Income Tax Appellate Tribunal - Hyderabad
Pacc Container Line Pte Ltd. Rep By Agent ... vs Ito, International Taxation, Nellore, ... on 31 March, 2017
ITA Nos 244 and 245 of 2017
PACC Container Line Pte Ltd (Rep. by JM Baxi & Co. Nellore)
IN THE INCOME TAX APPELLATE TRIBUNAL
Hyderabad ' A ' Bench, Hyderabad
Before Smt. P. Madhavi Devi, Judicial Member
AND
Shri B. Ramakotaiah, Accountant Member
ITA Nos.244 & 245/Hyd/2017
(Assessment Year: 2014-15)
M/s. PACC Container Line Vs Income Tax Officer
Pte Limited Singapore (International Taxation)
(Rep.by its Indian Agent Nellore
M/s.JM Baxi & Co)
Nellore
PAN:AAGCP 0145 G
For Assessee : Shri A.V. Raghuram
For Revenue : Shri A. Sitarama Rao, DR
Date of Hearing: 27.03.2017
Date of Pronouncement: 31.03.2017
ORDER
Per Smt. P. Madhavi Devi, J.M.
Both are assessee's appeals for the A.Y 2014-15 against the order u/s 172(4) of the Act.
2. Brief facts of the case are that the assessee is a Non- Resident Shipping Company and a resident of Singapore. Two of its vessels "MV PAC SCHEDER" and "MV PAC ATHENA"
had departed Krishnapatnam Port on 2.6.2013 and 13.9.2013 respectively to Huston, USA carrying freight. A local agent M/s. J.M. Baxi & Co. filed for an NOC claiming that the freight beneficiary is the resident of Singapore and in view of the DTAA existing between India and Singapore, the entire freight earned by Page 1 of 7 ITA Nos 244 and 245 of 2017 PACC Container Line Pte Ltd (Rep. by JM Baxi & Co. Nellore) the freight beneficiary is exempt from tax in India. At the time of obtaining NOC, the local agent furnished a copy of the tax residency certificate (TRC) in respect of the freight beneficiary to prove that it is a resident of Singapore. The local agent had also filed a certificate from the freight beneficiary to enable it to act as a local agent on their behalf along with the guarantee bond executed by the local agent. After verification of the information filed, the AO passed an order u/s 163 dt. 31.5.2013 and also dt.12.9.2013 treating M/s. J.M. Baxi & Co. Nellore as representative assessee of the non-resident foreign shipping company i.e. the assessee herein. Accordingly NOC was issued to the local agent and it was asked to file the return u/s 172(3) of the Act in respect of freight tax payable by the non-resident freight beneficiary within 30 days from the date of departure of the vessel from the port.
3. The local agent of the assessee filed the returns for both the vessels u/s 172(3) of the Act. The AO directed the local agent to file breakup of the expenditure, net freight paid to the freight beneficiary and copy of the bank a/c showing transfer of funds to the FB A/c in Singapore. In response thereto, the local agent of the assessee filed the copy of the A/c in OCBC Bank, where the name of the beneficiary account holder is not reflecting. AO therefore, observed that in the absence of primary information, the genuineness of the transaction cannot be accepted. He also observed that under Article 24 of the DTAA between India and Singapore, the benefits of the tax treaty are available only to persons who are residents of one or both the treaty countries and shall apply to so much of the income as is Page 2 of 7 ITA Nos 244 and 245 of 2017 PACC Container Line Pte Ltd (Rep. by JM Baxi & Co. Nellore) remitted to or received in that other contracting State. AO observed that since the local agent has failed to demonstrate that the income sourced in India has been remitted or received in Singapore and offered the same to tax at Singapore, he held that the income of the non-resident freight beneficiary is taxable in India. He accordingly computed the tax u/s 172(4) of the Act. Aggrieved, the assessee preferred an appeal before the CIT (A) with a delay of 249 days. The CIT (A) refused to condone the delay and dismissed the assessee's appeals and the assessee is in second appeal before us.
4. The learned Counsel for the assessee submitted that the order u/s 172(4) of the Act was passed by the AO for both the vessels on 31.12.2014 and immediately thereafter, the assessee filed an application u/s 154 of the Act before the AO on 28.01.2015 and the AO had rejected it on 19.02.2015. He submitted that thereafter, the assessee had made an application for revision u/s 264 of the I.T. Act on 1.7.2015 within a period of one year as permitted under the provisions of law along with (a) Tax Residence Certificate issued by Inland Revenue Authority of Singapore, (b) Certification of Incorporation on Change of Name of the Company, (c) Inward remittance certificate issued by the Banker to the credit of shipper's bank a/c and (d) a dummy statement of a/c containing the name of the shipping company i.e. the assessee herein. He submitted that during the course of hearing on 21.9.2015, the assessee orally withdrew the revision petition and thereafter the assessee filed the appeal before the CIT (A) on 9.11.2015 along with a petition for condonation of delay of 249 days. The learned Counsel for the assessee submitted that Page 3 of 7 ITA Nos 244 and 245 of 2017 PACC Container Line Pte Ltd (Rep. by JM Baxi & Co. Nellore) the above facts reveal that the assessee has been vigilant and has been pursuing the remedies available under the Act and it was only on the advice of the Counsel that the assessee has filed the appeal before the CIT (A) along with the additional evidence to prove that the income was remitted to the Account of the Non- Resident Company in Singapore. Therefore, the learned Counsel for the assessee prayed that the delay before the CIT (A) may be condoned and the appeal be remitted to the file of the AO for considering the bank account statement along with the name of the foreign company on it for verification by the AO.
5. The learned DR however, opposed the condonation of the delay and submitted that the assessee was parallely pursuing the proceedings both before the CIT u/s 264 and before the CIT (A) u/s 250 of the Act and therefore, the CIT (A) was right in rejecting the assessee's application for condonation of delay.
6. Having regard to the rival contentions and the material on record, we find that the assessment order u/s 172(4) was passed on 31.12.2014 and within a period of one month thereafter, the assessee had filed an application u/s 154 of the Act and after its rejection, the application u/s 264 of the Act was filed on 1.7.2015. An application u/s 264 of the Act can be filed within a period of one year from the date on which the order in question, was communicated to the assessee or the date on which he otherwise came to know of it, whichever is earlier. Therefore, it is clear that there was no delay in filing of the application u/s 264 of the Act. It is the case of the assessee that it had withdrawn its application u/s 264 on 21.9.2015 orally and before us has filed a Page 4 of 7 ITA Nos 244 and 245 of 2017 PACC Container Line Pte Ltd (Rep. by JM Baxi & Co. Nellore) copy of the letter dated 22.3.2017, whereby the assessee has withdrawn the revision petition in writing. Therefore, the finding of the CIT (A) that there is no evidence of the assessee withdrawing the application u/s 264 appears to be correct. However, the CIT (A) has dismissed the assessee's application for condonation of delay on the ground that the assessee has not substantiated the reasons for delay in filing of appeal and not because the assessee has not withdrawn the application u/s 264 of the Act. Since, the assessee has withdrawn the application in writing, the said objection also does not survive. Further, we are also convinced that the assessee was vigilant in pursuing its remedies.
7. The Hon'ble Supreme Court in the case of Basawaraj & Anr. Vs. The Special Land Acquisition Officer, as reported in (2013) 14 SCC 811 while considering an application for condonation of delay of 5½ years, has laid down the following legal parameters to be considered in such circumstances:
"9. Sufficient cause is the cause for which defendant could not be blamed for his absence. The meaning of the word "sufficient" is "adequate" or "enough", inasmuch as may be necessary to answer the purpose intended. Therefore, the word "sufficient" embraces no more than that which provides a platitude, which when the act done suffices to accomplish the purpose intended in the facts and circumstances existing in a case, duly examined from the view point of a reasonable standard of a cautious man. In this context, "sufficient cause"
means that the party should not have acted in a negligent manner or there was a want of bona fide on its part in view of the facts and circumstances of a case or it cannot be alleged that the party has "not acted diligently" or "remained inactive". However, the facts and circumstances of each case must afford sufficient ground to enable the Court concerned to exercise discretion for the reason that whenever the Court Page 5 of 7 ITA Nos 244 and 245 of 2017 PACC Container Line Pte Ltd (Rep. by JM Baxi & Co. Nellore) exercises discretion, it has to be exercised judiciously. The applicant must satisfy the Court that he was prevented by any "sufficient cause" from prosecuting his case, and unless a satisfactory explanation is furnished, the Court should not allow the application for condonation of delay. The court has to examine whether the mistake is bona fide or was merely a device to cover an ulterior purpose. (See: Manindra Land and Building Corporation Ltd. v. Bhootnath Banerjee & Ors., AIR 1964 SC 1336; Lala Matadin v. A. Narayanan, AIR 1970 SC 1953; Parimal v.Veena @ Bharti AIR 2011 SC 1150; and Maniben Devraj Shah v. Municipal Corporation of Brihan Mumbai AIR 2012 SC 1629.)
10. In Arjun Singh v. Mohindra Kumar, AIR 1964 SC 993 this Court explained the difference between a "good cause" and a "sufficient cause" and observed that every "sufficient cause" is a good cause and vice versa. However, if any difference exists it can only be that the requirement of good cause is complied with on a lesser degree of proof that that of "sufficient cause".
11. The expression "sufficient cause" should be given a liberal interpretation to ensure that substantial justice is done, but only so long as negligence, inaction or lack of bona fides cannot be imputed to the party concerned, whether or not sufficient cause has been furnished, can be decided on the facts of a particular case and no straitjacket formula is possible. (Vide: Madanlal v. Shyamlal, AIR 2002 SC 100; and Ram Nath Sao @ Ram Nath Sahu & Ors. v. Gobardhan Sao & Ors., AIR 2002 SC 1201.)"
We are of the opinion that the facts of the case before us satisfy the above parameters. Therefore, respectfully following the same, we condone the delay of 249 days in filing of the appeal before the CIT (A).
8. The only reason for bringing to tax the income of the freight beneficiary in India by the AO is that the assessee has not filed the bank a/c statement reflecting the name of the assessee therein and to prove that the income is received in Singapore. It is Page 6 of 7 ITA Nos 244 and 245 of 2017 PACC Container Line Pte Ltd (Rep. by JM Baxi & Co. Nellore) seen that the assessee has now filed the certificate from the Banker certifying that the Bank A/c is held by the assessee company and the Bank A/c copy is also is filed before the CIT (A) along with a petition under rule 46A. The Bank A/c copy would prove whether the assessee has received the freight charges in Singapore. Therefore, we are of the opinion that the assessee's appeals needs to be considered on merit. In view of the same and also since the certificate of the banker needs verification by the AO, we are of the opinion that it would be in the fitness of the case that the issue is remitted to the file of the AO and not the CIT (A). Therefore, we are allowing the assessee's appeal by condoning the delay and we are setting aside the issue on merits to the file of the AO for de novo consideration in accordance with law after taking into the consideration the banker's certificate submitted by the assessee.
9. In the result, assessee's appeals are allowed for statistical purposes.
Order pronounced in the Open Court on 31st March , 2017.
Sd/- Sd/-
(B. Ramakotaiah) (P. Madhavi Devi)
Accountant Member Judicial Member
Hyderabad, dated 31st March, 2017.
Vinodan/sps
Copy to:
1 K.Vasantkumar, A.V.Raghuram, P.Vinod & M.Neelima Devi, Advocates, 610 Babukhan Estate, Basheerbagh Hyderabad -01 2 Income Tax Officer (International Taxation) Nellore 3 CIT (A)-10 Hyderabad 4 CIT - (IT & TP) Hyderabad 5 The DR, ITAT Hyderabad 6 Guard File By Order Page 7 of 7