TaxTMI 
TaxTMI 
2020 (1) TMI 43
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....e's own case in earlier assessment years. 5. Shri Samuel Darse, the learned Departmental Representative, though, agreed with the aforesaid submissions of the leaned Counsel for the assessee, however, he relied upon the observations of learned DRP and the Assessing Officer. 6. The issue raised in grounds no.2 to 5, concerns taxability of Inland Haulage Charges (IHC) in India. Brief facts are, the assessee, as stated by the Assessing Officer, is a tax resident of France and engaged in shipping business in International Waters. During the year under consideration, it has carried out its business activity in India through its agent CMA CGM Agencies India Pvt. Ltd. For the assessment year under dispute, the assessee filed its return of income on 30th November 2015, declaring total income of Rs. 339,11,13,801, and as per the provisions of section 44B r/w section 172 of the Act. In the return of income filed, the assessee claimed benefit under Article-9 of the India-France Double Taxation Avoidance Agreement (DTAA) insofar as it relates to revenue earned from the shipping business in International Waters. The aforesaid benefit claimed by the assessee also included revenue earned from IH....
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....e decision of the Hon'ble Jurisdictional High Court in DIT v/s Balaji Shipping U.K. Ltd., which is on the issue of slot chartering and not on IHC. In this context, learned DRP also referred to the decision of the Hon'ble Supreme Court in DIT v/s A.P. Moller Maersk A/S, [2017] 392 ITR 186 (Bom.). Learned DRP also observed, the decision rendered by the Hon'ble Jurisdictional High Court in case of SAF Marine Container Lines NV (supra) appeared to be due to some confusion. Thus, the DRP ultimately concluded that the decision of the Tribunal and the decision of the Hon'ble Jurisdictional High Court in SAF Marine Container Lines NV (supra) would not be applicable as IHC is not covered by the definition of International Traffic. Learned DRP observed, as per Article-9 of the Tax Treaty, only income from operation of ships in International Traffic is exempt. That being the case, the activity of Inland Transportation cannot be considered as International Transport. Thus, learned DRP upheld the decision of the Assessing Officer. 7. Having heard the parties, we find that while deciding identical issue in assessee's own case in the assessment year 2012-13, learned DRP had categ....
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....ntegrated "Communication system". The assessee recovered pro-rata costs from its agents and accordingly the Indian agents also remitted pro-rata costs to the above said assessee. Before AO, the assessee contended that it was merely a system of cost sharing and hence the amount recovered by it from its agents is in the nature of reimbursement of expenses. The AO, however, held to it to be fee for technical services. 18. Before the Hon'ble High Court, the assessee has also taken a plea that the communication system is very much an integral part of shipping business and therefore, the income received by the assessee from the agents, did in fact, amount to income from the shipping business of the assessee and therefore, not chargeable to tax. The Hon'ble Bombay High Court held that the amount received by the assessee for using the communication system by the agents is part of shipping business and could not be captured under any other provisions of the Income tax Act except DTAA. The High Court further held that it does not amount to technical service. Finally the High Court held that the amounts paid by the agents for using the communication system arose out of the shipping busine....
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.... collected on IHC. 10. In the course of assessment proceedings, the Assessing Officer noticed that service tax amounting to Rs. 46,42,15,427 collected during the year under consideration was not included in the gross receipt while computing income under section 44B of the Act. Holding that service tax is an integral part of accrued income for computing profit under section 44B of the Act, the Assessing Officer included the service tax collected of Rs. 46,42,15,427, in the gross receipts for the purpose of computing the income and the tax thereon as per section 44B r/w section 172. 11. Learned DRP also upheld the decision of the Assessing Officer. 12. Having considered the submissions of the parties, we find that identical issue concerning taxability of service tax came up for consideration before the Tribunal in assessee's own case in assessment years 2012-13, 2013-14 and 2014-15, the Tribunal while deciding the issue in the order referred to above has held as under:- "26. The next issue relates to the inclusion of Service tax as part of Gross receipts. The assessee has collected service tax also on Inland haulage charges collected from its clients. Since we have held that the....
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....se, the assessee submitted that the revenue earned from Feeder Vessels is covered under Article-9 of the Tax Treaty. Rejecting the aforesaid submissions of the assessee, the Assessing Officer held that the income earned from the transportation in Feeder Vessels is taxable in India. The aforesaid decision of the Assessing Officer was also upheld by the DRP. 16. Having considered the submissions of the parties, we find that identical issue arising in assessee's own case for the assessment years 2012-13, 2013-14 and 2014-15 came up for consideration before the Tribunal. While deciding the issue in the order referred to above, the Co-ordinate Bench held as under:- "23. We heard the parties on this issue. We notice that the Hon'ble Bombay High Court has decided an identical issue in the assessee's own case referred supra) in AY 2002-03. We notice that the High Court has noted the facts as under:- "8(A) It was not disputed that the respondent owned or chartered or otherwise actually operated ships though not within the Indian territorial waters. In this appeal, the respondent arranged for the carriage of goods of its clients by sea from ports in India to foreign ports. As the respon....
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.... hence, not taxable in India. In fact, the aforesaid view of the Tribunal was upheld by the Hon'ble Jurisdictional High Court while dismissing Revenue's appeal in assessee's own case in Assessment Year 2002-03 in Income Tax Appeal no. 2175 of 2009, vide judgment dated 6th August,2012. Accordingly, these grounds are allowed. 18. The next issue raised in grounds no.15 to 17, is contesting the decision of the Revenue authorities that the assessee has an agency PE in India. 19. Having heard the parties, we find that identical issue came up for consideration before the Tribunal in assessee's own case in assessment years 2012-13, 2013-14 and 2014-15. While deciding the issue in the order referred to above, the Tribunal has held as under:- "27. In the cross objection filed by the assessee for AY 2012-13 and in the appeals filed for AY 2013-14 and 2014-15, the assessee is challenging the decision of Ld DRP in holding that its Indian Agent, viz., M/s CMA CGM Agencies (India) P Ltd shall constitute "Agency PE" of the assessee. The question relating to existence or otherwise of Permanent Establishment shall arise only if any part of its income is liable to be taxed as business income of t....