TaxTMI 
TaxTMI 
2020 (4) TMI 452
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....appeals are inextricably interlinked and interwoven, therefore, the same are being taken up together and disposed off by way of a consolidated order. We shall first advert to the appeal of the assessee for A.Y. 1998-99 in ITA No. 7680/Mum/2003. The assessee has assailed the impugned order on the following grounds of appeal before us: "1. On the facts and in the circumstances of the case, the learned Commissioner of Income- tax (Appeals) ['CIT(A)'] legally erred in assessing the principal (AL) and the agent (the Appellant Company) simultaneously. 2. On the facts and in the circumstances of the case, the learned CIT(A) legally erred in denying the benefit under Article 8 of the Double Taxation Avoidance Agreement ('DTAA') to AL and bringing to tax in the hands of the Appellant Company, the amount of freight collected on behalf of AL in India, on the pretext that the effective place of management of AL was not in Mauritius. 3. On the facts and in the circumstances of the case, the learned CIT(A) legally erred in holding that AL had a Permanent Establishment ('PE') in India in the form of the Appellant Company and thereby erred in charging to tax the Busin....
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....ted 20.03.2001 was issued to the assessee in order to assess the income of M/s Arc Line, Mauritius, in its hands in the capacity as that of a representative assessee. Initially no return of income was filed by the assessee in response to the aforesaid notice. However, subsequently a return of income was filed by the assessee on 29.03.2001, declaring its total income at Rs. Nil. It was the claim of the assessee that the income of M/s Arc Line, Mauritius was not taxable in India as per Article 8 of the India- Mauritius tax treaty. Observing, that the effective management of M/s Arc Line was not in Mauritius but was vested with the shareholders who exercised de facto control over the company's affairs in Dubai, the A.O was of the view that the assessee was not eligible for the benefit of Article 8 of the India-Mauritius tax treaty. In the backdrop of the aforesaid facts, the A.O holding a conviction that the assessee i.e Freight Connection (India) Pvt. Ltd. was the exclusive/dependant agent of M/s Arc Line, Mauritius, therefore, treated it as its Permanent Establishment (for short 'PE') in India. On the basis of his aforesaid observations, the A.O called upon the assessee to 'show cau....
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....e being an agent of independent status could not be considered as constituting a PE agency of M/s Arc Line, Mauritius. It was submitted by the ld. A.R that the Tribunal while disposing off the appeal of M/s Arc Line, Mauritius had observed that as the aforesaid company did not have a PE in India, therefore, its business income could not be brought to tax in India. On the basis of the aforesaid facts, it was submitted by the ld. A.R that now when the assessee had been held as not being an exclusive/dependant agent of M/s Arc Line, Mauritius, therefore, as per Article 7 of the India-Mauritius tax treaty in the absence of a PE in India its income from shipping activities could not have been subjected to tax in India. In the backdrop of the aforesaid facts, it was the claim of the ld. A.R that now when the income derived by M/s Arc Line, Mauritius from the shipping activities was not liable for being taxed in India, therefore, there was no occasion for assessing the same in the hands of the assessee company (as a representative assessee of M/s Arc Line) under Sec.44B of the Act. 6. Per contra, the ld. Departmental Representative (for short 'D.R') relied on the orders of the lower aut....
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....)- XXXI, Mumbai, dated 31.12.2004, which in turn arises from the order passed by the A.O under Sec. 147 r.w.s 163 of the Act, dated 26.03.2004. The assessee has assailed the impugned order on the following grounds of appeal before us : "1. On the facts and in the circumstances of the case, the learned Commissioner of Income tax (Appeals) ['CIT(A)'] has erred in assessing the principal (Arc Lines) and the agent (the appellant company) simultaneously. It is prayed that the order passed against the appel lant company under Section 143(3) r.w.s. 163 of the Income tax Act, 1961 ('the Act') ought to be quashed. 2. Without prejudice to Ground No. 1 above, and on the facts and in the circumstances of the case, the learned CIT(A) has erred in holding that the place of effective management of Arc Line ('AL') is neither in Mauritius nor in India but in a third country. It is prayed that the learned AO be directed to hold that the place of effective management of AL is in Mauritius. 3. Without prejudice to Ground No. 1 and 2 above, and on the facts and in circumstances of the case, the learned CIT(A) has erred in holding that the appellant company is a "Depend....
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....r with the aforesaid claim of the assessee applied the provisions of Sec.44B and assessed the income of M/s Arc Line, Mauritius, from its collections from shipping activities amounting to Rs. 6,39,42,338.15 @ 7.5% in the hands of the assessee in the latters status as that of a representative assessee. As such, the income of M/s Arc Line, Mauritius amounting to Rs. 47,95,688/- was brought to tax in the hands of the assessee in its capacity as that a representative assessee. 11. Aggrieved, the assessee carried the matter in appeal before the CIT(A). However, the CIT(A) not being persuaded to subscribe to the contentions advanced by the assessee upheld the view taken by the A.O viz. (i) that M/s Arc Line, Mauritius was not entitled for the benefit under Article 8 of the India-Mauritius Tax Treaty, as its place of effective management was in a third country; and (ii) that, as M/s Arc Line, Mauritius had a PE in India, therefore, its business income was taxable in India as per Article 7 of the India-Mauritius tax treaty. On the basis of his aforesaid observations, the CIT(A) upheld the view taken by the A.O that the income of M/s Arc Line, Mauritius from shipping activities was liable ....
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....d CIT(A) has erred in holding that the place of effective management of Bay Line ('BL') is neither in Mauritius nor in India but in a third country. It is prayed that the learned AO be directed to hold that the place of effective management of BL is in Mauritius. 3. Without prejudice to Ground No. 1 and 2 above, and on the facts and in circumstances of the case, the learned CIT(A) has erred in holding that the appellant company is a "Dependent Agent" constituting Permanent Establishment ('PE') of BL within the meaning of Article 5 of the Double Taxation Avoidance Agreement between India and Mauritius ('Mauritius Treaty'). It is prayed that the learned AO be directed to hold that the appellant company does not constitute PE of AL within the meaning of Article 5 of the Mauritius Treaty. 4. Without prejudice to Ground No.1 to 3 above, and on the facts and in the circumstances of the case, the learned CIT(A) has erred in holding that the profits of BL should be computed under Section 44B of the Act. It is prayed that the learned AO be directed to compute the profits of BL as attributable to the activities performed in the Indian territorial waters. T....
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....entative assessee. 16. Aggrieved, the assessee carried the matter in appeal before the CIT(A). Observing, that as the effective management of M/s Bay Lines, Mauritius was in a third country, therefore, the CIT(A) following the view that was earlier taken by him therein concluded that the assessee would not be entitled for the benefit of Article 8 of the India-Mauritius Tax Treaty. Also, it was observed by the CIT(A) that as M/s Bay Lines, Mauritius had a PE in India, therefore, its business income was liable to be taxed in India as per Article 7 of the India-Mauritius Tax Treaty. On the basis of his aforesaid observations, the CIT(A) was of the view that since the income of M/s Bay Lines, Mauritius from its shipping activities was taxable in India, therefore, no infirmity did arise from the order of the A.O who had rightly assessed the said income in the hands of the assessee in its capacity as that of a representative assessee. Accordingly, the CIT(A) confirmed the assessment framed by the A.O in the hands of the assessee. 17. The assessee being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. We find that the Tribunal vide its order passed in t....