9911796707
TMI Blog2022 (11) TMI 379X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment proceeding and thereby entire assessment proceeding is bad in law; Taxability of Inland Haulage Charges ('IHC') of INR 308,74,51,331/- 3. erred in making addition on account of IHC on the ground that same is chargeable to tax in India and accordingly brought to tax @ ad-hoc 10% deemed profit rate of taxable receipt: 4. erred in making an addition on account of IHC by denying the benefit of Article 9 of India -France Double Taxation Avoidance Agreement ('India-France DTAA') since IHC is directly connected to and ancillary to the transportation of cargo in international traffic; 5. erred in not taking cognizance of the decision of jurisdictional Tribunal in the Appellant's own case for AY 2012-13 to AY 2014-15 & AY 2015-16, wherein the Hon'ble Tribunal has held that IHC shall form part of income from operation of ships in international traffic and accordingly, not taxable in India as per Article 9 of India France DTAA; 6. without prejudice to the above, even if IHC is taxable in India under the Act, only 7.5% of such receipts should be taxable under section 44B of the Act; Taxability of freight charges of INR 11,59,46,291/- from transport ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. It is engaged in the business of operation of ships in international traffic (i.e. transportation of cargo between ports in India and ports outside India). For the year under consideration, assessee filed its return of income on 30/11/2017 declaring total income at Rs. 9,75,92,572. The case of the assessee was selected for scrutiny and vide draft order dated 20/12/2019 passed under section 143(3) of the Act total taxable income of the assessee was computed at Rs. 41,50,33,680, after making various additions. The assessee filed detailed objections before the learned DRP. Vide directions dated 25/02/2021, issued under section 144C(5) of the Act, objections filed by the assessee were rejected following the directions issued in assessee‟s own case for preceding assessment years. In conformity to the directions issued by learned DRP, the Assessing Officer ("AO") passed the final assessment order dated 09/04/2021 under section 143(3) read with section 144C(13) of the Act. Being aggrieved, the assessee is in appeal before us. 4. The issue arising in ground No. 1 is general in nature and therefore need no separate adjudication. 5. The issue arising in ground No. 2, raised in ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d DR") vehemently relied upon the orders passed by the lower authorities. 10. We have considered the rival submissions and perused the material available on record. We find that similar issue was decided in favour of assessee by the coordinate bench of the Tribunal in CMA CGM SA vs ACIT, in ITA No. 5998/Mum/2019, for assessment year 2016-17, vide order dated 02/09/2022, after following judicial precedents rendered in assessee‟s own case for preceding assessment years. The relevant findings of the coordinate bench of the Tribunal, in aforesaid decision, are as under: "7. We find that in assessment year 2015-16 similar ground was raised by the assessee before the Tribunal. The Tribunal following the order of Co ordinate Bench in assessee's own case in ITA No.6649/Mum/2017(supra) decided the issue in favour of the assessee. The relevant extract of the findings of Tribunal in assessment year 2015-16 are reproduced hereunder: "7. Having heard the parties, we find that while deciding identical issue in assessee's own case in the assessment year 2012-13, learned DRP had categorically held that the revenue earned from IHC is part of shipping business in International Wat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts and accordingly the Indian agents also remitted pro-rata costs to the above said assessee. Before AD, 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. The AO, however, held to it to be fee for technical services. 18. Before the Hon'ble High Court, the assessee has also taken a plea that the communication system is very much an integral part of shipping business and therefore, the income received by the assessee from the agents, did in fact, amount to income from the shipping business of the assessee and therefore, not chargeable to tax. The Hon'ble Bombay High Court held that the amount received by the assessee for using the communication system by the agents is part of shipping business and could not be captured under any other provisions of the Income tax Act except DTAA. The High Court further held that it does not amount to technical service. Finally the High Court held that the amounts paid by the agents for using the communication system arose out of the shipping business and cannot be brought to tax. 19. The decision so rendered by Hon'ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n assessee's own case, grounds of appeal No.2 to 4 are allowed for parity of reasons." 11. The issue arising in the present appeal is recurring in nature and has been decided in favour of the assessee by the decision of the coordinate bench of Tribunal for preceding assessment years. The learned DR could not show us any reason to deviate from the aforesaid decision and no change in facts and law was alleged in the relevant assessment year. Thus, respectfully following the order passed by the coordinate bench of the Tribunal in assessee‟s own case cited supra, we uphold the plea of the assessee and direct the AO to delete the addition on account of IHC. As a result, grounds No. 3 - 6 raised in assessee‟s appeal are allowed. 12. The issue arising in grounds No. 7 - 10, raised in assessee‟s appeal, is pertaining to taxability of freight charges from transportation of cargo through feeder vessels. 13. The brief facts of the case pertaining to this issue, as emanating from the record, are: During the course of scrutiny proceedings, it was noticed that the assessee was transporting the goods by means of feeder vessels which were neither owned nor chartered by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Authorized Representative of the assessee further submitted that the Hon'ble Bombay High Court in assessee's own case in appeal filed by Department in Income Tax Appeal No.2175 of 2009 decided on06/08/2012 has decided this issue in favour of assessee and has dismissed the appeal of Revenue. We find that in assessment year 2015-16 the Co-ordinate Bench following the order of Tribunal in assessee's own case for assessment years 2012-13 to 2014-15 dated 14/03/2018(supra) and the decision of Hon'ble Bombay High Court in assessee's own case held as under: "17. Facts being identical, respectfully following the aforesaid decision of the Co ordinate Bench rendered in assessee's own case, we hold that freight charges received from transportation of cargo through feeder vessels being part of shipping income in International Traffic is covered under Article-9(1) of the India-France Tax Treaty, hence, not toxable in India. In fact, the aforesaid view of the Tribunal was upheld by the Hon'ble Jurisdictional High Court while dismissing Revenue's appeal in assessee's own case in Assessment Year 2002-03 in Income Tax Appeal no. 2175 of 2009, vide judgment da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ‟s own case for preceding assessment years. The learned AR further submitted that the transition is as per Advance Pricing Agreement ("APA") and therefore no further adjustment is required. 21. On the other hand, learned DR vehemently relied upon the orders passed by the lower authorities. 22. We have considered the rival submissions and perused the material available on record. We find that similar issue was decided in favour of assessee by the coordinate bench of the Tribunal in CMA CGM SA vs ACIT (supra), for assessment year 2016-17, after following judicial precedents rendered in assessee‟s own case for preceding assessment years. The relevant findings of the coordinate bench of the Tribunal, in aforesaid decision, are as under: "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 P.E. of the assessee. It is further relevant to observe, in the adva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e nature of IT support fees [Fees for Technical Services (FTS)] amounting to INR 8,29,29.430/- from its Agency company [CMA CGM Agencies India Private Limited ('CCA)] is not chargeable to tax in India by virtue of the beneficial provisions of Article 9 of India-France tax treaty. 17. 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 18. Without prejudice to the above, Hon'ble Pune Tribunal in the case of Appellant's Indian Agency company, CCAI (ITA No.2314/PUN/2017 dated 2 January 2020) while adjudicating the similar payment for AY 2012-13 has held that the payment made for IT Services by CCAI to the Appellant is not chargeable to tax in India as per the Article 13 as well as Article 9 of India France tax treaty and hence, CCAI was not liable to withhold tax on the same in India. 19. Without prejudice to the above, the Appellant prays that the income from provision of such services would not qualify as FTS as per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appellant wishes to file an additional ground of appeal for non-taxability of FTS income in India as against tax rate of 10% (plus surcharge and education cess) as specified in under section 115A of the Act as considered by the Appellant in its return of income filed for the year under consideration. The assessed income to that extent would be lower when compared with the returned income." 28. The assessee has also filed following additional evidences, vide application dated 28/09/2022, in respect of the issues raised in the additional grounds of appeal: (i) I.T service agreement between CMA CGM SA and its Indian agency company dated 25/02/2015; (ii) Addendum dated 12/06/2015 to the said IT service agreement; (iii) Addendum dated 13/12/2017 to the said IT service agreement; (iv) Copy of invoices raised by the assessee on the agency company for a by 2017-18. 29. As per the assessee, for the year under consideration, it had earned income in the nature of IT support services amounting to Rs. 8,29,29,430 from its Indian agency company, which was inadvertently offered to tax at the rate of 10% plus surcharge and education cess in the return of income filed for the year under c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the return of income to claim the income as non- taxable under the provisions of DTAA. In the light of above, we are inclined to admit additional grounds of appeal, as well as additional evidences to substantiate additional grounds. 18. Since, this issue require fresh determination from a different dimension, we deem it appropriate to restore the same to Assessing Officer for de-novo examination considering the additional evidences filed by the assessee and after affording reasonable opportunity of hearing/opportunity to make submissions, in accordance with law. The additional grounds of appeal are allowed for statistical purpose." 30. Since, in the present appeal also the assessee has raised similar additional grounds and also filed similar additional evidences, therefore, we deem it appropriate to admit the same and restore the issue raised vide aforesaid additional grounds of appeal to the file of AO with similar directions as were passed in earlier assessment year. Needless to mention that no order shall be passed without affording reasonable opportunity of being heard to the assessee. In the result, additional grounds of appeal filed by the assessee are allowed for stat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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