New User   Login      
Tax Management India .com TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2015 (5) TMI 235 - BOMBAY HIGH COURT

2015 (5) TMI 235 - BOMBAY HIGH COURT - [2015] 374 ITR 497 (Bom) - Consideration / fees for technical services - AO held that the amounts paid by the three agents to the assessee taxable in India under Article 13(4) of the DTAA and assessed tax at 20% under section 115A - Tribunal allowed the appeal of the assessee Held that:- There is no finding by the Assessing Officer or the Commissioner that there was any profit element involved in the payments received by the assessee from its Indian agents. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t the agreements inter parties had been performed and the payments were made by the agents to use Maersk Net for the Maersk group's global shipping business and for no other reason. It related to shipment of cargo and their movement across the oceans. The views of the revenue that it amounted to technical service is misconceived. Repayment of money may be construed as “reimbursement” only if it is bereft of profits for the services rendered. There is no profit element in the pro rata costs paid .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Singh For the Respondent : Mr. Porus F. Kaka, senior counsel with Mr. Divesh Chawla and Mr. Atul K. Jasani JUDGMENT [Per A.K. Menon, J.] 1. The present set of appeals involve a common set of questions which have been proposed as substantial questions of law. For the sake of convenience, we will take up the facts in Appeal No.1690 of 2013 which is the lead case pertaining to assessment year 2001-2002. 2. The facts, in brief, are as follows. The assessee is a foreign company engaged in the shippin .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

in the hands of the two shipping companies referred to above. Pursuant to the directions of the Commissioner, the Assessing Officer assessed the income in the hands of the assessee which was allowed benefit of Double Taxation Avoidance Agreement (DTAA) between India and Netherlands. It was observed that the assessee had three agents working for them viz. Maersk Logistics India Limited (MLIL), Maersk India Private Limited (MIPL) and Safmarine India (Pvt) Limited (SIPL). These agents would book ca .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

from MIPL, MLIL and SIPL were in the nature of reimbursement of expenses. 3. The Assessing Officer did not accept this contention and held that the amounts paid by these three agents to the assessee is consideration / fees for technical services rendered by the assessee and, accordingly, held them to be taxable in India under Article 13(4) of the DTAA and assessed tax at 20% under section 115A of the Income Tax Act, 1961. 4. In appeal, the Commissioner of Income Tax also confirmed the Assessing .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

were booking cargo and acting as clearing agents for the assessee and were entitled to utilisation of the MaerskNet facility which consisted of a communication system connected to a main frame and other computer services in each of the countries of operation. These were all connected to what is known as MaerskNet Connecting Point (MCP) which were installed in each of the premises. This communication network would enable the agent concerned to access via the MCP, the following services : Global C .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

y (GEO), Statistics (RKMS) and Tables (RKTS/RKST) 5. The assessee submitted before the Tribunal that without this system, it was not possible to conduct international shipping business efficiently and in having the system set up, the assessee had incurred costs. A share of this cost would have to be borne by each of the agents which utilise the system and, accordingly, these pro rata costs relatable to each of the agents was billed to the agents and these amounts were thus paid. It was merely a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

up so as to efficiently carry out the shipping business on a global scale especially since the consignments would be sourced from and dispatched to different locations. No technical service was thus rendered by the assessee. It is merely an automated system using advanced technology and there was no human element involved in terms of rendering of services which would be the requirement of Article 13(4). 7. Mr.Kaka further submitted that the facility known as MaerskNet was located in Denmark wher .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

hich would be correctly termed as fees for technical services and, therefore, the same was liable to be taxed in India. 9. In this behalf, there is no finding by the Assessing Officer or the Commissioner that there was any profit element involved in the payments received by the assessee from its Indian agents. On the other hand, having considered the various submissions, we are of the view that no technical services as contemplated by the Act have been rendered in the instant case. 10. In the ca .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tue of DTAA in that case. Moreover, in the present case, there was no occasion for the Tribunal to come to any different view. In our view, the Tribunal has correctly observed that utilisation of the Maersk Net Communication system was a automated software based communication system which did not require the assessee to render any technical services. It was merely a cost sharing arrangement between the assessee and its agents to efficiently conduct its shipping business. In the case of Safmarine .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e not within the purview of Section 44B of the Act and, therefore, were chargeable to tax under the provisions of the Act. The Commissioner (Appeals) held that inland haulage charges earned by the assessee were only part of the income derived from the operation of ships and, therefore, were covered under Article 8 of the Double Taxation Avoidance Agreement (DTAA) entered into between India and Belgium and, therefore, not taxable as business profits in India. 11. The Tribunal in the meanwhile had .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rn the present case. The Maersk Net used by the agents of the assessee entailed certain costs reimbursement to the assessee. It was part of the shipping business and could not be captured under any other provisions of the Income Tax Act except under DTAA. 12. Our attention is also drawn to the decision of this Court in the case of Commissioner of Income-tax V/s. Siemens Aktiongeselleschaft reported in [2009] 310 ITR 320 (Bom), wherein this Court has held that once there is a treaty between two s .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version