AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2024 (9) TMI 200
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....- 1(1)(2), Mumbai (Ld. DCIT) under section 143(3) read with section 144C(3) of the IT Act without appreciating that the said assessment order is neither erroneous nor prejudicial to the interests of revenue. 1.1. While doing so, Ld. CIT(IT) failed to appreciate that: i. the Ld. AO had made sufficient enquiry and verification during assessment proceedings; ii. the impugned issue on merits has been decided by the Hon'ble Tribunal in favour of the Appellant in its own case for earlier assessment years; iii. the entire assessment order cannot be set-aside iv. the impugned issue i.e., denial of the benefit of Article 8 of India and United Arab Emirates (UAE) Double Taxation Avoidance Agreement (DTAA) with respect to its subject income derived from operations of ship in international traffic (freight income and inland haulage charges) is already a subject matter of appeal before the Commissioner of Income-tax (Appeals) 1.2. The Appellant prays that the order dated 21 March 2024 passed by the Ld. CIT (IT) under section 263 of the IT Act (hereinafter referred to as "the impugned order") is devoid of merits, invalid and thus, liable to be quashed. 2. On the facts and in th....
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....ght from chartered vessels of Transworld Feeders FZCO, was at Rs.59.47 Crores. However, the AO found that the assessee was not able to produce any chartered agreements/ownership documents or pooling agreements for the remaining amount of Rs. 2,95,36,19,876/- and since the assessee was not able to submit supporting documents, the exemption under Article 8 of India-UAE DTAA was denied to the assessee. with respect to the amount of Rs. 2,95,36,19,876/-. Proceeding further, the activity of inland transportation was not considered as international transport and accordingly taxed inland haulage charges as taxable u/s 44B of the Act. 6.1. The AO also found that Transworld Integrated Logistek Pvt. Ltd. (formerly known as 'BSL Freight Solutions Pvt. Ltd.), was also an agent of the assessee during FY 2015-16 and was held to be dependent agent of the assessee. Drawing support from the decision of the Hon'ble Andhra Pradesh High Court in the case of CIT v. Visakhapatnam Port Trust [1983] 144 ITR 146 (SC), the AO held that the assessee is having permanent establishments in India, both fixed and in the form of agent/front office. Having established the business connection, the AO treated the a....
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....amount paid or payable or received or deemed to be received, as the case may be, by way of demurrage charges or handling charges or any other amount of similar nature.]" it is seen that the AO instead of computing income @ 7.5% has taken the income as per provision of rules 10 of the IT Rules on the basis of net profit ratio @ 3.53% of the gross receipts. The income adopted by the AO is erroneous and prejudicial to the interest of revenue since section 44B is a special provision which clearly lays down the manner in which the income of the non-resident in shipping business is to be ascertained and income has been under assessed. In view of the above fact, i am of the considered view that the assessment order u/s 143(3) r.w.s 144C(3) of the Act dated 24.08.2021 passed by the Assessing Officer is not erroneous but prejudicial to the interest of revenue and need to be revised u/s 263 of the Act. in the above matter, you are being given an opportunity to represent your case by fixing hearing on 07.09.2023 at 3.15 P.M. You are requested to sumbit your written submission in this regard or attend the office of the undersigned on the above mentioned address either in person through y....
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....ormance of the functions of an Assessing Officer [or the Transfer Pricing Officer, as the case may be,] conferred on, or assigned to, him under the orders or directions issued by the Board or by the Principal Chief Commissioner or Chief Commissioner or Principal Director General or Director General or Principal Commissioner or Commissioner authorised by the Board in this behalf under section 120;[(iii) an order under section 92CA by the Transfer Pricing Officer;] (b) "record" shall include and shall be deemed always to have included all records relating to any proceeding under this Act available at the time of examination by the Principal [Chief Commissioner or Chief Commissioner or Principal] Commissioner or Commissioner; (c) where any order referred to in this sub-section and passed by the Assessing Officer 92[or the Transfer Pricing Officer, as the case may be,] had been the subject matter of any appeal filed on or before or after the 1st day of June, 1988, the powers of the* Principal Commissioner or Commissioner under this sub-section shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in such appeal. Explanatio....
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....44B. (1) Notwithstanding anything to the contrary contained in sections 28 to 43A, in the case of an assessee, being a non-resident, engaged in the business of operation of ships, a sum equal to seven and a half per cent of the aggregate of the amounts specified in sub-section (2) shall be deemed to be the profits and gains of such business chargeable to tax under the head "Profits and gains of business or profession". (2) The amounts referred to in sub-section (1) shall be the following, namely:- (i) the amount paid or payable (whether in or out of India) to the assessee or to any person on his behalf on account of the carriage of passengers, livestock, mail or goods shipped at any port in India; and (ii) the amount received or deemed to be received in India by or on behalf of the assessee on account of the carriage of passengers, livestock, mail or goods shipped at any port outside India.] 97[Explanation.-For the purposes of this sub-section, the amount referred to in clause (i) or clause (ii) shall include the amount paid or payable or received or deemed to be received, as the case may be, by way of demurrage charges or handling charges or any other amount of similar nat....
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.... case of CIT Vs Clix Finance India Pvt Ltd ITA 1428/2018 order dated 01.03.2024. The relevant findings read as under: "19. A bare reading of sub-Section (1) of Section 263 of the Act makes it abundantly clear that the said provision lays down a two- pronged test to exercise the revisional authority i.e., firstly, the assessment order must be erroneous and secondly, it must be prejudicial to the interests of the Revenue. Further, Explanation 2 to Section 263 of the Act delineates certain conditions and circumstances when the order passed by the AO can be said to be erroneous and prejudicial to the Revenue. 20. Clause (a) of Explanation 2 to Section 263 of the Act further stipulates that if an order is passed without making an enquiry or verification which should have been made, the same would bestow a revisional power upon the Commissioner. However, the said Clause or any other condition laid down in Explanation 2 does not warrant recording of the said enquiry or verification in its entirety in the assessment order. 21. Admittedly, in the instant case, the questionnaire dated 02.11.2004, which has been annexed and brought on record in the present appeal, would manifest that th....
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....tion as revenue expenditure. Learned counsel for the assessee is right in his submission that one has to keep in mind the distinction between "lack of inquiry" and "inadequate inquiry". If there was any inquiry, even inadequate that would not by itself give occasion to the Commissioner to pass orders under section 263 of the Act, merely because he has a different opinion in the matter. It is only in cases of "lack of inquiry" that such a course of action would be open. In Gabriel India Ltd. (1993) 203 ITR 108 (Bom), law on this aspect was discussed in the following manner 23. A similar view was taken by this Court in the case of CIT v. Anil Kumar Sharma [2010 SCC On Line Del 838], wherein, it was held that once it is inferred from the record of assessment that AO has applied its mind, the proceedings under Section 263 of the Act would fall in the category of Commissioner having a different opinion. Paragraph 8 of the said decision reads as under:- "8. In view of the above discussion, it is apparent that the Tribunal arrived at a conclusive finding that, though the assessment order does not patently indicate that the issue in question had been considered by the Assessing Officer....
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....e order passed by the Income Tax Officer, which might set a bad trend or pattern for similar assessments, which on a broad reckoning, the Commissioner might think to be prejudicial to the interests of Revenue Administration." In our view this interpretation is too narrow to merit acceptance. The scheme of the Act is to levy and collect tax in accordance with the provisions of the Act and this task is entrusted to the Revenue. If due to an erroneous order of the Income Tax Officer, the Revenue is losing tax lawfully payable by a person, it will certainly be prejudicial to the interests of the Revenue. 10. The phrase "prejudicial to the interests of the Revenue" has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interests of the Revenue, for example, when an Income Tax Officer adopted one of the courses permissible in law and it has resulted in loss of revenue; or where two views are possible and the Income Tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudi....