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2022 (11) TMI 379
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....hout having the appropriate charge/ jurisdiction over the present assessment proceeding and thereby entire assessment proceeding is bad in law; Taxability of Inland Haulage Charges ('IHC') of INR 308,74,51,331/- 3. erred in making addition on account of IHC on the ground that same is chargeable to tax in India and accordingly brought to tax @ ad-hoc 10% deemed profit rate of taxable receipt: 4. erred in making an addition on account of IHC by denying the benefit of Article 9 of India -France Double Taxation Avoidance Agreement ('India-France DTAA') since IHC is directly connected to and ancillary to the transportation of cargo in international traffic; 5. erred in not taking cognizance of the decision of jurisdictional Tribunal in the Appellant's own case for AY 2012-13 to AY 2014-15 & AY 2015-16, wherein the Hon'ble Tribunal has held that IHC shall form part of income from operation of ships in international traffic and accordingly, not taxable in India as per Article 9 of India France DTAA; 6. without prejudice to the above, even if IHC is taxable in India under the Act, only 7.5% of such receipts should be taxa....
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....t 15. erred in initiating penalty proceedings under section 270A of the Act." 3. The brief facts of the case are: The assessee is a company incorporated in and a tax resident of France. It is engaged in the business of operation of ships in international traffic (i.e. transportation of cargo between ports in India and ports outside India). For the year under consideration, assessee filed its return of income on 30/11/2017 declaring total income at Rs. 9,75,92,572. The case of the assessee was selected for scrutiny and vide draft order dated 20/12/2019 passed under section 143(3) of the Act total taxable income of the assessee was computed at Rs. 41,50,33,680, after making various additions. The assessee filed detailed objections before the learned DRP. Vide directions dated 25/02/2021, issued under section 144C(5) of the Act, objections filed by the assessee were rejected following the directions issued in assessee‟s own case for preceding assessment years. In conformity to the directions issued by learned DRP, the Assessing Officer ("AO") passed the final assessment order dated 09/04/2021 under section 143(3) read with section 144C(13) of the Act. Being aggrieved....
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....ur of assessee by decisions of the coordinate bench of the Tribunal rendered in assessee‟s own case for preceding assessment years. 9. On the other hand, learned Departmental Representative ("learned DR") vehemently relied upon the orders passed by the lower authorities. 10. We have considered the rival submissions and perused the material available on record. We find that similar issue was decided in favour of assessee by the coordinate bench of the Tribunal in CMA CGM SA vs ACIT, in ITA No. 5998/Mum/2019, for assessment year 2016-17, vide order dated 02/09/2022, after following judicial precedents rendered in assessee‟s own case for preceding assessment years. The relevant findings of the coordinate bench of the Tribunal, in aforesaid decision, are as under: "7. We find that in assessment year 2015-16 similar ground was raised by the assessee before the Tribunal. The Tribunal following the order of Co ordinate Bench in assessee's own case in ITA No.6649/Mum/2017(supra) decided the issue in favour of the assessee. The relevant extract of the findings of Tribunal in assessment year 2015-16 are reproduced hereunder: "7. Having heard the partie....
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....s in booking cargo and carrying out clearing agent works, the assessee maintained a global telecommunication facility called MaerskNet, which is a vertically integrated "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 AD, 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 ....
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....red under Article-9 of the India-France Tax Treaty, accordingly, not taxable in India. These grounds are decided allowed." No contrary material has been brought on record distinguishing facts or the aforesaid decision. Respectfully following the decision of Co-ordinate Bench in assessee's own case, grounds of appeal No.2 to 4 are allowed for parity of reasons." 11. The issue arising in the present appeal is recurring in nature and has been decided in favour of the assessee by the decision of the coordinate bench of Tribunal for preceding assessment years. The learned DR could not show us any reason to deviate from the aforesaid decision and no change in facts and law was alleged in the relevant assessment year. Thus, respectfully following the order passed by the coordinate bench of the Tribunal in assessee‟s own case cited supra, we uphold the plea of the assessee and direct the AO to delete the addition on account of IHC. As a result, grounds No. 3 - 6 raised in assessee‟s appeal are allowed. 12. The issue arising in grounds No. 7 - 10, raised in assessee‟s appeal, is pertaining to taxability of freight charges from transportation of cargo thr....
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.... transportation of cargo through feeder vessels are covered by Article 9 of India-France DTAA. The Id.Authorized Representative of the assessee pointed that the issue is squarely covered by the order of Tribunal for the assessment years 2012-13 to 2014-15 and the order for assessment year 2015-16. The Id. Authorized Representative of the assessee further submitted that the Hon'ble Bombay High Court in assessee's own case in appeal filed by Department in Income Tax Appeal No.2175 of 2009 decided on06/08/2012 has decided this issue in favour of assessee and has dismissed the appeal of Revenue. We find that in assessment year 2015-16 the Co-ordinate Bench following the order of Tribunal in assessee's own case for assessment years 2012-13 to 2014-15 dated 14/03/2018(supra) and the decision of Hon'ble Bombay High Court in assessee's own case held as under: "17. Facts being identical, respectfully following the aforesaid decision of the Co ordinate Bench rendered in assessee's own case, we hold that freight charges received from transportation of cargo through feeder vessels being part of shipping income in International Traffic is covered under Article-9....
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.... conformity to the directions issued by learned DRP, the AO passed the final assessment order. Being aggrieved, the assessee is in appeal before us. 20. During the course of hearing, learned AR submitted that this issue is covered in favour of assessee by decisions of the coordinate bench of the Tribunal rendered in assessee‟s own case for preceding assessment years. The learned AR further submitted that the transition is as per Advance Pricing Agreement ("APA") and therefore no further adjustment is required. 21. On the other hand, learned DR vehemently relied upon the orders passed by the lower authorities. 22. We have considered the rival submissions and perused the material available on record. We find that similar issue was decided in favour of assessee by the coordinate bench of the Tribunal in CMA CGM SA vs ACIT (supra), for assessment year 2016-17, after following judicial precedents rendered in assessee‟s own case for preceding assessment years. The relevant findings of the coordinate bench of the Tribunal, in aforesaid decision, are as under: "10. Both sides heard. We find that in assessment year 2015-16 Co-ordinate Bench following the decisi....
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....plication dated 14/07/2022 requested for admission of following additional ground of appeal: "Additional Ground- Non-taxability of income in the nature of IT support services [Fees for Technical Services ('FTS')) amounting to INR 8,29,29,430/-: 16. On the facts and circumstances of the case and in law, the Appellant prays that the income earned in the nature of IT support fees [Fees for Technical Services (FTS)] amounting to INR 8,29,29.430/- from its Agency company [CMA CGM Agencies India Private Limited ('CCA)] is not chargeable to tax in India by virtue of the beneficial provisions of Article 9 of India-France tax treaty. 17. On the facts and circumstances of the case and in law, while the Appellant has inadvertently offered the said income to tax at the rate of 10% plus surcharge and education cess (as per section 115A of the Act) in the return of income, it does not automatically constitute income chargeable to tax in India 18. Without prejudice to the above, Hon'ble Pune Tribunal in the case of Appellant's Indian Agency company, CCAI (ITA No.2314/PUN/2017 dated 2 January 2020) while adjudicating the similar payment for A....
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....awn to the decision of Hon'ble Pune. Tribunal in case of CCAI (i.e. Indian agency company of the Appellant) (ITA No.2314/PUN/2017 dated 2 January 2020), wherein it was held that the said FTS paid by the assessee is not chargeable to tax in India as per the beneficial provisions of India-France tax treaty and hence, the assessee was not liable to withhold any tax on the same in India. In light of the said judicial precedent, the Appellant wishes to file an additional ground of appeal for non-taxability of FTS income in India as against tax rate of 10% (plus surcharge and education cess) as specified in under section 115A of the Act as considered by the Appellant in its return of income filed for the year under consideration. The assessed income to that extent would be lower when compared with the returned income." 28. The assessee has also filed following additional evidences, vide application dated 28/09/2022, in respect of the issues raised in the additional grounds of appeal: (i) I.T service agreement between CMA CGM SA and its Indian agency company dated 25/02/2015; (ii) Addendum dated 12/06/2015 to the said IT service agreement; (iii) Addendum ....