TaxTMI 
TaxTMI 
2016 (5) TMI 1025
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.... 3. To adjudicate on this appeal, on merits, only a few material facts need to be taken note of. There is no dispute that the assessee is a tax resident of Indonesia and that he has earned income from slot chartering in certain vessels sailing from the port of Mundra during the relevant previous year. During the course of the scrutiny of returns filed by the assessee under section 172, the benefits of India Indonesia Double Taxation Avoidance Agreement [(1988) 171 ITR (St) 27; India Indonesia tax treaty, in short], on the short ground that "these vessels in which the containers were transported were not owned or chartered by the assessee". In the impugned assessment order, the Assessing Officer did specifically observe as follows: The assessee has not owned or chartered these vessels. The assessee has either taken only some slots or has loaded a few handful containers on the vessels mentioned above. Section 172 explicitly gives powers for charging and recovery of tax on any ship owned or chartered by a nonresident which carries passengers, livestock, mail or goods shipped at any port in India. Thus, it is clear that when a non-resident owns or charters a ship and goods are shipp....
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.... sale of tickets for such transportation on behalf of other enterprises, the incidental lease of ships or aircraft and any other activity directly connected with such transportation 6. A plain look at article 9(1) shows that that the profits derived by an enterprise of a Contracting State "from the operation of ships or aircraft in international traffic" is taxable only in the State in which such enterprise is resident. In other words, source jurisdiction has no rights to tax such an income. The expression income from 'operation of ships or aircrafts' stands defined under Article 9(4) inasmuch as 'operation of ships or aircrafts' shall mean to include not only "transportation of passengers, mail, livestock or goods carried on by the owners or lessees or charterers of a ship or aircraft" but also "sale of tickets for such transportation on behalf of other enterprises", "the incidental lease of ships or aircrafts" but also, rather most importantly, "any other activity directly connected with such transportation". In effect thus, not only the income from operations of ships or aircraft in international traffic, but also activities connected therewith, are taxed only in the residenc....
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....ficer] is satisfied that it is not possible for the master of the ship to furnish the return required by this subsection before the departure of the ship from the port and provided the master of the ship has made satisfactory arrangements for the filing of the return and payment of the tax by any other person on his behalf, the 1632a[Assessing Officer] may, if the return is filed within thirty days of the departure of the ship, deem the filing of the return by the person so authorised by the master as sufficient compliance with this sub-section. (4) On receipt of the return, the 1632a[Assessing Officer] shall assess the income referred to in sub-section (2) and determine the sum payable as tax thereon at the 1633[rate or rates in force] applicable to the total income of a company which has not made the arrangement referred to in section 194 and such sum shall be payable by the master of the ship. 1633a[(4A) No order assessing the income and determining the sum of tax payable thereon shall be made under sub-section (4) after the expiry of nine months from the end of the financial year in which the return under subsection (3) is furnished: Provided that where the return under s....
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.... 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 be liable to pay interest under sections 234B and 234C nor entitled to interest under section 244A, in respect of their income attributable only to the business of such carriage of passengers and goods, etc. 1633d. Ins. by Finance Act, 1997, s. 45 (retrospectively w.e.f. 1-4-1976). [Emphasis, by underlining, supplied by us] 8. It is only when the assessee is owner or charterer of the vessel that section 172 comes into play. If it is the case of the Assessing Officer that the assessee is not an owner or charterer of the vessel, section 172, under which the impugned assessment is framed, does not come into play at all, and the very foundation of the impugned assessment ceases to have any legally sustainable basis. Revenue does not, therefore, has anything to gain from this hyper-technical plea. 9. While dealing with the taxability of income in a situation in which transportation of goods has been done by using the slot charter, as is the admitted position on the facts of this case, it is important to tak....