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2020 (1) TMI 43 - AT - Income TaxTaxability of Inland Haulage Charges (IHC) in India - HELD THAT:- Respectfully following the decision of the Co–ordinate Bench rendered in assessee’s own case in the preceding assessment years, we hold that IHC, since, forms part of income from operation of ships in International Traffic, is covered under Article–9 of the India–France Tax Treaty, accordingly, not taxable in India. These grounds are decided allowed. Taxability of service tax collected on IHC - HELD THAT:- In assessee’s own case, we hold that service tax cannot form part of the gross receipts for computing income for taxation purpose as per section 44B r/w section 172. Taxability of freight charges received from transportation of Cargo through Feeder Vessels - HELD THAT:- Respectfully following the aforesaid decision of the Co–ordinate Bench rendered in assessee’s own case, we hold that freight charges received from transportation of cargo through feeder vessels being part of shipping income in International Traffic is covered under Article–9(1) of the India–France Tax Treaty, hence, not taxable in India. In fact, the aforesaid view of the Tribunal was upheld by the Hon’ble Jurisdictional High Court while dismissing Revenue’s appeal in assessee’s own case in Assessment Year 2002–03 Agency PE in India - Tribunal has held that if the Indian agent has been remunerated at arm’s length, it cannot be considered as agency PE of the assessee. It is further relevant to observe, in the advance pricing agreement between the CMA CGM Agencies India Pvt. Ltd. and CBDT entered on 24th November 2015, it has been agreed that remuneration @ 18% between the assessee and its Indian agent has to be considered to be at arm’s length. In the facts of the present case, it has been factually demonstrated before us that the payment made by the assessee to its Indian agent is at the arm’s length price of 18%. That being the case, following the aforesaid decision of the Co–ordinate Bench, we hold that the Indian Agent of the assessee cannot be considered as an agency PE. Thus, grounds are decided in favour of the assessee. Error in calculating tax on interest on External Commercial Borrowing (ECB) - as per section 115A of the Act, the applicable interest rate is 5% - assessee has raised the issue of non–grant of TDS credit as appearing in Form no.26AS - assessee has challenged levy of interest under section 234A - HELD THAT:- As could be seen, in respect of the issues raised in the aforesaid grounds, the assessee has already moved an application for rectification under section 154 of the Act before the Assessing Officer which, as stated before us, is still pending. Considering the nature of dispute, we direct the Assessing Officer to verify assessee’s claim with regard to grounds no.18 to 21 along with the rectification application pending before him and decided as per law after providing reasonable opportunity of being heard to the assessee. Grounds are allowed for statistical purposes.
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