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2015 (6) TMI 709 - AT - Income TaxInvoking the provisions of Section 172 r.w.s. 163 - non affording any opportunity of hearing - Held that:- Scheme of taxation 172 lays emphasis the tax object, i.e. the activity which is to be taxed, and not the tax subject, i.e. the person who is to be taxed. Therefore, when a person assumes liability, by filing return under section 172(3) in respect of tax liability under section 172(2), such a liability is qua the taxability of income in respect of the amount paid or payable on account of carriage of passengers, livestock, mail or goods on the ship. The scheme of this Section, in our humble understanding, does not allow such a person to choose being accountable in respect of a particular person, in respect of owner of the ship or in respect of charterer of the ship. If he assumes the liability under section 172(3), it is in respect of the income earned by the activities of the ship. The assessee's claim that he is only responsible for the tax liability of the owner, and not the charterer, is only to be stated and rejected. Having said that, we may also point out that the Assessing Officer himself has assessed the UK based company, i.e. owner of the ship and not the charterer of the ship. By implication, thus, he accepts that the income was earned by the UK based company, and, if that be so, the provisions of Article 9(1) of the Indo UK tax treaty unambiguously provides that "income of an enterprise of a Contracting State (i.e. Tramp Shipping Ltd. UK) from the operation of ships in international traffic shall be taxable only in that State (i.e. UK)". In this view of the matter, and in view of the fact that it has not been the case of any of the authorities below that the income belonged to the charterer based in Bahamas and not the owner based in UK, we are unable to see any legally sustainable reasons to decline the benefit of Article 9 to the assesse before us. The grievance of the assessee must, therefore, be upheld. what would constitute a reasonable time limit? - Held that:- Subsequently with effect from 1st April 2007, the statute itself has considered the period of nine months from the end of the financial year, in which return under section 172(3) is filed, as reasonable time limit within which assessment order under section 172(4) is to be framed. When this time limit is statutorily treated as a reasonable time limit for the returns filed after 1st April, 2007, in our considered view, this time limit can also be treated as a reasonable time limit for the returned filed prior to 1st April 2007 as well. We do so. The assessment under section 172(4) was framed on 29th March 2005, whereas the ship had left Indian port on 29th October 2001. The assessment was thus framed almost three years after the end of the relevant previous year. Viewed in this perspective, the impugned order under section 172(4) was indeed barred by limitation. For this reason also, the assessee must succeed in this appeal. - Decided in favour of assessee.
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