE India Technology Centre P. Ltd(supra). Therefore, this Tribunal do not find any infirmity in the order of the CIT(A) and accordingly, the s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....It is not in dispute that the marine container does not belong to the assessee. In fact, the container was taken on lease from M/s Crono Containers Ltd, UK. The nature of expenditure which was claimed as domestication expenses are customer domestication, transportation cost, lease rentals, survey, handling charges etc. When the assessee has taken the marine container on lease, the assessee is duty bound to maintain the container and keep the same to be fit for use. It is also not in dispute that the container taken on lease was in turn used by the assessee in its leasing business. Therefore, as rightly found by the CIT(A), the expenditure incurred by the assessee in the nature of customer domestication, transportation cost, lease rental, survey etc. are regular and recurring expenditure therefore, it is in the revenue field. This Tribunal do not find any reason to interfere with the order of the CIT(A). Accordingly, the same is confirmed. 23. In the result, the assessee's appeal I.T.A.No.442/Mds/2011 is partly allowed for statistical purposes and Revenue's appeal I.T.A.No.695/Mds/2011 is dismissed. 24. Now coming to Revenue's appeal I.T.A.No.696/Mds/2011 for assessment year 2....
X X X X Extracts X X X X
X X X X Extracts X X X X
....yman insurance policy is to protect the assessee-company from adverse financial effects in case of unexpected death of the Managing Director. Even though as per the terms of the insurance company, the keyman shall not have shares more than 51%, the fact is that the policy was taken in favour of the Managing Director and the assesseecompany has also paid the premium. On a query from the Bench whether the assessee-company could make any claim on the keyman insurance policy in view of the conditions imposed by the insurance company, the ld. Counsel clarified that that may not be relevant factor for allowing the claim of the assessee. Once the assessee paid the premium for keyman insurance policy, such expenditure has to be allowed as revenue expenditure. 29. We have considered the rival submissions on either side and also perused the material available on record. Admittedly, the assessee has paid Rs. 10 lakhs towards premium for keyman insurance policy on the life of the Managing Director Shri Bijoy Poulose. As per the terms and conditions of the insurance policy, to make a claim, the person who is insured should not have more than 51% of the shares in the company. The family membe....