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2021 (9) TMI 1175 - AT - Income TaxIncome chargeable to tax in India - PE In India - shipping income received by the assessee - place of effective management may be a state other than India or Mauritius - Article 8 of the Double Taxation Avoidance Agreement between India and Mauritius ('DTAA) - Whether CIT(A) has legally erred in holding that the Appellant had a Permanent Establishment ('PE'} in India in the form of Agents and thereby has erred in charging to tax the Business Profits of the Appellant in India under Article 7 of the ? - HELD THAT:- As in the first round of litigation, the Tribunal, while deciding assessee’s appeal held that the assessee is not eligible for availing the benefit of Article 8 of the tax treaty. Having held so, the Tribunal did not decide assessee’s alternative contention regarding applicability of Articles 5 and 7 of the tax treaty, as according to the Bench, such issue is of academic nature. However, the Tribunal opined that once Article 8 of the tax treaty is held inapplicable to the assessee, the consequence should be that income earned by the assessee in India from operation of ships in international traffic has to be taxed as per the provisions of the domestic law. The issue whether assessee has a PE in India so as to tax the business profit in terms of Article 7 is very much alive for adjudication before the Tribunal. No material has been brought to our notice by the revenue to demonstrate that the aforesaid order of the Tribunal while disposing of the miscellaneous application has either been challenged by the revenue in a higher court or has been reversed. In the aforesaid scenario, the order passed in M.A has attained finality. That being the case, revenue’s objection to ground 2 raised by the assessee is unsustainable. Agency PE in India - Whether two entities M/s Samsara Shipping Pvt Ltd and Parekh Marine Agency Pvt Ltd can be considered to be providing exclusive agency services to the assessee or they are of independent status and providing such services in the ordinary course of their business? - HELD THAT:- The very fact that the aforesaid entities are providing services to a number of shipping companies including the assessee demonstrates that they are not exclusively working for the assessee. Not only they are agents of independent status, but the services provided by them to various shipping companies including the assessee are in course of their ordinary business as per Article 5(5) of the Tax treaty. At this stage, we must observe, since the language used in Article 5(5) is simple and unambiguous, there is no necessity of interpreting it with external aid. See DCIT vs Overseas Transport Co Ltd[2020 (10) TMI 503 - ITAT MUMBAI] As specific clauses of the agreement referred to by the assessing officer and learned Commissioner (Appeals) for concluding that M/s Samsara Shipping Pvt Ltd and Parekh Marine Agency Pvt Ltd are agency PE of the assessee were considered by the co-ordinate bench in case of ADIT vs Bay Lines Mauritius [2018 (2) TMI 1524 - ITAT MUMBAI] However, even after taking note of such clauses available in the agreement, the co-ordinate bench held that agents in India are of independent status and providing services to the assessee in ordinary course of business. In our considered opinion, the aforesaid decisions of the Tribunal would squarely apply to the facts of assessee’s case. Therefore, it has to be held that M/s Samsara Shipping Pvt Ltd and Parekh Marine Agency Pvt Ltd do not constitute agency PE of assessee in India. Thus, in absence of a PE in India, the business profits of the assessee would not be taxable in view of Article 7 of the tax treaty. Accordingly, we delete the addition. This ground is allowed.
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