TaxTMI 
TaxTMI 
TaxTMI 
2017 (10) TMI 679
X X X X Extracts X X X X
X X X X Extracts X X X X
.... returned by the appellant is erroneous, contrary to the provisions of the law, facts and circumstances of the case and is non-speaking and without giving any basis and therefore, requires to be suitably modified. 2 The learned CIT(A) erred in holding that reassessment proceedings under section 147 of the Act initiated by the AO is justified and thereby rejected appellant's contention that reassessment proceeding is without jurisdiction and therefore not valid. The learned CIT(A) erred in law as well as on facts in holding that the AO is justified in bringing the appellant's income to tax under section 9 of the Act and thereby rejected contention of the appellant that no income chargeable to tax has accrued or arisen or deemed to have accrued or arisen in India under section 9(1)(i) of the Act. 4 The learned CIT(A) erred in holding that liaison office in India substantially contributed in the business activity of the appellant without appreciating that (a) activity of India LO is preparatory and auxiliary in nature; (b) India LO performs limited role of co-ordination of crew recruitment process; (c) activity of India LO is not an income generating activity. The ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt Establishment) of Assessee in India. Thereafter, notice u/s 143(2) & 143(1) were issued and served upon the Assessee, thereafter, the Assessee filed the detailed reply which is mentioned in the assessment order, dated 21.02.2011. After considering the reply of the Assessee, Assessing Officer arrived at this conclusion that the Assessee office was having the business connection from which the income accrues to the Assessee, therefore, the Assessing Officer took into consideration the income of M/s Freedom Shipping Company Ltd. (FSCL) and assessed the income of the Assessee to the tune of Rs. 3,34,17,555/- for the Assessment year of 2005-06. Feeling aggrieved by the said assessment order, Assessee filed the appeal before the CIT(A) who confirm the order of Assessing Officer therefore, the Assessee has filed present appeal before us. ISSUE NO.2 4. Under this issue the Assessee has raised the validity of the notice u/s 147 &148 of the I.T. Act 1961. The Ld. representative of the Assessee has argued that the Assessee company is a company based in Nassau, Bahamas and is in the business of ship management and the Assessee company has opened the liaison office in India located at Uni....
X X X X Extracts X X X X
X X X X Extracts X X X X
....man power and liaison with local union for settling the dispute and also to look after the payment of statutory dues of various scheme and advise the principal regarding global job market and also to provide with into pertaining to the prevalent wage structure of various unions. The liaison office has certain power to take the decision regarding appointment of man power at various post that is fourth engineer, second officer, marine engineers, trainee men, cadet etc. The Assessee company has also taken the permission from the Reserve Bank of India to do this job by virtue of letter dated 19.05.1995. Assessee company did not generate any income from theliaison office taxable in India. It is to be seen what the AO has concluded. 1. The activity undertaken by the Indian LO directly contributes to the earning of income By DSCL. 2. The Indian LO has a business connection from which income accrues to DSCL and hence a reasonable estimation of attribution of income to the activities carried out by the India LO should be made. 3. The Indian LO is rendering human resource consultancy services to DSCL. 4. For quantification of the income, the AO considered another company viz. freedom....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e expenses of the office in India will be met exclusively out of the funds received from abroad through normal banking channels. (iv) The office in India shall not borrow or lend any money from/ to any person in India without our prior permission (v) The office in India shall not acquire, hold, )otherwise than by way of lease for a period not exceeding five years) transfer or dispose of any immovable property in India without obtaining prior permission of the Reserve Bank of India under Section, 31 of the Foreign Exchange Regulation Act, 1973 (vi)The office in India will furnish to our Bombay Regional Office (on a yearly basis) (a) a certificate from the audition to the effect that during the year no income was earned by/or accrued to the office, in India: (b) details of remittances received from abroad duly supported by Inward remittance certificate: (c) certified copy of the audited final accounts of the office in India; and (d) annual report of the work done by the office in India, stating therein the details of actual export or import, if any, effected during period in respect of which the office had rendered liaison services. (vii) The incharge of the l....
X X X X Extracts X X X X
X X X X Extracts X X X X
....taken into consideration for Assessing the income of the Assessee company and accordingly assessed the income to the tune of Rs. 3,34,17,555/- and accordingly the income was assessed for the relevant year also which are question. Nothing came into the violation of the said letter No income accrued, arised and deemed to be accrued in India as in this regard nothing came into the notice on record. Therefore, it cannot be said that there is business connection of the Assessee company in India. In this regard we find support of law settled in CIT v/s. R.D. Aggarwal & Co. (1965) 56 ITR 20 (SC) & CIT v/s. T.I. & M. Sales Ltd. (1987) 166 ITR 93 (SC) & DCIT v/s. Ardeshi B. Cursetjeef & Sons Ltd. (2008) 24 SOT 48 (Mumbai).The main point is that the after the survey of u/s 133 of the I.t. Act. The notice u/s 147/148 was issued along with reasons. The Assessee has also filed the objection but the said objection was not disposed of by the authority and thereafter, the Assessment Officer passed the order of the assessment 2005-06, 2006-07 & 2007-08 in question. It is totally wrong and clear cut violation of the principle of natural justice and in this regard and these order cannot be justifiabl....