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TMI Blog2017 (3) TMI 1376X X X X Extracts X X X X X X X X Extracts X X X X ..... t of India - Denmark DTAA, ignoring tax residency as well as other relevant details furnished and Ld. CIT (A) also erred in confirming the same. ii. Ld. AO and Ld CIT(A) has erred in law as well as on facts in not accepting the contention of the appellant that M/s. Faber Shipbroker APS, Denmark, is only disponent owner of the vessel who is the actual Beneficiary of receipt of Freight and responsible for the entire taxation burden and payment of tax in Denmark. iii. Ld. AO and Ld. CIT(A) has erred in law as well as on facts in stating that the payment received by the claimed disponent owner Faber Ship Broker of Denmark, would be in nature of hiring payment for charter and not freight for carrying goods. iv. Ld. AO has erred in law as well as on facts in stating that M/s. CTI Group Inc., Jordan has chartered the ship & has transported goods & has earned freight and Ld. CIT(A) also erred in confirming the same. v. The Ld. AO has erred in law in taxing income in India ignoring the fact that there is DTAA with Denmark i.e. country to which freight beneficiary belongs. Article 4 and particularly Article 9 of DTAA clearly mention that the income from shipping business is taxab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble on records, it was noticed that you have claimed DTAA benefit for the country of Denmark without any valid documents. Your attention is also invited for the following basic requirements for obtaining DTAA benefit.:- ARTICLE 9: Shipping - 1. Profits derived from the operation of ships in international traffic shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated. In other to obtain benefit of DTA, you will submit following details of the freight beneficiaries of the vessels:- I) Please furnish latest amended Article of Association dated 02.07.1999 (as per your summary sheet). II) Please that, Jens Faber Andersen, is General Manager of the company, therefore, you are requested to furnish following details:- a) Please incorporation certification of M/s. Faber shipbroker APS - Denmark. b) Details of share holders of company with their nationality & address of M/s. Faber Shipbroker APS - Denmark. c) During the year companies AGM wherein taken with complete address and also submit copy of the AGM M/s. Faber shipbroker APS - Denmark. d) Details of Directors of the company and their nationality with complet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of amended Article of Association dated 02.07.1999 is attached herewith. a) Incorporation certificate of M/s. Faber Shipbrokers APS - Denmark is attached herewith. b) The Jens Faber Andersen is a sole Proprietor of the company and tax registered here in Copenhagen, Denmark, tax number is 37050629 copy of passport of Jens Faber Andersen is attached herewith. c) No AGM is held during the year as the company owned by the sole proprietor as mentioned in point above. d) The Jens Faber Andersen is a sole proprietor of the company, and tax registered here in Copenhagen, Denmark - tax number is 37050628. Copy of passport of Jens Faber Andersen is attached herewith. i. Complete copy of Freight invoice - The freight was not received from India but from the ultimate buyers i.e. Jorden. Copy of declaration made by Managing Director of Faber Shipbrokers is attached herewith. ii. There is no payment made to a non-resident from India in respect of this voyage. Payment was made by the ultimate buyer from Jorden. iii. The details are not possible. iv. The company is resident of Denmark as certified tax authorities of Denmark. It is granted certificate of residence for the purpose of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s. 172(3) @ 7.5% is Rs. 87,174/- and 87,774/- totaling to Rs. 1,74,948/-. 13. Freight was payable by CTI Group Inc., Jordan to Faber Shipbrokers, Denmark (kindly refer clause no. 13 and 14 of charter party agreement at Page No.36 of Paper Book.) 14. Faber is owner and CTI Group Jordan is charterer (Refer para 3 & 4 of Charter Party agreement). As per Charter Party agreement - CTI Group Inc., Jordan is charterer and Faber Shipbroker, Denmark is the owner. (This can be verified from the signatories to Charter party agreement). Therefore, the agreement sought by CIT(A) about agreement between CTI Group Inc., Jordan and Faber Shipbrokers, Denmark is Charter Party agreement was submitted before AO and CIT(A). 15. According to Section 172 of the Act, income of owner or charter who receives freight is chargeable to tax. In this case, freight is received by Faber Shipbrokers, Denmark and has earned the freight, so, the income of Faber Shipbroker, Denmark is chargeable to tax in India. Faber Shipbrokers is resident of Denmark and tax residency certificate of which is available on record. (Refer Page No.35 of paper book). So as per decision of Honorable SC in case of Azadi Bachao Andolan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n India and Denmark read as under - Profits derived from the operation of ships in international traffic shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated. Therefore, on the basis of Article 9 of the DTAA between India and Denmark, the income on account of operation of ship in International Traffic shall be taxable in the state in which the place of effective management is situated i.e. in this case Denmark. Therefore, in view of the above discussion and considering Article-9 of the Treaty between India and Denmark and also the decision taken by the Department in earlier cases of the assessee, we hold that the ships operated in International Traffic and therefore, the income from ship shall not be taxed in India as per Article 9 of the Treaty. Therefore, on account of foregoing observation, appeal of the assessee/appellant is allowed. 20. In the result, appeal filed by the assessee in ITA No. 313/Rjt/2013 for the Assessment Year 2011-12 is allowed. 21. Now we take up the assessee's appeal in ITA No.658/Rjt/2012, 659/Rjt/2012, 660/Rjt/2012 & 661/Rjt/2012 for the A.Y.2010-11. The assessee has taken following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Group Inc., Jordan. The country of Jordan, the Government of India did not have comprehensive tax treaty. iii. The Ld. CIT(A) has erred in law and on facts by holding that freight beneficiary of the vessel is M/s. Faber Shipbroker APS Denmark without verifying or filing a copy of bank account/bank certificate of the actual freight beneficiary of the vessel. iv. The Ld.CIT(A) has erred in law and on facts that determined freight beneficiary of the vessel is M/s. Faber Shipbroker APS - Denmark based on the charter party agreement instead of verifying the bank account of freight remittance. v. The Ld. CIT(A) has erred in law and on facts that freight amount received or deemed to be received in India by or on behalf of the assessee on account of carriage of passengers, livestock, mail or goods shipped at any port outside India is neither taxed in India nor paid tax in Denmark, which violation of Chapter IX - Double taxation relief - agreement with foreign countries u/s. 90(1) of the Act. vi. The Ld. CIT(A) has erred in law and on facts by ignoring the comprehensive DTAA Agreement of India & Denmark in respect of Article-9-Shipping that Profits derived from the operation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cessor had dismissed the earlier appeal of the assessee vide Appeal No. CIT(A)/GNR/99 & 101/Intl.taxn./2010-11 dtd. 02/07/2012. v. The Ld. CIT(A) has erred in law and on facts in deciding the appeals without calling upon various documents as mentioned in statement of facts enclosed. vi. the Ld. CIT(A) has erred in law and on facts in not following the judicial analysis supported by recent decision of Hon'ble Delhi Bench Tribunal in the case of SMR Investment Ld., Vs. Dy. DIT [2010] 12 ITAT India 866 wherein it was held that merely Tax Residency Certificate is not enough to conclude the residential status. vii. On the facts and circumstances of the case Ld. CIT(A) ought to have upheld the order of the AO. viii. It is therefore, prayed that the order of the Ld. CIT(A) may be set-aside and that of the Assessing Officer be restored to the above extent. ix. Any other ground that may be urged at the time of hearing. 25. Since we have allowed appeal of the assessee in ITA No. 313/Rjt/2013, ITA No.658, 659, 660 & 661/Rjt/2012. We are not inclined to accept the contention of the Department and Department's both the appeals in ITA No.517/Rjt/2013 & 499/Rjt/2014 are dismissed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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