TaxTMI 
TaxTMI 
2022 (2) TMI 220
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....ome Taxability of freight charges of INR 17,21,95,959/- from transportation of cargo through feeder vessels 2. erred in holding that freight income from transportation of cargo through feeder vessels is not eligible for benefit under Article 8 of India-Germany DTAA, 3. erred in holding that while income from feeder vessels would fall within the ambit of section 44B of the Act whereas the same shall not eligible for benefit under Article 8 of India-Germany DTAA: 4. erred in not taking cognizance of the decision of jurisdictional Bombay HC/IT AT in the Assessees own case for AY 2005-06 to AY 2011-12, AY 2013-14, AY 2014-15, AY 2015-16 and AY 2016-17 wherein the Hon'ble HC/Hon'ble IT AT has held that freight income from transportation of cargo through feeder vessels is eligible for benefit under Article 8 of the India-Germany DTAA; Hapag Lloyd India Private Limited (HLIPL') held to be agency permanent establishment ('PE') of the Assessee in India 5. erred in holding that HLIPL constitutes an agency PE of the Appellant in India, without providing cogent reasons for the same; 6. without prejudice to the a....
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....3.2018 at Rs. Nil. The case of the assessee was selected for scrutiny. The learned Assessing Officer noted that assessee has claimed the benefit of Article 8 of India Germany DTAA with respect to the income from Feeder Vessel. The assessee was asked to show whether it has a permanent establishment in India or not. The assessee replied on 22.11.2019, submitted that it books space and slots on feeder vessels and transport cargo through such vessels. It also said that it is necessary for slot hire agreement, which are directly connected and inter linked with an integral part of the enterprise business of operation of ships. It is therefore, submitted that if DTAA is construed to include activity directly or indirectly connected with the operations of the ship, income from slot charters and feeder vessels are also covered for benefit. It also relied on the decision of Hon'ble Bombay High Court in the case of Balaji Shipping (UK) Ltd. (77 DTR 361) and decision of the co-ordinate Bench in CGM France [27 SOT 367 (Mum)]. The assessee also submitted that identical issue in case of the assessee has been decided by the ITAT in favour of assessee, which has been confirmed by the Hon&....
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.... as directed by the ITAT in assessee's own case in earlier years and then grant credit of tax. Such directions were issued on 13.03.2021. 7. Based on these directions, the learned Assessing Officer passed a final assessment order under section 143(3) read with section 144C(13) of the Act on 19.04.2021 determining the total income of the assessee at Rs. 1,29,14,697/-. The directions with respect to the grant of credit of tax deducted at source in the name of subsidiary company to the assessee was not at all dealt with by the assessing officer. Therefore, the assessee is aggrieved with that order has preferred the appeal before us. 8. The learned Authorized Representative submitted that whether assessee is eligible for the benefit of article 8 of India Germany Double Tax Avoidance Agreement for its slot charter income is covered in favour of the assessee in assessee's own case for earlier years starting from Assessment Years 2006-07 to 2015-16. For Assessment Year 2007-08, the appeal against the order of the coordinate Bench filed by the learned Assessing Officer before Honourable High court has also been dismissed. In view of this, it was submitted that issue on ....
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....anel the learned assessing officer has not carried out such directions. He further stated that on identical facts and circumstances in the case of the assessee for assessment year 2016 - 17 the coordinate bench vide its order dated 31st of January 2020 has set-aside the issue back to the file of the learned assessing officer as per paragraph number 16 of that order. He therefore submitted that with similar direction to the learned assessing officer this ground of appeal be allowed. 11. The learned Departmental Representative vehemently supported the orders of the lower authorities. He specifically submitted that the decision of the Hon'ble Bombay High Court in case of Balaji Shipping (supra) issue was on India UK Double Taxation Avoidance Agreement, whereas the issue involved in this case is India German DTAA. It was submitted that Article 8 in case of India Germany Double Taxation Avoidance Agreement does not give any exemption as has been considered by the honourable High Court based on India UK Double Taxation Avoidance Agreement. He referred to both Double Taxation Avoidance Agreements to support his contentions. 12. The learned Authorised Representative submitted tha....
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...., identical issue arose wherein the honourable Bombay High Court in (2013) 31 taxmann.com 64 (Bombay) following the decision in case of DIT (International taxation) versus Balaji shipping UK Ltd. (2012) 211 taxmann 535/24 taxmann.com 229, per paragraph number 2, in appeal filed by the assessee against the order of the coordinate bench which held that the agreements among consortium members were not cool/joint men's business arrangements but were merely slot arrangements and that the freight income received on account of transportation of cargo on feeder vessel would be ineligible for benefit of article 8, the honourable High Court set aside the order of the coordinate bench and remanded the matter back to the coordinate bench for fresh consideration in the light of decision of the honourable court in case of Balaji sipping UK Ltd. (supra). 17. Pursuant to above remand by the honourable High Court, the coordinate bench in ITA number 8854/MUM/2010 on 14/8/2013, while recording the fact of the order of the honourable High Court, as per para number 7 - 8.5 has held as Under:- "7. We have perused the records and considered the rival contentions carefully. The dispute is ....
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.... In that case also the assessee in addition to own/chartered ships had also availed slot hire facilities Under connecting Agreements with owner/charter of feeder vessels. In some cases the cargo had been transported to the final international destinations/port on the vessels used on slot arrangement basis. In some other cases goods had been transported through feeder vessels availed on slot higher facilities to the international hub port from where they had been shipped to final destination to the vessels owned/chartered by the assessee. The honourable High Court noted that the AO had taxed such income from federal vessels u/s. 44B of the income tax act which dealt with income from operation of ships, a provision similar to the provisions of article 9 (1) of the treaty which referred to profit and gains of business operation of ships. Therefore, the High Court held that the income arising from slot hire arrangement had to be considered as the income referred to Under article 9 (1) of the treaty as the phrase "operation of ship" not being defined in the treaty, it must be given the same meaning as described in Section 44B. The High Court also held that are availing of slot hire faci....
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....del convention as well as the judgement of Honourable High Court of Delhi in case of Director Of Income Tax versus KLM Royal Dutch airline (supra) the High Court held that both types of cases relating to direct transportation of cargo to the international destinations/port through the slot hire facility as well as the case where the cargo had been transported through the slot hire facility to the hub point and, thereafter, through the vessels owned/chartered by the assessee were eligible for exemption Under the treaty provisions. Though the said judgement was in the context of Indo UK treaty but we find that provision of treaty relating to income from operation of ships in international traffic are similar to the provisions of Indo German treaty with which we are concerned in this case. 8.4 The learned DR pointed out that the judgement in case of Balaji sipping UK Ltd. (supra) was restricted to the facts of only those type of cases as held by the honourable High Court. In that case the revenue from slot hire arrangement was only 12% whereas in the present case revenue from slot hire arrangement was substantially high at a 29%. We have considered this aspect carefully. We f....
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....for assessment year 2006 - 07 to assessment year 2011 - 12 (except assessment year 2007 - 08) as per order dated 22/7/2016, following the order of the coordinate bench for assessment year 2007 - 08 dated 14/8/2013 allowed the claim of the assessee and dismissed appeals of the revenue. Further, for assessment year 2005 - 06 in ITA number 1776/2014 the coordinate bench wide order dated 21/9/2016 wherein the appeal was filed by the assessee was allowed as per paragraph number 7 holding that slot hire charges income is eligible for benefit as per article 8 of the treaty. Subsequently also for assessment year 2013 - 14 per order dated 31/10/2017, for assessment year 2014 - 15 per order dated 28/6/2019, for assessment year 2015 - 16 per order Dated 16/12/2019 and for assessment year 2016 - 17 per order dated 31/1/2020, the claim of the assessee for the benefit to the slot hire income Under article 8 of the treaty was allowed. 21. As per chart submitted by the learned authorized representative the percentage of income from feeder vessels to the total freight income for the impugned assessment year is merely 0.69%. All the arguments raised before us by the learned departmental represent....
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....peal number 8 is allowed for statistical purposes in terms of our aforesaid observations." 24. Facts related to short grant of TDS credit of Rs. 26,06,606/- showed that the gross receipt of Rs. 11,94,94,364/- on which the tax has been deducted has already been considered for claim of exemption under section 90(2) read with Article 8 of Indo German Double Taxation Avoidance Agreement. The claim of the assessee is that the assessee has wholly owned subsidiary in India Hapag-Lloyd India Pvt. Ltd. This company collected the freight from the customers of the assessee and therefore, the customers while making payment to an Indian entity deducts tax at source and certificates are issued in the name of Indian entity. The Indian entity arranges for vendor payments and the balance amount collected is remitted to assessee. The assessee's claim is that the income involved in the TDS certificate does not pertain to Indian entity but to the assessee. The TDS is claimed as credit by the assessee. The Indian entity did not claim any credit of the above TDS. The Tax Deducted At Source (TDS) in form No. 26 AS is shown in the name of the Indian entity. As the assessee has shown the....