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2014 (7) TMI 296 - AT - Income TaxComputation of income from shipping business u/s 44B - taxability in the hands of managing firm whereas ship is owned by two separate companies – Held that:- Following Deputy Director of Income-tax Versus AP Moller Maersk [2013 (11) TMI 827 - ITAT MUMBAI] - the assessee firm on behalf of the companies have been making applications from time to time at the beginning of every financial year for obtaining annual double income tax relief / port clearance certificate - the assessee firm is the managing owner and in that capacity only, it manages the affairs of these two companies for which it is remunerated as per the relevant terms agreed between the parties - it cannot be held that whatever income accrues during the carrying on such business belongs to the assessee firm - once the entire infrastructure including the vessels which are deployed in the international traffic belongs to the two companies, then it cannot be said that the income accruing from exploiting I deployment of such assets / vessels belong to the assessee firm - the assessee firm is separate and distinct from two companies and any income accruing on account of shipping operations does not belong to the assessee, but to these two companies only. The status in the return of income as well as in the assessment orders has always been held to be that of non-resident corporate company and not as a partnership firm. From the assessment year 2004—05, two sets of returns of income are being filed, one by the assessee firm on managing commission / fees which is being claimed as non—taxable and second return of income in the name of these two companies which has now been merged referred to as A.P. Moller Maersk A/S showing shipping income - the shipping income belongs to these companies only and not in the hands of the assessee firm which is only a representative of these companies and is carrying out its obligation for filing of the return of income as well as managing the entire affairs. Fees from managerial services treated as fees for technical services – Held that:- Following Deputy Director of Income-tax Versus AP Moller Maersk [2013 (11) TMI 827 - ITAT MUMBAI] - for taxing the royalty and fees for technical services in case of a non-resident under the Indo Denmark DTAA, the basic condition is that there has to be a P.E. or fixed base in connection with which such a liability has been incurred – the payment has not been made by any P.E. to the assessee firm albeit the payment has been made by non-resident company i.e., two Danish companies to another non-resident i.e., a partnership firm established under the laws of Denmark – the payment cannot taxed as FTS in case of the assesse - the payment of management fee cannot be subjected to tax in India by virtue of Article-13(6) – thus, the additions made are liable to be set aside –Decided against revenue.
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