TaxTMI 
TaxTMI 
2017 (3) TMI 1376
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.... 4,14,274/- u/s. 172(4)of the Act and denying benefit of India - Denmark DTAA, ignoring tax residency as well as other relevant details furnished and Ld. CIT (A) also erred in confirming the same. ii. Ld. AO and Ld CIT(A) has erred in law as well as on facts in not accepting the contention of the appellant that M/s. Faber Shipbroker APS, Denmark, is only disponent owner of the vessel who is the actual Beneficiary of receipt of Freight and responsible for the entire taxation burden and payment of tax in Denmark. iii. Ld. AO and Ld. CIT(A) has erred in law as well as on facts in stating that the payment received by the claimed disponent owner Faber Ship Broker of Denmark, would be in nature of hiring payment for charter and not freight for carrying goods. iv. Ld. AO has erred in law as well as on facts in stating that M/s. CTI Group Inc., Jordan has chartered the ship & has transported goods & has earned freight and Ld. CIT(A) also erred in confirming the same. v. The Ld. AO has erred in law in taxing income in India ignoring the fact that there is DTAA with Denmark i.e. country to which freight beneficiary belongs. Article 4 and particularly Artic....
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....rokers APS- Denmark. Reg. Please refer to your return dated 01.02.2011 and 15.02.2011. On going through the submission made available on records, it was noticed that you have claimed DTAA benefit for the country of Denmark without any valid documents. Your attention is also invited for the following basic requirements for obtaining DTAA benefit.:- ARTICLE 9: Shipping - 1. Profits derived from the operation of ships in international traffic shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated. In other to obtain benefit of DTA, you will submit following details of the freight beneficiaries of the vessels:- I) Please furnish latest amended Article of Association dated 02.07.1999 (as per your summary sheet). II) Please that, Jens Faber Andersen, is General Manager of the company, therefore, you are requested to furnish following details:- a) Please incorporation certification of M/s. Faber shipbroker APS - Denmark. b) Details of share holders of company with their nationality & address of M/s. Faber Shipbroker APS - Denmark. c) During the year comp....
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....e Income-tax Act, 1961. 7. In response to the said notice, the agent/assessee had submitted details filing return u/s. 172(3) for obtaining port clearance u/s. 172 (6) of the Act. In this reply dated 23.11.2011 received by this office on 30.11.2011, the agent/explained as under:- Copy of amended Article of Association dated 02.07.1999 is attached herewith. a) Incorporation certificate of M/s. Faber Shipbrokers APS - Denmark is attached herewith. b) The Jens Faber Andersen is a sole Proprietor of the company and tax registered here in Copenhagen, Denmark, tax number is 37050629 copy of passport of Jens Faber Andersen is attached herewith. c) No AGM is held during the year as the company owned by the sole proprietor as mentioned in point above. d) The Jens Faber Andersen is a sole proprietor of the company, and tax registered here in Copenhagen, Denmark - tax number is 37050628. Copy of passport of Jens Faber Andersen is attached herewith. i. Complete copy of Freight invoice - The freight was not received from India but from the ultimate buyers i.e. Jorden. Copy of declaration made by Managing Director of Faber Shipbrokers is attache....
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....ers, Denmark is the desponent owner and ship was chartered by CIT Group Inc., Jordan for shipment of 10,160 M.T. of cement purchased from M/s. Saurashtra Cement Pvt. Ltd. 12. Ship arrived on Porbandar port on 16/01/2011 & 11/02/2011 and return u/s. 172(3) was filed on 02/02/2011 and 17/02/2011 for freight amount of Rs. 27,52,344/- and Rs. 27,71,307/- and amount chargeable to income tax u/s. 172(3) @ 7.5% is Rs. 87,174/- and 87,774/- totaling to Rs. 1,74,948/-. 13. Freight was payable by CTI Group Inc., Jordan to Faber Shipbrokers, Denmark (kindly refer clause no. 13 and 14 of charter party agreement at Page No.36 of Paper Book.) 14. Faber is owner and CTI Group Jordan is charterer (Refer para 3 & 4 of Charter Party agreement). As per Charter Party agreement - CTI Group Inc., Jordan is charterer and Faber Shipbroker, Denmark is the owner. (This can be verified from the signatories to Charter party agreement). Therefore, the agreement sought by CIT(A) about agreement between CTI Group Inc., Jordan and Faber Shipbrokers, Denmark is Charter Party agreement was submitted before AO and CIT(A). 15. According to Section 172 of the Act, income of owner or charter who receives fr....
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....been operating from Denmark. It can be concluded that the Director Mr. Jens Faber Anderson resides in Denmark is resident of Denmark and have been operating business wholly from Denmark, all the important decisions are taken from Denmark in the form of meeting and therefore, the place of effective management and control is Denmark only. The principal company is also engaged in international traffic and residence is Denmark. Article 9 of the treaty between India and Denmark read as under - Profits derived from the operation of ships in international traffic shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated. Therefore, on the basis of Article 9 of the DTAA between India and Denmark, the income on account of operation of ship in International Traffic shall be taxable in the state in which the place of effective management is situated i.e. in this case Denmark. Therefore, in view of the above discussion and considering Article-9 of the Treaty between India and Denmark and also the decision taken by the Department in earlier cases of the assessee, we hold that the ships operated in International Traffic....
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....Department/revenue has taken following Grounds of Appeal in ITA No.517/Rjt/2013 for the Assessment Year 2012-13:- i. The Ld. CIT(A) has erred in law and on facts on this issue of applicability of Article-4-Resident and Article-9-Shipping in which the principal beneficiary did not have regular shipping business in India. ii. The Ld. CIT(A) has erred in law and on facts by holdings that the freight beneficiary of the vessel is M/s. Faber Shipbroker APSDenmark instead of freight received by M/s. CIT Group Inc., Jordan. The country of Jordan, the Government of India did not have comprehensive tax treaty. iii. The Ld. CIT(A) has erred in law and on facts by holding that freight beneficiary of the vessel is M/s. Faber Shipbroker APS Denmark without verifying or filing a copy of bank account/bank certificate of the actual freight beneficiary of the vessel. iv. The Ld.CIT(A) has erred in law and on facts that determined freight beneficiary of the vessel is M/s. Faber Shipbroker APS - Denmark based on the charter party agreement instead of verifying the bank account of freight remittance. v. The Ld. CIT(A) has erred in law and on facts that freig....