AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (2) TMI 1473
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....IN & Order No. ITBAAPLM2502023-241061378332(1) dated 22.02.2024 3 ITA No. 1090/Chny/2024 2016-17 DIN & Order No. ITBAAPLM2502023-241061378546(1) dated 22.02.2024 All the above appeals are centering around a common issue and hence for the purposes of convenience, adjudicated together. For the purposes of this adjudication the facts and figures for AY-2012-13 have been taken. As facts have been reported to be identical in AY-2013-14 and 2016-17, the decision for AY-2012-13 shall apply mutatis mutandis for appeals qua AY-2013-14 and 2016-17. 2.0 The first ground of appeal raised by the assessee is regarding the assessment being passed without jurisdiction and hence was barred by limitation. We have noted that in para 7.3 at page 22 of his order, the Ld. CIT(A) has vividly held that the assessee did not provide him any details or evidences as to how the impugned order of the Ld.AO was without any jurisdiction. Accordingly, in the absence of any supporting documents, the Ld. CIT(A) dismissed the challenge of the assessee. During the course of present proceedings also the assessee has not adduced any evidence as to how the impugned assessment order is bad in law and bar....
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....essee did not file the requested certificates from the respective shipping companies but merely gave a self-certificate that the impugned companies are "....Residents of the respective countries and did not have any permanent establishment in India in the previous year relevant to above assessment years...". It was concluded that the mere act of parking of ships on Indian port and the activity of goods downloads would lead to a presumption of a business connection of said shipping companies in India. It was further concluded that mere self-serving statement of absence of PE's by the assessee do not have any value. The Ld. First Appellate Authority held that in such situations provisions of section 9(1)(i) gets attracted. It was also observed that assessee ought to have obtained nil tax deduction certificate u/s 195 of the act. The Ld. Counsel observed that with the above findings, disallowance u/s 40(a)(i) was confirmed. 4.0 Before us, the Ld. Counsel placed heavy reliance upon the board instruction no.1934 dated 14.02.1996 titled 'Charter Hire for chartering foreign vessels on time charter basis on account of Government departments/Public Sector undertakings'. It was submitted ....
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....nce the income would be taxable in India only. The Ld. DR argued that section 5(2) of the act provides that all income of a non-resident shall be exigible to taxes in India in case it is accrues or arises or is deemed to accrue or arise in India. The Ld. DR invited reference to page-2 of the agreement between assessee and Noble Chartering dated 28.03.2012 which contained payment terms stipulating that all payments would be made "before breaking bulk", reproduced hereunder: "....Payment terms: 100 pct frt on B/L qty to be paid within 4(four) banking days after signing/releasing of bills of lading marked "FRT PAYABLE AS PER C/P" but in any case always before breaking bulk. Freight payment guaranteed by OPG Power Generation Pvt Ltd....." 7.0 The Ld. DR informed that in shipping parlance "before breaking bulk" refers to act of opening of hatches of the ship for commencement of unloading of goods from it on to a shipping port. Thus it was argued that as the right to receive freight by the shipping company was directly related to its delivery of goods to the assessee on in Indian shipping port, the impugned freight income would fall under section 5(2) of the act and ....
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....ty of suitable Indian vessels in required position, foreign vessels are chartered at the most competitive freight rates to meet the requirements of Indian indentors. 2. The question of income-tax being payable in respect of freight on import of cargo has been examined carlier and in O.M. dated 12th April, 1984 (Annex), the Department of Revenue had clarified that no income-tax was payable in respect of freight on import of cargo unless such freight is paid in India to non-resident shipping company or its agent. It has been clarified by the Ministry of Surface Transport that according to normal international practice and also according to the agreements with the foreign ship owner 90% of the freight is to be paid within seven days of the vessel completing loading of cargo and sailing from the loading port. The balance of 10% is remitted after the import of cargo is unloaded in India. 3. At the time of remittances of this 10%, the normal practice has been to issue a No Objection Certificate for the remittance of 1% without deduction of tax at source on the ground that income has not accrued in India. The Reserve Bank of India is, however, now insisting that an NOC s....
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....ng Foreign Vessels on time charter basis as vividly evident from its very subject line. Thus, seen neither the instruction No.1934 nor the decision of Reliance Industries Limited supra come to the rescue of the assessee. 11.0 We have found sufficient force in the argument of the Ld. DR that the agreements entered between the assessee and the Foreign Shipping Companies regarding payment at the time of "Break bulk" would make the freight income of such Foreign Shipping Companies clearly liable for taxation in India under the provisions of section 5 r.w.s 9 of the act. We have also noted that in AY-2016-17, in para 2.1 of page 2 of its order the Ld. AO had recorded that the assessee had filed a letter 27.12.2019 stating that it had made payment of Rs. 20,27,17,742/- without making any TDS as the payments were to non-resident outside India for services that were rendered outside India and no income accrued or deemed to accrue in India. The said observation of the assessee primarily hinges upon a conclusion drawn by the assessee that the freight payments made to foreign shipping companies were not taxable in India. The assessee cannot enjoy the authority of drawing any such powers. I....