TMI Blog2006 (6) TMI 182X X X X Extracts X X X X X X X X Extracts X X X X ..... tax. No tax was deducted on that amount. The Assessing Officer, therefore, rightly treated the assessee as an assessee in default in respect of the tax within the meaning of section 201 of the Act - the Commissioner (Appeals) took a correct view in the matter. Accordingly the impugned order for these two years upheld. For the same reasonings the order of the Commissioner (Appeals) for the assessment year 2003-04 reversed. Appeal of assessee dismissed. - Member(s) : M. K. CHATURVEDI., K. D. RANJAN. ORDER Per M.K. Chaturvedi, Vice President.- The assessee has filed appeals for the assessment years 2002-03 and 2004-05 against the common order dated 25-11-2005 passed by the Commissioner (Appeals)-XI, Chennai. The revenue's appeal is directed against the order dated 30-1-2004 passed by the Commissioner (Appeals)-XI, Chennai and relates to the assessment year 2003-04. 2. The solitary common issue raised in these appeals relates to the question whether on the facts and in the circumstances of the case the assessee was liable to deduct tax at source while remitting payments to various shipping companies under time charter agreements. 3. We have heard the rival submissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... As per the New Oxford Advanced Learners Dictionary 'equipment' means 'the things that are needed for a particular purpose or activity'. As per Websters Dictionary 'equipment' means 'all fixed assets other than land and building' used in a business enterprise. A fixed asset is an asset held with an intention of being used for the purpose of producing or providing goods or services and is not held for sale in the normal course of business. As per the Strouds Judicial Dictionary, the term 'equipment' for the purpose of the Employer's Liability (Defective Equipment) Act, 1969 was held to be wide enough to include a ship of whatever size notwithstanding that ships are not specifically mentioned in the definition of the equipment under the Act. 6. The official USA Government Website on the North American Industry Classification system includes shipping under the category of the transportation equipment. In the interpretation of tax treaties, aircrafts and ships have always been considered to fall within the meaning of the term 'industrial equipment'. 7. The views expressed by Klaus Vogel on Double Taxation Convention (Third Edition) are pertinent to construe the meaning of 'equipment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vessel. It is for availing services of the vessel. In time charter there is no payment for the use of the ship. The payment is for availing the transportation services offered by the owner. The time charter is not a contract for hire of ship but a contract for provision of standard services which the owner of the ship provides through their officers, crew and ship. 11. Our attention was invited on time charter agreement entered into by the assessee with a FSC, which is included at page 2 of the paperbook. This agreement was approved by the New York Produce Exchange. Clause 4 of the agreement reads as under: "4. That the Charterers shall pay for the use and hire of the said vessel at the rate of USD 29,000 per day including overtime payable every 15 days in advance or pro rata for part of a day.... United States Currency commencing on and from the day of her delivery, as aforesaid and at and after the same rate for any party of a day; hire to continue until the hour of the day of her redelivery in like good order and condition, ordinary wear and tear excepted, to the Owners (unless lost) at... on dropping lasy outward sea pilot station at safe port ENNORE, MADRAS or TUTICORIN in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ability to make such deduction, may appeal to the Commissioner (Appeals) to be declared not liable to make such deduction." Section 195(1) reads as under:- "195(1) Any person responsible for paying to a non resident, not being a company, or to a foreign company, any interest or any other sum chargeable under the provisions of this Act (not being income chargeable under the head 'Salaries' shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rates in force." As per the mandate of this section it is obligatory on the part of the person responsible for making payment to the non-resident to deduct tax at source in respect of any sum chargeable under the provisions of the Act. The fact that non-resident did earn the income in India constitute raison d'etre for its chargeability. If there exists doubt in regard to the taxability of such income the person responsible may make an application to the Assessing Officer in this regard. Therefore it is clear that the fact whether the sum is chargeable to tax or not i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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