TMI Blog2022 (9) TMI 1388X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee further submitted that the Hon'ble Bombay High Court in assessee's own case in appeal filed by Department in Income Tax Appeal [ 2012 (8) TMI 1211 - BOMBAY HIGH COURT] has decided this issue in favour of assessee and has dismissed the appeal of Revenue. Permanent Establishment of the assessee in India - No material is brought on record to suggest that the transaction with Indian entity is not at arm s length. On the contrary assessee has demonstrated that transaction is as per APA therefore, no further adjustment is required. Respectfully following the decision of Co-ordinate Bench in assessee s own case for assessment year 2015-16 grounds No.11 to 13 are allowed. Taxing interest on ECB @ 10% instead of tax rate of 5%(+ surcharge @5% and cess @3%) - assessee pointed that rectification application has already been filed before the AO on 25/02/2021, which is still pending for final disposal - HELD THAT:- AO is directed to decide the rectification petition of the assessee dated 25/02/2021 expeditiously, preferably within a period of six months from the date of receipt of this order. The ground No.15 of appeal is allowed for statistical purpose. Claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CMA CGA Agencies (India) Pvt. Ltd. Whether Agency Permanent Establishment (PE)of the assessee in India. Ground No. 14 - Error in computing Fees for Technical Services under the head Income from Other Sources . Ground No.15 Error in calculation of Tax on interest on External Commercial Borrowings (ECB). Ground No. 16 - Initiation of Penalty proceedings u/s. 271(1)(c) of the Act. Additional Grounds of Appeal read as under: 17. On the facts and circumstances of the case and in law, the Appellant prays that the income earned in the nature of IT support fees [Fees for Technical Services ('FTS')] amounting to INR 8,12,79,561/- from its Agency company [CMA COM Agencies India Private Limited ('CCAl')] is not chargeable to tax in India by virtue of the beneficial provisions of Article 9 of India-France tax treaty. 18. On the facts and circumstances of the case and in law, while the Appellant has inadvertently offered the said income to tax at the rate of 10% plus surcharge and education cess (as per section 115A of the Act) in the return of income, it does not automatically constitute income chargeable to tax in India. 19. Without prejudice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Tribunal for assessment year 2015-16 dated 30/12/2019. 4. The grounds raised by the assessee in appeal are decided in seriatim. Taxability of Inland Haulage Charges (IHC): 5. The ld.Authorized Representative of the assessee submitted that the Assessing Officer has erred in making addition on account of IHC on the ground that the same is chargeable to tax in India and levied tax @10% on deemed profit rate of taxable receipts. The Assessing Officer / DRP failed to appreciate the fact that IHC are not taxable in India as per Article 9 of India- France DTAA. IHC are directly connected to and ancillary to the transportation of cargo in international traffic. The ld.Authorized Representative of the assessee submitted that the Tribunal in assessee's own case in ITA No.6095/Mum/2018 for assessment year 2015-16 decided on 30/12/2019 and also by the order of Tribunal dated 14/03/2018 common for ITANo.2185/Mum/2017 for assessment year 2013-14 and ITA No.6649/Mum/2017 for assessment year 2014-15 has held that IHC forms part of income from operation of Ships in international traffic, hence, covered by Article -9 of India-France DTAA. 6. Shri C.T. Mathews representing t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f India-Belgium DTAA. However, in the case of DIT Vs. A.P.Moller Maersk A/S (ITA No.1306 of 2013 dated 29- 04-2015), to which India-Denmark treaty would apply, the Hon ble Bombay High Court has held that the principles involved in the decision of Safmarine Container Lines N.V (Supra) also govern the case of A.P. Moller Maersk A/S (supra). There is no dispute that the Article 9 of India-France DTAA is identically worded to the corresponding Article in India-Denmark DTAA. 17. We shall now discuss in brief the facts available in M/s A.P. Moller Maersk A/S case. The said company was resident of Denmark and hence India- Denmark DTAA applied to it. In order to help its agents in booking cargo and carrying out clearing agent works, the assessee maintained a global telecommunication facility called MaerskNet, which is a vertically integrated Communication system . The assessee recovered pro-rata costs from its agents and accordingly the Indian agents also remitted pro-rata costs to the above said assessee. Before AO, the assessee contended that it was merely a system of cost sharing and hence the amount recovered by it from its agents is in the nature of reimbursement of expenses. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Ld A.R on this issue. Accordingly we hold that Inland Haulage Charges received by the assessee shall form part of income from operation of ships in international traffic and accordingly Article 9 of India-France DTAA shall apply to it. Accordingly we uphold the order passed by Ld DRP in Ay 2012-13 on this issue and reverse the orders passed by it on this issue in AY 2013-14 and 2014-15. 8. Respectfully following the decision of the Co ordinate Bench rendered in assessee s own case in the preceding assessment years, we hold that IHC, since, forms part of income from operation of ships in International Traffic, is covered under Article 9 of the India France Tax Treaty, accordingly, not taxable in India. These grounds are decided allowed. No contrary material has been brought on record distinguishing facts or the aforesaid decision. Respectfully following the decision of Co-ordinate Bench in assessee's own case, grounds of appeal No.2 to 4 are allowed for parity of reasons. Taxability of Freight Charges for Transportation of Cargo through Feeder Vessels: 8. The ld.Authorized Representative of the assessee submitted that the Assessing Officer and DRP have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee submitted that in the preceding assessment years similar findings were given by the Assessing Officer and the DRP. The issue travelled to the Tribunal. The Tribunal in appeals for assessment years 2012-13 to 2014-15 decided vide order dated 14/03/2018 (supra) and vide order for the assessment year 2015-16 dated 30/12/2019 held that Indian entity cannot be considered as Permanent Establishment and decided the issue in favour of the assessee. The ld.Authorized Representative of the assessee further pointed that a perusal of the Advance Pricing Agreement (APA) at page 117 of the paper book would show that the transaction is at arm s length, therefore, Indian entity cannot be held to be as agency Permanent Establishment. 10. Both sides heard. We find that in assessment year 2015-16 Co-ordinate Bench following the decision of Tribunal in assessee s own case for assessment year 2012-13 to 2014-15 held as under: 20. As could be seen from the aforesaid decision, the Tribunal has held that if the Indian agent has been remunerated at arm s length, it cannot be considered as agency PE of the assessee. It is further relevant to observe, in the advance pricing agreement between t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt of I.T.Support Services. The aforesaid receipts are in the nature of Fees for Technical Services(FTS) arising in India. The contention of the assessee is that FTS is not taxable in the light of beneficial provisions of India-France DTAA. 15. The reason given by the assessee for raising additional grounds of appeal before the Tribunal as per the application (supra) is reproduced herein below: With regard to the additional ground relating to non-taxability of FTS received by the Appellant from its Indian agency company [CMA CGM Agencies India Private Limited ('CCAI')], it is submitted that the Appellant had inadvertently offered the same to tax at the rate of 10% plus surcharge and education cess (as per section 115A of the Act) in the return of income filed for the year under consideration. In this regard, attention is drawn to the decision of Hon'ble Pune Tribunal in case of CCAI (i.e. Indian agency company of the Appellant) (ITA No.2314/PUN/2017 dated 2 January 2020), wherein it was held that the said FTS paid by the assessee is not chargeable to tax in India as per the beneficial provisions of India-France tax treaty and hence, the assessee was not liable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... grounds of appeal the assessee has stated that FTS arising from IT Services is not taxable in the light of beneficial provision in India France tax treaty and also in the light of decision rendered by Pune Bench of the Tribunal in the case of assessee s Indian Agency Company CMA CGM Agencies India Pvt. Ltd.(supra). In so far as the issue raised in additional grounds of appeal it emanates from the proceedings before the Lower Authorities. The income which has been offered to tax by the assessee in return of income, now by way of additional ground assessee is claiming it non-taxable. It is a well settled principle that true income of the assessee should be taxed and only legitimate taxes should be collected from the assessee. [ Re: Balmukund Acharya Vs. DCIT, 310 ITR 310 (Bom)]. The assessee by way of additional evidences has supported the contentions raised in additional grounds of appeal. It is not a case where the assessee has raised altogether a fresh issue which was neither part of the income tax return or assessment proceedings. The assessee has changed its stand from offering income to tax in the return of income to claim the income as non- taxable under the provisions of DT ..... X X X X Extracts X X X X X X X X Extracts X X X X
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