TMI Blog2010 (2) TMI 884X X X X Extracts X X X X X X X X Extracts X X X X ..... of notice. We do not share learned counsel's perception. A decision is an authority for what it actually decides, and not even for what may logically follow from the same. Learned counsel has, rather half-heatedly, pointed out that there is no date on the reasons of reopening, but then these reasons are forwarded by the AO on 6th Jan., 2004, which is also the date of approval by his Addl. Director of IT, and it is therefore futile to even suggest that the date of the reasons of reopening can be a date later than 6th Jan., 2004. It is thus clear that as on the time of recording of reasons, the reassessment proceedings in the case of the foreign principal were not in progress and, even by the logic advanced before us, the income had escaped assessment. No fault can thus be found in the reasons recorded by the AO. One plea against the reopening of assessment in the hands of the representative assessee is taken which travels upto the Special Bench and, once the Special Bench has given its verdict on the said plea, then another plea on the same issue is taken up, that too without even taking up a specific ground of appeal and without there being any evidence, save and except for, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h. Accordingly, the Special Bench rejected the contentions of the assessee and remitted the matter to the Division Bench for disposal of appeal in accordance with the law. 5. Learned counsel now has a new plea against the validity of reassessment proceedings, which, according to him, has not been dealt with either by the earlier Division Bench or even the Special Bench. His contention is that initiation of reassessment proceeding in this case is preceded by initiation of reassessment proceedings directly in the hands of the foreign principal. Once, according to the learned counsel, the assessment proceedings in the hands of the foreign principal are yet to be concluded, it could not be said that any income has escaped assessment. We may add that no specific plea to the above effect is taken up in the ground of appeal, nor is it discernable from records that this ground was ever taken up at any of the proceedings before the Tribunal. Be that as it may, having heard the rival contentions on this issue and having noted that the assessee has raised a grievance against upholding the validity of reassessment proceedings, we proceed to dispose of this plea on merits. 6. Let us fir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transportation by sea or air of passengers, mail, livestock or goods carried on by the owners or lessees or charterers of the ships or aircraft, including profits from:- (a) the sale of tickets for such transportation on behalf of other enterprises; (b) the incidental lease of ships or aircraft used in such transportation; (c) the use, maintenance or rental of containers (including trailers and related equipment for the transport of containers) in connection with such transportation; and (d) any other activity directly connected with such transportation.' TCSPL is not fulfilling the conditions laid down in art. 8(1) because it is not in business of ship operations but is merely a commission agent. Thus, it can be seen from the above that the TCSPL cannot avail benefits of art. 8 of the DTAA. Its revenues from shipping business in India, therefore, are required to be taxed as per provisions of s. 44B of the IT Act, 1961. Therefore, in view of the above, I have reasons to believe that income chargeable to tax has escaped for asst. yr. 1998-99 in the case of TCSPL and the same needs to be assessed as per the provisions of s. 44B of the IT Act." 7. It w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essed by the Dy. Director of IT to Addl. Director of IT shows the subject as 'submission of proposal to reopen the assessments under s. 147 of the IT Act, 1961, in the case of J.M. Baxi and Co. as agent of TCSPL for the asst. yr. 1998-99 - request for approval-reg.' ............. 8. ............, it is vivid that the AO had not recorded any reasons in the case of TCSPL for reopening the assessment. The reasons, which have been referred to in the assessment order, are qua the J.M. Baxi and Co. only. In the absence of any such reasons having been recorded by the AO, we are of the considered opinion that the subsequent proceedings become null and void. We, therefore, quash the making of the reassessment." 9. The assessment of the foreign principal was quashed for the reason that no specific reasons were recorded in the case of the foreign principal as that the reasons were recorded only qua the representative assessee, and now that the assessment of the foreign principal is quashed, the representative assessee before us seeks quashing of reassessment on the ground that once the assessment of foreign principal was in progress, it could not be said that any income escaped th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... objection in the assessment proceedings. While a decision to reopen the assessment is an intellectual exercise, which requires application of mind to the facts of the case, the service of notice is a rather mechanical exercise, which does not contemplate any fresh application of mind to the facts of the case. Learned counsel very fairly does not dispute the date on which the reasons are recorded and the position that no assessment proceedings were in progress in the hands of the foreign principal at that point of time. It is thus beyond any dispute or controversy that as on the point of time when the AO recorded reasons of reopening the assessment, i.e., on 6th Jan., 2004, assessment proceedings in the hands of the foreign principal were not in progress. Learned counsel has, rather half-heatedly, pointed out that there is no date on the reasons of reopening, but then these reasons are forwarded by the AO on 6th Jan., 2004, which is also the date of approval by his Addl. Director of IT, and it is therefore futile to even suggest that the date of the reasons of reopening can be a date later than 6th Jan., 2004. It is thus clear that as on the time of recording of reasons, the reasse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... direct assessment of the person on whose behalf, or for whose benefit income referred to, is receivable, or the recovery from such person of the tax payable in respect of such income". It thus follows that even when assessment of representative assessee is made in respect of an income, liability of the principal in respect of the said income does not cease to exist, and vice versa. Therefore, notwithstanding direct assessment in the hands of the foreign principal, income is to be taxed in the hands of the representative assessee as his income as well. Hon'ble Andhra Pradesh High Court, in the case of Barium Chemicals Ltd. vs. ITO (1975) 100 ITR 637 (AP) also supports this position. The proceeding in the hands of the foreign principal, in a case in which a representative assessee exists under s. 161, is a parallel proceeding which does not exonerate the representative assessee. In other words, therefore, even if income is assessed in the hands of the foreign principal but not in the hands of the representative assessee, it is still required to be treated as income escaping assessment, of course, vis-a-vis the representative assessee. For all these reasons, independently as also tak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the view that the appellant is a dependent agent of TCSPL and, therefore, constitutes PE in India as per art. 5 of India Singapore tax treaty; - the learned AO has erred in facts and in law in holding that the income earned in India by TCSPL is taxable in India under art, 7 of the DTAA read with s. 9(l)(i) of the Act." 17. In Revenue's appeal, grievance raised on merits is as follows:- "On the facts and in the circumstances of the case and in law, the CIT(A) erred in directing the AO to extend the benefits of art. 8 of the DTAA between India and Singapore, to the principal, ignoring the fact that:- (a) the only income shown in the P and L a/c submitted by the principal is by way of commission and not freight; and (b) to avail the benefits of art. 8 of the DTAA between India and Singapore, the principal should be in the business of ship operation whereas in the present case, the principal is only a commission agent in the shipping business." 18. Learned representatives submit that both the above issues are now covered by Tribunal's order dt. 26th June, 2008 in the case of Dy. Director of IT (International Taxation) vs. Thoresen Chartering Singapore Pte. Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X
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