Income Tax Appellate Tribunal - Rajkot
M/S Atlantic Shipping P. Ltd.,, ... vs The Income Tax Officer (Inter. Taxa.),, ... on 7 February, 2017
आयकर, अपील य अ धकरण राजकोट यायपीठ ।
IN THE INCOME TAX APPELLATE TRIBUNAL, RAJKOT
[Conducted through "E" Court at Ahmedabad]
BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER
AND
SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER
Stay Application No.2/RJT/2016
IN
आयकर अपील सं./ ITA.No.409/RJT/2016
Asstt.Year 2015-2016
M/s.Seasworld Shipping & Logistics P.Ltd. ITO (International Taxation)
(As agent of BP Singapore Pte Ltd.) Vs Gandhidham.
115, Rsishabh Corner, Plot no.93
Sector 8, Tagore Road
Gandhidham.
Stay Application No.3/RJT/2016
IN
आयकर अपील सं./ ITA.No.410/RJT/2016
Asstt.Year 2015-2016
M/s.Interocean Shipping (India) Pvt. Ltd. ITO (International Taxation)
(As agent of BP Singapore Pte Ltd.) Vs Gandhidham.
Plot No.72, ward-10/A
Opp: IFFCO Colony Main Gate
Gandhidham.
Stay Application No.4/RJT/2016
IN
आयकर अपील सं./ ITA.No.411/RJT/2016
Asstt.Year 2015-2016
M/s.GAC Shipping (India) Pvt.Ltd. ITO (International Taxation)
(As agent of BP Singapore Pte Ltd.) Vs Gandhidham.
1/20, Sonali Park, Plot No.317
Ward 12/B, Gandhidham.
Stay Application No.5/RJT/2016
IN
आयकर अपील सं./ ITA.No.412/RJT/2016
Asstt.Year 2015-2016
M/s.Atlantic Shipping Pvt.Ltd. ITO (International Taxation)
(As agent of BP Singapore Pte Ltd.) Vs Gandhidham.
Golden Arcade, Office No.201
2nd Floor, Plot NO.141 & 142
Sector 8, Gandhidham
Stay Petition No.3/Rjt/2016 in ITA No.410/RJT/2016 & 3 Others
2
Dist. Kutch, Gujarar370 201.
अपीलाथ(/ (Appellant) )*यथ(/ (Respondent)
Assessee by : Shri Paurnami Sheth, AR
Revenue by : Shri Yogesh Pandey, CIT-DR
सन
ु वाई क तार ख/ Dateof Hearing : 07/02/2017
घोषणा क तार ख / Date of Pronouncement: 07/02/2017
आदे श/O R D E R
PER RAJPAL YADAV, JUDICIAL MEMBER:
Present four stay applications are directed at the instances of the assessee for grant of ad-interim stay of outstanding demands in the Asstt.Year 20015-16.
2. Facts on all vital points are common, therefore, for the sake of reference, we take up facts from stay application no.3/RJT/2016 in the case of M/s.Interocean Shipping (India) Pvt. Ltd. ("Interocean" for short).
3. Before embarking upon an inquiry about demands raised against each assessee in the respective assessment year, we would like to give brief backgrounds of the facts.
4. BP Singapore Pte Ltd. is a company incorporated under the tax laws of Singapore and engaged in operation of ships in international traffic. M/s.
"Interocean" is a company who had filed provisional return of income in the capacity of agent for BP Singapore Pte Ltd.("BP Singapore" for short). Under similar circumstances, other three companies viz. M/s.Seaworld Shipping & Logistics P. Ltd. ("Seaworld" for short), M/s.Atlantic Shipping Stay Petition No.3/Rjt/2016 in ITA No.410/RJT/2016 & 3 Others 3 Pvt. Ltd. ("Atlantic" for short) and M/s.GAC Shipping (India) Pvt. Ltd. ("GAC" for short) have also filed provisional returns in the capacity of agent for BP Singapore. All these applicants have claimed benefit of Article 8 of Indo-Singapore DTA . Details of Tax demands raised by the department and amounts of taxes paid by these companies are as under:
Sr. Name of Tax Demand Amount paid Balance Tax
No. Assessee by the Demand sought
assessee to be stayed
Interocean 1,31,93,600/- 19,79,040/- 1,12,14,560/-
Seaworld 16,85,970/- 2,52,896 14,33,075/-
Atlantic 19,23,432/- 2,88,515/- 16,34,917/-
GAC 51,72,255/- 7,75,900/- 43,96,355/-
5. The ld.counsel for the assessee while taking us through these stay applications contended that issue involved in all these appeals is squarely covered in favour of the assessee by the decision of ITAT rendered in ITA No.392/RJT/2014 in the case of Alabra Shipping Pte Ltd., Singapore ("Alabra" for short). She also pointed out that this view of the Tribunal has been upheld by the Hon'ble Gujarat High Court in the case of M.T. Maersk Milkage & Others Vs. Director of IT (International Taxation), SCA No.9150 of 2014. According to the ld.counsel for the assessee, BP Singapore is a tax resident of Singapore. She drew our attention towards page no.42 of the paper book wherein certificate of residence for the purpose of claiming benefit under Singapore/India DTA for trade has been placed on record. This certificate has been issued by Inland Revenue Authority of Singapore. She pointed out that as per the Article 8 of Indo-Singapore Tax Treaty if freight receipts in respect of shipping considered in the assessment order were taxable in Singapore, on accrual or receipt basis, then as per the Article 24 of the Indo-Singapore Tax Treaty, such amount will not be taxable in India. She further contended that freight receipts were taxable on accrual basis in Singapore, and therefore benefit of Article 24 ought to be given. For Stay Petition No.3/Rjt/2016 in ITA No.410/RJT/2016 & 3 Others 4 buttressing her contention she relied upon the order of the ITAT. She prayed that recovery of outstanding demands in all these cases be stayed.
6. On the other hand, the ld.CIT-DR contended that the AO has recorded a specific finding that these freights were not received in Singapore. These were credited to the accounts in City Bank, New York. These were not remitted to a bank in Singapore. He further pointed out that in the present appeals, the assessees have not produced any documentary evidence exhibiting the fact that these amounts were suffered taxes in Singapore. He also pointed that if the assessee pays taxes in India, they can claim benefit in Singapore. Taxes will not be collected twice. He drew our attention towards finding of the CIT(A) wherein in para-5 the ld.CIT(A) has observed that assessees have furnished letter of KPMG highlighting inclusion of freight in India for the assessment year 2015-16 in Singapore. Assessees have not produced any documentary evidence exhibiting these facts that these amounts have been taxed in Singapore.
7. We have duly considered rival contentions and gone through the record carefully. At this stage, we are not supposed to go into merit of the case and arrive at a firm conclusion. We are required to assess whether the assessee has prima facie arguable cases or not. It is also pertinent to observe that under Income Tax Act no guidelines have been provided as to how discretionary power to grant stay is to be exercised. Therefore, we have to look back to the Specific Relief Act. One of the conditions for grant of stay is that if a person is going to suffer irreparable loss which cannot be compensated in terms of money, then the court should exercise its discretion in favour of such person. We would appreciate that if by recovery of the amounts, business of the assessee was going to be closed down, and they are going to suffer irreparable loss which cannot be compensated in terms of Stay Petition No.3/Rjt/2016 in ITA No.410/RJT/2016 & 3 Others 5 money, then our discretion to grant stay should be exercised in their favour. In the case of M/s. Atlantic and Seaworld, the demand is of Rs.19,23,432/- and Rs.14,33,075/-. These are not very substantial amount, recovery of which would not close down business of BP Singapore. If their appeals will be allowed they will get refund with interest. Apart from other reasons which we are going to assign for deciding these applications, this is one of the reasons for which we are not inclined to grant stay in the case of Atlantic and Seaworld.
8. The ld.counsel for the assessee has placed reliance upon the order of the ITAT in the case of Alabra (supra). Relevant discussion made by the ITAT in that case is worth to note. It reads as under:
"7. So far as the case before us is concerned, there is no dispute that the business is being carried on by the assessee in Singapore and that the assessee is tax resident of Singapore. By letter dated 31st December 2013 (Reference no. 200716495G), Inland Revenue Authority of Singapore has confirmed that, in the case of Albara Shipping Pte Ltd, "freight income has been regarded as Singapore sourced income and brought to tax on an accrual basis (and not remittance basis) in the year of assessment". The assessee has also filed a confirmation dated 4th December 2013 from its public accountant that the freight of US $ 6,71,366 earned on MT Albara's sailing from Sikka port has been included in the global income offered to tax by the company in Singapore. On these facts, in our considered view, the provisions of Article 24 cannot be put into service as this provision can only be triggered when twin conditions of treaty protection, by low or no taxability, in the source jurisdiction and taxability on receipt basis, in the residence jurisdiction, are fulfilled. There is nothing on the record to even vaguely suggest that the freight receipts of ASPL-S were taxation only on receipt basis in Singapore. Quite to the contrary, there is reasonable evidence to demonstrate that such an income was taxable, on accrual basis, in the hands of the assessee. All this material was duly confronted to the Assessing Officer, in the remand proceedings, and the Assessing Officer could not demonstrate that the stand taken by the ASPL-S in this regard was incorrect."
Stay Petition No.3/Rjt/2016 in ITA No.410/RJT/2016 & 3 Others 6
9. A perusal of the above would indicate that basic reason or grant of benefit of Article 8 of the Indo-Singapore Treaty was that the assessee produced two certificates from Inland Revenue Authority of Singapore exhibiting fact that freights have been taxed in Singapore on accrual basis. We have confronted the ld.counsel for the assessee to show us any documents which can demonstrate that the freight alleged to have been paid to BP Singapore has suffered taxes in Singapore either on accrual basis or receipt basis. She failed to show any such document. Thus, we are of the view the assessees have failed to demonstrate prima facie that these freight receipts have suffered taxes in Singapore. There is no prima facie case on merit. Therefore, we do not see any reasons to exercise our discretion in favour of the assessee for staying recovery of outstand demand in all four appeals.
10. The observations made by us will not impair or injure the case of the AO and will not cause any prejudice to the defence/explanation of the assessee.
11. In the result, all Stay Applications are dismissed at this stage. Order pronounced in the Court on 7th February, 2017 at Ahmedabad.
Sd/- Sd/- (PRADIP KUMAR KEDIA) (RAJPAL YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER