TaxTMI 
TaxTMI 
2026 (6) TMI 499
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.... consequential. 4. Learned Departmental Representative (DR) agreed with the aforesaid submissions of the assessee. 5. In view of the submissions made by the parties, we propose to deal with Ground Nos. 4, 5 and 6 at the outset. The issue arising from these grounds relates to taxability of receipts/income from transportation of cargo through feeder vessels by holding them not to be covered under Article 8 of India- Germany Double Taxation Avoidance Agreement ("DTAA"). Rather, such receipts are taxable u/s. 44B of the Act. 6. Briefly the facts relating to this issue are, the assessee is a non-resident limited liability company incorporated in Germany and is a tax resident of Germany. As stated, as part of its regular business of operation of ships internationally, assessee is engaged in transportation of inbound and outbound cargo from and to the ports in India and vice versa. It is stated, assessee undertakes transportation of cargo on vessels owned/chartered/pooled by it, as also on slot arrangements. Since, while engaging itself in transportation, sometimes it so happened that the ships owned/chartered or pooled by the assessee company are too large in size and cannot ent....
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....efit under Article 8 of India-Germany DTAA. He submitted, in subsequent assessment years up to Assessment Year 2022-23, the Tribunal has followed its decision rendered in Assessment Year 2007-08 and decided the issue in favor of the assessee. He submitted, the decisions of the Tribunal in Assessment Years 2007-08, 2009- 10, 2011-12, 2006-07, 2008-09, and 2010-11, have been affirmed by the Hon'ble Jurisdictional High Court, while dismissing further appeals preferred by the Revenue. Thus, he submitted, the issue stands squarely settled in favor of the assessee by the decisions of the Hon'ble Jurisdictional High Court and ITAT. 9. Though, learned Departmental Representative (DR) agreed that in past assessment years issue has been decided in favor of the assessee by the decisions of ITAT and Hon'ble High Court, however, he preferred to rely upon the observations of the Assessing Officer and learned DRP. 10. We have considered rival submissions and perused the materials on record. We have also applied our mind to the orders of ITAT and Hon'ble Jurisdictional High Court in assessee's case. From the observations of the Assessing Officer and learned DRP, it is very much c....
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.... by the assessee to the tune of Rs. 95,63,79,908/-. Thus income from the balance freight revenue relating to feeder vessels amounting to Rs. 1677537979/- has been taxed by AO u/s 44B of the Income Tax Act on the ground that the revenue had been earned on the basis of slot sharing arrangement which was not eligible for relief under the provisions of DTAA. 8. We find that the issue raised in the appeal as to whether the double taxation exemption provision will be available even in respect of shipping facilities used by the assessee on slot sharing arrangement basis has already been considered and decided by the Hon'ble High Court of Delhi in case of Director of Income Tax (Int. Taxation) Vs. Balaji Shipping vide order dated 6th August 2012 in Income Tax appeal no. 3024 & 3215 of 2009. In that case also the assessee in addition to own/chartered ships had also availed slot hire facilities under connecting career agreements with owner/charterer of feeder vessels. In some cases the cargo had been transported to the final International destination/port on the vessels used on slot arrangement basis. In some other cases goods had been transported through feeder vessels availed ....
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....o the activities directly connected with the operation of ships and also to activities indirectly connected which were ancillary to such operation. The Article 4.1 of the model convention provided that any activity carried out primarily in connection with transportation by ships or aircraft should be considered directly connected with such transportation and Article 4.2 provided that other operations which are so closely related that they should not be regarded as separate business or source of income have to be considered as ancillary to the operation of ship and aircrafts in the International traffic. The High Court therefore held that slot sharing arrangement was covered by the provisions of Clause 4.1 and 4.2 of the model OECD convention. 8.3 Thus after considering the OECD model convention as well as the judgment of Hon'ble High Court of Delhi in case of Director of Income Tax Vs. KLM Royal Dutch Airline (Supra) the High Court held that both types of cases relating to direct transportation of cargo to the international destination/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 ....