TaxTMI 
TaxTMI 
2023 (1) TMI 356
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....ellant submits that the Learned Commissioner of Income Tax (Appeals) has erred in not granting the benefit of Article VI regarding shipping income as per DTAA between India and Greece. The Appellant submits that the benefit of DTAA between India and Greece be granted and the benefit of 50% of the tax payable in India to be granted and demand of Rs. 1521348/- be deleted. On the facts and in circumstances of the case the Appellant submits that the Learned Commissioner of Income Tax (Appeals) has erred in stating that the Non Resident company is engaged in occasional shipping and not in the regular shipping and denied the benefit of the DTAA by applying Clause 4 to the Article VI of the DTAA. 3. The following additional grounds were also raised: "On the facts and circumstances of the case, the Appellant submits that the Appellant's assessment be completed u/s 172 (7) of The Income Tax Act, 1961 on the basis of the Annual Return filed for Assessment Year 2015 - 2016 on 02.02.2016 and the Appellant be granted refund due in respect of income from all the three voyages carried out in F. Y. 2014 - 2015 (A. Y. 2015 - 2016) by giving the benefit of 50% of tax relief ....
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....ted the order of the authorities below. 7. We have head contentions of both the parties. We have also gone through the order of the ITAT, Rajkot Bench in the case of CMA CGM Agencies (India) (P.) Ltd. (supra) cited before us. 8. The issue before us relates to the provisions of Section 172 of the Act which pertains to the liability to tax in Special cases relating to the profits of non-resident from occasional shipping business. The provisions of this section, we have noted, were exhaustively dealt with in the case of CMA CGM Agencies (India) (P.) Ltd. by referring and relying on the decision of the Jurisdictional High Court in the case of Arabian Express Ltd. vs. Union of India [1995] 82 taxmann.com 6 (Guj.). The ITAT interpreted this section as providing that the profits made by non-resident from occasional shipping should be taxed by adopting summary method of assessment by holding that 7 ½% of the amount of freight received from India be treated as the income of the non-resident and further providing for the master of the ship to furnish to the A.O. a return of the full amount of freight earned. Thereafter it requires the A.O. to assess the income as referred to Sec....
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....l amount paid or payable to the owner or charterer or any person on his behalf on carriage of all passengers, livestock, mail or goods shipped at that port since the last arrival of the ship thereat. Sub-section (4) requires the AO to assess income referred to in sub-section (2) and determine the sum payable thereon. The procedure of assessment contemplated by subsections (2) and (4) is summary in nature in that it neither allows the non-residents to claim any deduction including the benefits otherwise admissible under the Double Taxation Avoidance Agreements nor requires the AO to follow any elaborate procedure for making the assessment. The AO has to simply assess the income at the rate of 7.5% of the freight paid or payable to the owner or charterer of the ship or any person on his behalf. And that is the end of the matter as far as assessment of income from such ships is concerned. Sub-section (7) of section 172 confer-s a right on the owner or charterer of a ship to claim before the AO before the expiry of the relevant assessment year that an assessment be made of his total income in accordance with the normal provisions of the I-T Act, and if he so claims, any payment made by....
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....r shipping business; (ii) the cases covered by sub-section (7) of section 172, i.e., where the owner or charterer claims that his total income should be assessed in accordance with the normal provisions of the Income-tax Act; and (iii) cases where there is a convention between the Government of India and the foreign countries as provided under section 90 of the Income-tax Act. The summary procedure of assessment contemplated by section 172 cannot be mixed up with a regular assessment especially when option is exercised by the owner or charterer of the ship u/s 172(7). By the same analogy, there cannot be multiple assessments of profits from the same voyages, i.e., one u/s 172(4) on the basis of returns filed u/s 172(3) and the other under the normal provisions of the Incometax Act on the basis of the return filed u/s 139. 9. Taking note of the above, the ITAT thereafter held that where summary assessment had been made u/s. 172(4) but subsequently the assessee had exercised his right to assessment under the normal provisions of the Act as per the provisions of Section 172(7), then the orders passed u/s. 172(4) in summary assessment were to be set aside and a final assessment ough....