TMI Blog2014 (11) TMI 564X X X X Extracts X X X X X X X X Extracts X X X X ..... me assessed of the petitioner no.1 as assessee being a partner of the partnership or such income of the partnership had escaped assessment would be a question to be gone into and answered in the assessment sought to be made pursuant to the issuance of the notice - this court cannot find the partnership had made full disclosure. Scope of definition u/s 2(31) - relief under Indo-UK treaty - Held that:- The Revenue in treating the partnership as an assessee and seeking to assess income of it which had escaped assessment is for the purpose of charging tax on the income of the partnership, treating it as a person liable to be charged with the levy of income tax under the section - In doing so the revenue has to treat the partnership as a person within the definition provided of person u/s 2(31)(iv) of the Act – thus, the notice for reopening is set aside – Decided in favour of assessee. - W.P. no. 457 of 2005 With W.P. no.458 of 2005 - - - Dated:- 7-11-2014 - Justice Arindam Sinha, J. For the Petitioner : Mr. P. Kaka, Senior Adv., Mr. V. Kundalia, Adv., Mr. M. Kanth, Adv. For the Respondent : Late D. K. Shome, Senior Adv., Mr. R.K. Chawdhury, Adv., Ms. Saswati Joardar, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 30th July, 1999. The said order speaks as under:- In this case, return of income was filed on 19/5/1998 showing income at Nil. Subsequently, a revised return was filed on 12/4/1999 showing income at Nil. The revised return was filed in order to claim refund of the taxes paid under section 172(4) to the extent of ₹ 25,29,231. The assessee is non-resident shipping company, engaged in the business of operation of ships in the International Traffic. In response to notice under section 143(2) of the Income tax Act, Sri A.K. Basu, FCA, A/R. of the assessee, attended the proceedings from time to time and the case was discussed with him. During the year under consideration, the assessee has shown gross freight to the extent of ₹ 2,41,68,52,588. It has been submitted on behalf of the assessee that in accordance with article 9 of the agreement for avoidance of the Double Taxation between India and U.K., the profit derived by the assessee company from the operation of ships in the International Traffic would be taxable only in the U.K. Accordingly, the sums received in India from the operation of ships including ancillary charges have been claimed as exe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filing of return by the PONP under I.T. Act,1961. Put up to Addl. DIT (Intl. Taxn.), Kolkata for his kind perusal and for seeking necessary sanction under section 151(2) for issuing notice under section 148 of the I.T. Act, 1961. Mr. Porus Kaka, learned Senior Advocate appeared on behalf of the petitioners and submitted the income shown under the said revised return amounting to ₹ 241,68,52,588/- was the entire partnership income from the joint/pooled partnership business. Therefore, the petitioner no.1 as a partner had already been assessed after exercising its option under section 143(3) of the said Act which assessment order continues to remain valid and has not been altered in any way or proceeding. According to him that assessment order assessed the freight income of both the partners jointly constituting the partnership. Since it is not disputed the income concerned is from the operation of ships in international traffic, in any event such income was not chargeable to tax in India by reason of the India-UK and India-Netherlands Double Taxation Avoidance Agreements (DTAA). He submitted it was and is accepted both internationally and in India that partnership income a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ia on and from 1st January, 1997 to 31st March, 1997 and in subsequent years which it failed to disclose. Such income cannot be returned by and be assessed in the hands of the individual partners since income was earned by the partnership in India. According to the Revenue, the benefit of the India-UK Treaty could be availed of, if admissible, by the partnership only. Several decisions were relied on by the petitioners. They are as follows:- (i) Calcutta Discount Co. Ltd. V. Income Tax Officer, Companies District I, Calcutta And Anr. : 41 ITR 191; (ii) Director of Income Tax (International Taxation) V. Venkatesh Karrier Ltd. : 49 ITR 124; (iii) Sunil Krishna Paul And Anr. V. Commissioner of Income Tax West Bengal : 59 ITR 457; (iv) Madhya Pradesh Industries Ltd. V. Income Tax Officer, Nagpur : 77 ITR 268; (v) Dunlop Rubber Company Ltd. (London) V. Income Tax Officer A Ward, Companies District III And Ors. : 79 ITR 349; (vi) Commissioner of Income Tax, Calcutta V. Burlop Dealers Ltd. : 79 ITR 609; (vii) Income Tax Officer, I Ward, Distt. VI, Calcutta, And Ors. V. Lakhmani Mewal Das : 103 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee (petitioner no.1) is a non-resident shipping company engaged in the business of operation of ships in international traffic. Under Article 9 of the India- UK Treaty the profit derived by the assessee company from the operation of ships in international traffic would be taxable only in the UK and was thus exempted from tax in India. Hence, the Revenue found tax payable by the assessee company, that is the petitioner no.1, would be nil on such income from freight. Further facts are that M/s. P O Nedlloyd partnership, UK hereinafter referred to as the said partnership, filed its return of income arising out of shipping business in India for the Assessment Year 2002-03 on 31st October, 2002 as New Case-1st Year . Though the petitioners claiming to be partners of the said partnership did not state as much in their covering letter dated 31st March, 1999 enclosing the said revised return considering the said partnership had came into being on 31st July, 1997, the noting by the Revenue the said partnership was actually carrying on shipping business in India to realise gross freight of ₹ 241,68,52,588/- during the period relevant to Assessment Year 1997-98, was not denied. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Article 1 - Scope of the Convention 1. This Convention shall apply to persons who are residents of one or both of the Contracting States. Article 3 - General Definitions 1(f) the term person includes an individual, a company and any other entity which is treated as a taxable unit under the taxation laws in force in the respective Contracting States, but, subject to paragraph 2 of this article, does not include a partnership: 1(h) the terms enterprise of a contracting state and enterprise of the other contracting state mean respectively an enterprise carried on by a resident of a contracting state and an enterprise carried on by a resident of the other contracting state. 2. A partnership which is treated as a taxable unit under the Income tax Act, 1961 (43 of 1961), of India shall be treated as a person for the purposes of this Convention. Article 4 - Fiscal Domicile 1. For the purposes of this Convention, the term resident of a Contracting State means any person who, under the law of that State, is liable to taxation therein by reason of his domicile, residence, place of management or any other criterion of a similar nature. Article 9 - Shipping 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
