Income Tax Appellate Tribunal - Rajkot
Ial India Ltd., As Agent Of Ial Container ... vs Department Of Income Tax on 18 January, 2012
आयकर अपील य अ धकरण, राजकोट यायपीठ राजकोट IN THE INCOME TAX APPELLATE TRIBULAL; RAJKOT BENCH, RAJKOT.
Before Shri T. K. Sharma, JM and Shri B.R.Jain, AM ITA No.192/Rjt/2012. नधारण वष / Assessment Years 2010-11 Income Tax Officer Vs. M/s IAL India Limited (International Taxation), Ground Floor Plot No.20/A, Shiv House, Sector-8 Plot No.340, Sector 1/A, Gandhidham-Kutch Gandhidham.
(अपीलाथ /Appellant) Agent of M/s IAL Container Line (UK).
PAN:AABCI1414L
यथ /Respondent
राज व क ओर से/ Revenue by Shri Avinash Kumar
नधा रतीक ओर से/ Assessee by Shri Ram Gopal Sharma
सुनवाई क तार ख/Date of Hearing 12.12.2012
घोषणा क तार ख / 14.12.2012
Date of Pronouncement
आदेश / Order
ट .के. शमा, या यक सद य / T. K. Sharma, J. M.
This appeal by the Revenue is against the order dated 18.1.2012 of CIT(A) for the assessment year 2010-11.
2. The facts in brief are that the Agent IAL India Ltd., Gandhidham filed various Vovage final return u/s 172(3) of the Income tax Act 1961 on various dates from the financial year 2009-2010 to the relevant assessment year 2010-11 for the freight beneficiary of M/s IAL Container Lines (UK) Ltd without paying freight tax. The AO for the sake of convenience and since the issue involved in the matter passed common order u/s 172(4) of the Act on 13.12.2010 in respect of entire Vovage return filed during the financial year 2 ITA No.192/Rjt/2012. 2009-10. In this order, the AO held that M/s IAL Container Lines (UK) Ltd having occasional business on port of Kandla and Mundra and not engaged in regular business of shipping and hence, not eligible for benefit of Article 9 of Indo-UK Treaty. Further in this order the AO held that the Principal is not owned or chartered none of the vessel, therefore, the agent/freight beneficiary is not entitled to claim of DTAA benefit for the said chartered vessel for the various reasons discussed in paragraph 10 of the impugned order. To sum up, the AO worked out the income and tax payable thereon as under :
Total amount of freight earned in Indian Rupees Which is including THC : Rs. 1,53,17,789/-
Taxable income i.e. 7.5% : Rs. 11,48,834/-
Tax payable on taxable income : Rs. 4,85,152/-
Income tax
Less : double income-tax relief : NIL
Tax paid on final return dated : NIL
Balance tax payable : Rs. 4,85,152/-
3. On appeal, before the ld. CIT(A), the assessee contended that
Principal M/s IAL Container Lines (UK) Ltd is engaged in regular shipping
business and not occasional business. They are filing return of income u/s 139(1) read with section 44B of the Act for the past various years including for the assessment year under consideration. The acknowledgment of copy of return of income dated 13.10.2010 for the assessment year 2010-11 was submitted before the AO during the proceedings under section 172 of the Act. It was further claimed that the appellant was assessed to tax u/s 44B of the Act before the Dy.Comissioner of Income Tax / Cir 1(2), Kochi/Krl/W/011/01. It was also argued that once the provisions of section 3 ITA No.192/Rjt/2012. 44B are applicable then applicability of section 172 no more survive. This is because the higher amount is subject to tax u/s 44B as it considered total income of the assessee as compared to tax under section 172 which considered only income on a particular port or a shipping. After considering their arguments, the ld. CIT(A), in the impugned order held that the order passed u/s 172(4) is null and void because the assessee is not engaged in occasional business is backed by its acting alternative clause provided under section 172 (7) of the Act, 1961. The relevant portion of the decision of the ld. CIT(A) as contained in paragraph 4 at page is reproduced below :
"4.0....... I have perused the submission made by the appellant and am of the opinion that the appellant is in regular shipping business and not in occasional shipping business. I have considered the judgments cited. Once a person claims that it is not engaged in occasional shipping business and wants to go out of the ambit of section 172; the recourse is provided in section 172 (7) only and for that it has to opt for filling return u/s 139(1). It has also approached its regular assessing officer to get DIT relief certificate for the financial year showing its intent to be taxes there. The appellant has been filing returns at Mumbai and also filed the return for the year under appeal much before the order u/s 172(4) was passed.
Since, the appellant has opted for the option to be assessed u/s 172(7) by filing return of income u/s 139(1); it is established that the appellant is in regular shipping business and liable to be assessed under other provisions of the Act including 44B, and not u/s 172(4). Thus the order passed u/s 172(4) by the Income Tax Officer is null and void as Assessee's claim that it is not engaged in occasional shipping business backed by its taking the alternate recourse provided in section 172(7) itself. Even a person engaged in occasional shipping business in fact can opt for being assessed otherwise as per section 172(7). Once the AO says that the appellant is not owner/charter of the vessel, then he could not have taken recourse to section 172 itself as the section applied to owner/charter only. The subsection (1) reads as under :
"172. (1) The provisions of this section shall, notwithstanding anything contained in the other provisions of this Act, apply for the purpose of the levy and recovery of tax in the case of any ship, belonging to or 4 ITA No.192/Rjt/2012. chartered by a non-resident, which carries passengers, livestock, mail or goods shipped at a port in India".
In addition, the relevant part of sub-section (3) reads as under :
"172. (3) Before the departure from any port in India of any such ship, the master of the ship shall prepare and furnish to the Assessing Officer a return of the full amount paid or payable to the owner or charterer or any person on his behalf, on account of the carriage of all passengers, livestock, mail or goods shipped(emphasis supplied) at that port since the last arrival of the ship thereat:
Therefore, the section applies only for freight received/receivable by owner /charter(or any person on is behalf). However, whether the appellant is owner/charger or not on the facts of the case is not adjudicated here, because even in case it is, it has to be assessed as per option exercised u/s 172(7).
4. Aggrieved with the order of the ld. CIT(A), the Revenue is in appeal before this Tribunal by taking following grounds :
"1. The ld. CIT(A) has erred in law and on facts in holding that the order of the AO is null and void and that the assessee is assessable under section 172(7) of the Act.
2. The ld. CIT(A) has further erred in law and on facts in not directing the jurisdictional AO to tax the income of the assessee from the business of handling cargo transportation (including ) slot chartering business), as per normal provisions of the Act, while holding that the order passed u/s 172(4) is null and void."
5. At the time of hearing before us, on behalf of the Revenue Shri Avinash Kumar appeared and contended that Principal has not owned or chartered any of the vessel, therefore, Principal had wrongly claimed DTAA benefit for the slot chartered vessels. He accordingly relying on the reasoning given by the AO in the assessment order contended that the assessee through its local agent has wrongly claimed DTAA benefit, therefore, the AO rightly made the assessment u/s 172(4) of the Act and ld. 5 ITA No.192/Rjt/2012. CIT(A) is not justified in holding the same as null and void on the ground M/s Gold Star Lines Ltd, Hong Kong is assessable u/s 172(7) of the Act.
6. In reply, Shri Ram Gopal Sharma, the ld. Authorized Representative of the assessee supported the order of the ld. CIT(A). He contended that the Principal of assessee and the freight beneficiary namely M/s IAL Container Line (UK) are engaged in the regular shipping business and not in occasional shipping business and therefore, the provisions of section 172 (4) of the Act are inapplicable to them. In this regard, he drew our attention to the finding recorded by the ld. CIT(A) at pages 4 to 8 of the of impugned order (which is reproduced by us hereinabove at page 4 of this order) and submitted that the department has placed no material to rebut the findings of the ld. CIT(A) and merely relied on the findings of the Assessing Officer. However, the freight beneficiary of M/s IAL Container Line (UK) was regularly engaged in shipping business was apparent from the fact that the Principal is regularly engaged in the business of shipping, as observed by the ld. CIT(A) that the Principal is regularly filing its return of income at Mumbai. In support of this he filed a copy of the acknowledgment of return of income for the assessment year 2010-11 in assessee's paper book. Finally the counsel for the assessee submitted that the Income-tax Act does not stipulate multiple assessment against the same assessee, simultaneously u/s 172(4) and also under the normal provisions of Act. Under these circumstances, the ld. Counsel for the assessee submitted that the ld. CIT(A) rightly quashed the order passed by the AO u/s 172(4) of the Act. The ld. Counsel of the assessee also placed a copy of the decision of the Rajkot Bench of the Tribunal in the case of I.T.O V/s M/s CMA CGM 6 ITA No.192/Rjt/2012. Agencies (India) Pvt. Ltd. in ITA Nos. 151 to 190/Raj/2012(AY-2010-2011) dated 31.08.2012 wherein on identical facts the Tribunal dismissed the appeal of the assessee with certain observations.
7. Having heard both the sides we have carefully gone through the orders of authorities below. Admittedly, the Rajkot Bench of the Tribunal in the case of I.T.O V/s M/s CMA CGM Agencies (India) Pvt. Ltd. (supra) on identical facts relied on by the ld.counsel of the assessee, quashed the order passed u/s 172(4) of the Act with the observation that the jurisdictional AO may verify the position and take such action as may be warranted in law in terms of section 172(7) to ensure that the income of the assessee from the various voyages does not escape assessment as per the normal provisions of the I-T Act. The facts of the assessee's case are identical to that of the case relied on by the assessee. The Principal M/s IAL Container Line (UK) has filed return of income for the assessment year 2010-11 with Dy.Comissioner of Income Tax / Cir 1(2), Kochi/Krl/W/011/01 on 13.10.2010. The said case has already been under scrutiny of the regular assessing officer of M/s IAL Container Line (UK) . This clearly indicates that M/s IAL Container Line (UK) has accepted the liability to be dealt with the provisions of section 172(7) of the Act. The jurisdictional AO may, therefore, verify the position and take such action as may be warranted in law in terms of section 172(7) to ensure that the income of the assessee from the 13 voyages does not escape assessment as per normal provisions of the Act. 7 ITA No.192/Rjt/2012.
8. In view of the foregoing discussion, the appeal of the Revenue is dismissed subject to the observations made above.
9. In the result, the appeal of the Revenue is dismissed.
This order is pronounced in the open Court on the date mentioned hereinabove.
Sd sd
( B.R.JAIN) (T. K. Sharma)
लेखा सद य/ Accountant Member या यक सद य/Judicial Member
आदेश दनांक/Order Date 14 .12.2012.
राजकोट /Rajkot
SRL
आदेश क त ल प अ े षत / Copy of Order Forwarded to:-
1. अपीलाथ / Appellant-,
2. यथ / Respondent-
3. संबं धत आयकर आयु त / Concerned CIT.
4. आयकर आयु त- अपील / CIT (A).
5. वभागीय त न ध, आयकर अपील य अ धकरण, राजोकट / DR, ITAT, Rajkot
6. गाड फाइल / Guard file.
आदेश से / By order, True copy Senior Private Secretary Income tax Appellate Tribunal, Rajkot.