TMI Blog2022 (11) TMI 379X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 raised in assessee‟s appeal are allowed. Taxability of freight charges from transportation of cargo through feeder vessels - HELD THAT:- As decided in own case assessment year 2016 17[ 2018 (3) TMI 1832 - ITAT MUMBAI] 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 [ 2012 (8) TMI 1211 - BOMBAY HIGH COURT ] Treating the agent of assessee in India as permanent establishment of the assessee - HELD THAT:- As decided in own case assessment year 2016 17[ 2018 (3) TMI 1832 - ITAT MUMBAI] 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 demonstrat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /- from transportation of cargo through feeder vessels 7. erred in holding that 7.5% of freight charges from transportation of cargo through feeder vessels is income taxable in the hands of the Appellant and not eligible for benefit under Article 9 of India-France DTAA; 8. erred in not taking cognizance of the decision of jurisdictional Bombay HC in the Appellant's own case for AY 2002-03 (ITA No. 2175 of 2009), wherein the Hon'ble H has followed the decision in case of Balaji Shipping (UK) Ltd. and held that freight income from transportation of cargo through feeder vessels is not taxable in India. 9. 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 followed the decision of Hon'ble jurisdiction Bombay HC in the Appellant's own case and held that the freight income from transportation of cargo through feeder vessels is eligible for relief as per article 9 of India-France DTAA; 10. erred in holding that while income from slot arrangement would fall within the ambit of section 44B of the Act, at the same time it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... djudication. 5. The issue arising in ground No. 2, raised in assessee‟s appeal, was not pressed during the course of hearing and therefore is dismissed as not pressed. 6. The issue arising in grounds No. 3 6, raised in assessee‟s appeal, is pertaining to taxability of Inland Haulage Charges ( IHC ). 7. The brief facts of the case pertaining to this issue, as emanating from the record, are: During the year under consideration, out of the total Revenue, the assessee had collected a sum of Rs. 308,74,51,331, from its customers on account of IHC. These charges were collected towards transportation of goods from the exporter‟s warehouse to the port of loading and vice versa. As per the assessee, the IHC activity is directly connected to and ancillary to the transportation of cargo in international traffic and it falls under Article 9 of India France Double Taxation Avoidance Agreement ( DTAA ). The AO vide draft assessment order rejected the claim of the assessee and held that the IHC received for transportation of goods in domestic areas. The AO further held that the handling charges are the charges paid for loading / unloading / stacking etc. of containe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the revenue earned from IHC is part of shipping business in International Waters, hence, covered under Article-9 of the Tax Treaty. However, subsequently, while deciding the identical issue in assessee's own case for the assessment years 2013-14 and 2014-15, learned DRP took a contrary view and decided the issue against the assessee. When the appeals preferred by the Revenue and the assessee for the aforesaid assessment years came up for consideration before the Tribunal, the Tribunal in ITA no.6649/ Mum./2017 Ors., dated 14th March 2018, decided the issue in favour of the assessee holding as under: 15. We have heard rival contentions on this issue and perused the record. We notice that the Id DRP has mainly declined to follow its own order passed in AY 2012-13 in the subsequent two years for the reason that there is difference between Article 8 of India-Belgium DTAA and Article 9 of India France DTAA. According to Ld DRP that the India-Belgium DTAA contains specific provisions to include any other activity directly connected with such transportation , whereas the same is absent in the India France DTAA. The Ld A.R, on the contrary, submitted that the presence or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shipping business and cannot be brought to tax. 19. The decision so rendered by Hon'ble Bombay High Court in the context of India-Denmark DTAA clearly shows that the ancillary activities connected with the shipping business are also included in the shipping business. The above said decision has been followed by the co-ordinate bench in the case of same assessee, viz., A.P.Moller Maersk A/S (ITA No.1798/Mum/2015 dated 15-02 2017) for AY 2011-12 to hold that the Inland Haulage charges received by that assessee shall also form part of shipping income from international traffic. The decision so rendered for AY 2011-12 was followed by the coordinate bench in the above said assessee's case in AY 2012-13 in ITA No.1743/Mum/2016 dated 07-02-2018. 20. Before us, the Id A.R demonstrated that the Article 9 of India France DTAA and Article 9 of India-Denmark DTAA are identically worded. Since the decision rendered by Hon'ble Bombay High Court in the case of Safmarine Containers Lines N.V (which was rendered in the context of India-Belgium DTAA) was held to be applicable to India-Denmark DTAA also by the Hon'ble Bombay High Court in the case of A.P.Moller Maersk A/S (I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the assessee was transporting the goods by means of feeder vessels which were neither owned nor chartered by the assessee company. The AO vide draft assessment order held that the journey through feeder vessels to mother vessel is falling under Article 7 of DTAA and accordingly treated the sum of Rs. 11,59,46,291 as business profits of the assessee. The AO treated this income as covered under section 44B of the Act and 7.5% thereof i.e. Rs. 86,95,972 was added the total income of the assessee. The learned DRP rejected the objections filed by the assessee, against the aforesaid addition, by following its directions rendered in assessee‟s own case for preceding assessment years, after noting that in the year under consideration facts are pari materia to the earlier assessment years and the issue is still pending before higher forums. In conformity to the directions issued by learned DRP, the AO passed the final assessment order. Being aggrieved, the assessee is in appeal before us. 14. During the course of hearing, learned AR submitted that this issue is covered in favour of assessee by decisions of the coordinate bench of the Tribunal rendered in assessee‟s own ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enue's appeal in assessee's own case in Assessment Year 2002-03 in Income Tax Appeal no. 2175 of 2009, vide judgment dated 6th August 2012. Accordingly, these grounds are allowed. [Emphasized by us) No contrary material has been brought to our notice to take a different view. Following the order of Co-ordinate Bench on this issue, ground No. 6 to 10 of the appeal are allowed for similar reasons. 17. The issue arising in the present appeal is recurring in nature and has been decided in favour of the assessee 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 freight charges for transportation of cargo through feeder vessels. As a result, grounds No. 7 10 raised in assessee‟s appeal are allowed. 18. The issue arising in grounds No. 11 13, raised in assessee‟s appeal, is pertaining to treati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 advance pricing agreement between the CMA CGM Agencies India Pvt. Ltd and CBDT entered on 24th November 2015, it has been agreed that remuneration @ 18% between the assessee and its indian agent has to be considered to be at arm's length, in the facts of the present case, it has been factually demonstrated before us that the payment made by the assessee to its indian agent is at the arm's length price of 18%. That being the case, following the aforesaid decision of the Co-ordinate Bench, we hold that the Indian Agent of the assessee cannot be considered as an agency PE. Thus, grounds are decided in favour of the assessee. [Emphasized by us) There has been no change in the facts in impugned assessment year. 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 fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble 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 the beneficial provisions of India - France tax treaty read along with protocol having the Most Favoured Nation (MFN') clause as the same does not make available any technical knowledge, experience or skill etc to the Indian agent. 20. Without prejudice to the above, the said income from IT support services does not qualify as royalty as per the provisions of India - France tax treaty as the payment of use of software does not satisfy the requirement of 'use of, or the right to use, any copyright of software 21. Without prejudice to the above, on the facts and circumstances of the case and in law, the Appellant prays that the provision of IT support services by CCSA was mainly aimed at facilitating its shipping business and accordingly, the amount received will assume the character of profit derived from the operations of ships as it is inextricably linked with its shipping activity and hence, exempt under Article 9 of India-France tax treaty. The Appellant craves leave to add to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort 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 consideration. However, subsequently the coordinate bench of Tribunal in Indian agency company‟s case vide order dated 02/01/2020 in ITA No. 2314/PUN/2017 held that fee for technical services paid by Indian agency company is not chargeable to tax in India as per the beneficial provisions of DTAA and hence the Indian agency company is not liable to withhold any tax on the same in India. As the income has been offered to tax inadvertently by the assessee, therefore, the assessee has filed aforesaid additional grounds and additional evidences. We find that similar additional grounds and additional evidences were also filed by the assessee before the coordinate bench of the Tribunal in its appeal for assessment year 2016 17. The coordinate bench in CMA CGM SA vs ACIT (supra), for assessment year 2016-17 admitted the additional grounds of appeal as well as additional evidences filed to support the additional grounds and restore the same to the file of AO for de novo exa ..... 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