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TMI Blog2014 (5) TMI 1112X X X X Extracts X X X X X X X X Extracts X X X X ..... ly as an agent of Glendive Enterprises and not of any other party and thus, the above income of Rs. 42,61,950/- was not assessable in the hands of the appellant at all. 4. The Ld. Commissioner of Income tax Appeals has erred in law and in facts in not following the terms of the tax treaty entered between India and other country (Cyprus). 5. The Ld. Commissioner of Income tax Appeals erred in not appreciating that Glendive Enterprises was having effective management in Cyprus and accordingly, the income arising to Glendive was not taxable as per Article 8 DTAA between India and Cyprus. 6. The Commissioner of Income tax Appeals has erred in holding concluding that the effective management of Glendive was not in Cyprus without any basis or any evidence and contrary to the facts of the case and accordingly, the income assessed in the hands of the appellant as an agent was not justified in law. 7. The Appellant contests the consequential levy of interest u/s. 234A, 234B and 234C of the Act. 8. The Appellant craves leave to add to, alter, amend and / or delete in all the foregoing grounds of appeal. 2. The assessee Shaan Marine Services Pvt. Ltd. (hereinafter referred to as Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he concept of place of effective management requires that decisions on the conduct of entity's business as a whole and in substance are made. The decisions should be key management and commercial decision. The lower authorities observed that Glendive has paid an amount received from Arabian Resources to Aquavita International (hereinafter referred to as Aquavita) on the same day i.e. 08.12.2011. Therefore, to examine the role played by Glendive and to determine as to whether Cyprus company is with substance or not. The following queries were asked vide order sheet dated 02.09.2013 requiring the assessee to furnish the information of Glendive with regard to Number of employees, Area of office premises, Office equipment used and monthly office expenses for each month separately. 2.4 The assessee has replied that Glendive has carried out business from Cyprus itself as these days, major activities of business are being carried out with the outsourcing the same, for which the company need not have employees on its role. It was stated on behalf of assessee that considering the business practice the fact of Glendive issue of employees should not be given undue importance. The assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the fundamental requirements of effective management are not fulfilled by Glendive and ultimately, the CIT(A) held that the Assessing Officer was correct in denying the benefit of Cyprus DTAA as the place of effective management of Glendive does not exists in Cyprus. 3. Before us, the learned Authorized Representative has submitted that the CIT(A) has erred in law and in facts in confirming the income of Rs. 42,61,950/- assessed by the Assessing Officer u/s. 172(4) of the Act in the hands of the assessee as an agent. The CIT(A) has erred in confirming the contention of the Assessing Officer that the income has accrued in India in the hands of the assessee as an agent although the same does not accrue or arise in India in view of applicable law and facts of the case. The CIT(A) failed to appreciate that the assessee was assessable only as an agent of Glendive and not of any other party and thus, the above income of Rs. 42,61,950/- was not assessable in the hands of the assessee at all. The CIT(A) has erred in law and in facts in not following the terms of the tax treaty entered into between India and Cyprus. The CIT(A) erred in not appreciating that Glendive was having effect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le the ship for transporting Bauxite Ore from India to Sharjah. As mentioned above, Glendive appointed Shaan as its agent for handling the loading other operations, for necessary clearances from the court, customs, PHO, Income Tax, immigration, etc. in India as detailed on page 17 of the Paper Book filed by the assessee. The bill of lading is placed on page 79 and the freight bill is on page 78 of the Paper Book filed by the assessee. The bill of lading gives the details of the exporter which is Ashapura Minchem Ltd., the ore is to be transported to Arabian and the carrier is Glendive. Glendive is a company registered in Cyprus as detailed in page 20 and its tax residence is also in Cyprus as detailed in page 19 of the Paper Book filed by the assessee. Shaan as an agent of Glendive filed the return u/s 172 of IT Act as placed on page 18 of the Paper Book. In the said return, it declared income at Rs. NIL because as per Article 8 of DTAA between India and Cyprus, in the shipping business, the income of the entity is to be taxed in the country wherein the enterprise is registered and it is having its head quarters. Accordingly, as Glendive is registered in Cyprus and it is having its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ablishment as such, it is interposed in between only for taking advantage of the DTAA. We find that Arabian has made a contract with Glendive as a charterer of the ship. Glendive has a contract with Aquavita for chartering the ship. The bill of lading as placed on page 79 of the Paper Book, recognized Glendive as the ship charterer in this case. The Glendive has played definite role in transporting the ore by ship from India to Sharjah which is evident from the fact that all contracts and the bill of lading have been made in the name of Glendive. Glendive has given its annual report as placed on page 21 onwards and in the P & L Account as placed on page 27 of the Paper Book, wherein it has incorporated all the receipts in this year and not just the commission. All these documents and the contracts have acknowledged the role of Glendive as a ship charterer. In such a scenario, the authorities below were not justified in holding that Glendive has not played any role. It is just a paper company and has not played any role in transporting ore from India to Sharjah. The authorities below have tried to rewrite these contracts mentioned above, which is not permissible. 4.3 It is pertinen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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