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TMI Blog2014 (7) TMI 725X X X X Extracts X X X X X X X X Extracts X X X X ..... quently not taxable as business profits in India. 2. Mr Tejveer Singh, the learned counsel appearing on behalf of the Revenue, submitted that the dispute in the present Appeal is in relation to collection of Inland Haulage Charges by the Assessee from its customers in respect of transportation of goods kept in containers at Inland Container Depots (ICDs) to the port where the goods are loaded in ships for international traffic. He submitted that the Assessing Officer had correctly held that such Inland Haulage Charges are not within the purview of section 44B of the Income Tax Act and were neither directly connected to the activity of international operations of ships. He submitted that such charges earned by the Assessee were therefore taxable as business profits in India and not covered under the Double Tax Avoidance Agreement between India and Belgium. He submitted that the CIT (Appeals) as well as the ITAT were in error in deleting the addition made by the Assessing Officer to the income of the Assessee which has given rise to the following substantial questions of law that need to be answered by this Court and read as under :- (I) Whether, on the fact and circumstances of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee was charging freight from the place inside India where the goods were picked up and upto to the point of destination port or destination station. He therefore held that the Assessee was undertaking the job of transportation from the collecting station to the destination station which may be from the ports of loading or unloading of the cargo. From the freight so collected, the Assessee was arranging the transportation of the cargo from the port to the destination and vice versa. For this activity, the Assessee issued a combined bill of lading and it was not disputed by the Assessing Officer that the Assessee was engaged in the business of operation of ships in international traffic. After analysing article 8 of the DTAA between India and Belgium, the CIT (Appeals) held that it was clear beyond any doubt that the fraction of the freight earned by the Assessee towards Inland Haulage Charges was with reference to cargo which was carried for onward international traffic by the Assessee and was only a part of the income derived from the operation of ships. In view thereof, the CIT (Appeals) held that the said income formed part of the income from the operation of ships in internati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e situation, submitted that the concession made in the order dated 17th January 2013 was not correct and the case of the present Assessee did not stand covered against the Revenue by the decision of this Court in Income Tax Appeal No.3024 of 2009 in the matter of Director of Income Tax v/s Balaji Shipping UK Ltd. which is now reported in (2012) 253 CTR (Bom) 460. 8. At the outset, we fail to see how this submission can be made by the learned advocate for the Appellant. The said concession was made by the very same Advocate i.e. Mr Tejveer Singh, who appeared in that matter and is also appearing before us. We therefore fail to see on what basis he submits that the concession made by him earlier was incorrect. He was not able to substantiate this submission. Be that as it may, to ensure that justice is done between the parties, we have examined the judgment of this Court in the case of Balaji Shipping UK Ltd. (supra). On going through the said judgment, we find that the concession made earlier by Mr Tejveer Singh was in fact correct and the case of the Assessee in the present case also stands covered by the judgment in the case of Balaji Shipping UK Ltd. (supra). The relevant portio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e goods not on behalf of the owner of the vessel which has granted them a slot hire facility, but in their own name on behalf of their clients. The contract of carriage of goods by sea is thus performed by such enterprises on a principal to principal basis with their clients and not as agents of the owners of the ships and/or their clients. The slot hire agreements are therefore, at least indirectly, if not directly, connected and interlinked with and are an integral part of the enterprise's business of operating ships. 25. Without availing slot hire facilities, an enterprise would be unable to carry on its business of operating ships in international traffic at all in many cases. They may well loose much of their business. Even if business expediency is irrelevant to the interpretation of the DTAA, it indicates the close nexus between slot hires and the business of operation of ships in international traffic. If the DTAA is construed to include activities directly or indirectly connected to the operation of ships, it would include slot charters. 26. The second type of case poses some difficulty. We are, however, of the view that even such cases fall under art. 9(1) . Article ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icle 8 of the Indo-Netherlands DTAA which fell for the consideration of the Court reads as under :- Air Transport : 1. Profits from the operation of aircraft in international traffic shall be taxable only in the State in which the place of effective management of the enterprise is situated. Article 8(1) is similar to art. 9(1). In that case the assessee had obtained a licence in respect of premises at Mumbai from the Airport Authority of India. This licence was for the purpose of cargo handling only. The assessee entered into an agreement with CSC (P) Ltd. for cargo handling at Mumbai on its behalf. The agreement provided for payment by the assessee to CSC (P) Ltd. for cargo handling at Mumbai. The payment made by the assessee to CSC was after the adjustment of the licence fee/rent paid by the assessee to the Airport Authority of India. The adjustment was considered by the department as the income of the assessee chargeable to tax under art. 6 of the Indo-U.K. DTAA. The Division Bench upheld the decision of the Tribunal to the effect that the adjustment was directly and inextricably linked to the cargo handling business of the assessee and was not in the course of a separate bus ..... X X X X Extracts X X X X X X X X Extracts X X X X
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