UNITED ARAB SHIPPING COMPANY LTD.(FORMERLY KNOWN AS UNITED ARAB SHIPPING COMPANY (S.A.G)), MUMBAI v. DCIT (IT)- 4(3)(1), MUMBAI

ITA 7206/MUM/2018 | 2014-2015
Pronouncement Date: 27-11-2019 | Result: Allowed

Appeal Details

RSA Number 720619914 RSA 2018
Assessee PAN AAACU4043J
Bench Mumbai
Appeal Number ITA 7206/MUM/2018
Duration Of Justice 11 month(s) 13 day(s)
Appellant UNITED ARAB SHIPPING COMPANY LTD.(FORMERLY KNOWN AS UNITED ARAB SHIPPING COMPANY (S.A.G)), MUMBAI
Respondent DCIT (IT)- 4(3)(1), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 27-11-2019
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted I
Tribunal Order Date 27-11-2019
Last Hearing Date 27-11-2019
First Hearing Date 27-11-2019
Assessment Year 2014-2015
Appeal Filed On 14-12-2018
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH MUM BAI BEFORE SHRI C.N.PRASAD JUDICIAL MEMBER & SHRI G. MANJUNATHA ACCOUNTANT MEMBE R ITA NO.7206/MUM/2018 ( ASSESSMENT YEAR: 2014-15 ) UNITED ARAB SHIPPING COMPANY LIMITED [ FORMERLY KNOWN AS UNITED ARAB SHIPPING COMPANY (S.A.G.)] C/O.HAPAG-LLOYD INDIA PRIVATE LIMITED 403/404 SATELLITE GAZEBO A WING 4 TH FLOOR GURU HARGOVINDJI MARG ANDHERI(E) MUMBAI-400 093 VS. DCIT(INTERNATIONAL TAXATION)- 4(3)(1) 16 TH FLOOR ROOM NO.1611 AIR INDIA BUILDING NARIMAN POINT MUMBAI-400 021 PAN/GIR NO. AA ACU4043J ( APPELLANT ) .. ( RESPONDENT ) REVENUE BY SHRI. HARSHAD VENGURLEKAR SR.DR ASSESSEE BY SHRI. M.P.LOHIA & NIKHIK TIWARI ARS DATE OF HEARING 2 7 /11 /2019 DATE OF PRONOUNCEME NT 27 /1 1 /2019 / O R D E R PER G.MANJUNATHA (A.M) : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) 58 MUMBAI DATED 17/10/2018 AND IT PERTAINS TO ASSESSMENT YEAR 2014-15. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL. GENERAL 1. ERRED IN ASSESSING THE TOTAL INCOME OF THE APPEL LANT AT RS. 4 30 76 773/- AS AGAINST AN INCOME OF RS. NIL AS CLAIMED BY THE APPE LLANT IN THE REVISED COMPUTATION OF INCOME SUBMITTED DURING THE ASSESSME NT PROCEEDINGS; ITA NO.7206/MUM/2018 UNITED ARAB SHIPPING COMPANY LIMITED 2 MAINTAINABILITY OF CLAIM RAISED DURING THE COURSE O F ASSESSMENT PROCEEDINGS : 2. ERRED IN DENYING THE BENEFIT OF ARTICLE 8 OF THE TAX TREATY ON THE GROUND THAT FRESH CLAIM MADE BEFORE THE ASSESSING OFFICER (AO') DURING THE ASSESSMENT PROCEEDINGS IS NOT MAINTAINABLE AND THEREBY REVISED CLAIMED CANNOT DE ENTERTAINED; 3. ERRED IN NOT APPRECIATING THAT THE POWERS OF APP ELLATE AUTHORITIES ARE VERY WIDE AND ANY FRESH LEGAL CLAIM WOULD BE MAINTAINABLE BEF ORE THEM EVEN THOUGH NOT RAISED IN THE RETURN OF INCOME; TAXABILITY TO FREIGHT INCOME OF RS.4 30 76773/- FRO M CARRIAGE OF GOODS IN INTERNATIONAL TRAFFIC ON VESSELS TAKEN UNDER SLOT C HARTERING/FEEDER ARRANGEMENTS: 4. ERRED IN DENYING/ DECLINED TO ADJUDICATE THE GROUND ON APPLICABILITY OF THE BENEFIT OF ARTICLE 8 OF THE TAX TREATY ON SHIPPING INCOME EARNED FROM CARNAGE OF GOODS IN INTERNATIONAL TRAFFIC ON VESSELS TAKEN UND ER SLOT CHARTERING/ FEEDER ARRANGEMENTS WITHOUT APPRECIATING AND BY NOT CONS IDERING THE DECISION OF THE HONBLE JURISDICTIONAL BOMBAY HIGH COURT IN THE CAS E OF BALAJI SHIPPING UK LTD.; UNDER SECTION 234A 5.ERRED IN APPLYING INTEREST OF RS 96 665 UNDER SEC TION 234A OF THE ACT; INTEREST UNDER SECTION 234B 6. ERRED IN APPLYING INTEREST OF RS.2 28 790/- UNDER SECTION 234B OF THE ACT. INTEREST UNDER SECTION 234C 7. ERRED IN APPLYING INTEREST OF RS 1 52 610 UN DER SECTION 234C OF THE ACT; 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESEE IS A GLOBAL SHIPPING COMPANY ESTABLISHED IN JULY 1976 AND IS A TAX RESIDENT OF KUWAIT. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF OPERATION OF SHIPS IN INTERNATIONAL WATERS. THE ASSESEE IS A NON -RESIDENT COMPANY AND DOES NOT HAVE A PLACE OF BUSINESS IN IN DIA. THEREFORE IT HAS NOT MAINTAINED ANY BOOKS OF ACCOUNT IN INDIA AS PER SECTION 44AA OF THE I.T.ACT 1961. FURTHER THE ASSESSEE IS A TAX RESIDENT OF KUWAIT WITHIN THE MEANING OF ARTICLE 4 OF THE INDIA -KUWAIT DTAA (TAX TREATY) AND IS AS SUCH ENTITLED TO THE BENEFICIAL P ROVISION OF THE TAX TREATY AS PER SECTION 90(2) OF THE I.T.ACT 1961. A S PER ARTICLE 8 OF THE TAX TREATY PROFIT ARISING TO A ENTERPRISE WHI CH IS RESIDENT OF KUWAIT FROM THE OPERATION OF SHIPS IN INTERNATIONA L TRAFFIC WHICH ITA NO.7206/MUM/2018 UNITED ARAB SHIPPING COMPANY LIMITED 3 TAXABLE ONLY IN KUWAIT BUT NOT IN INDIA. ACCORDING LY WHILE FILING RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS CLAIMED THE BENEFIT OF ARTICLE 8 OF THE TAX TREATY IN RESPECT OF AMOUNT RECEIVED FROM CARRIAGE OF GOODS IN INTERNATIONAL TR AFFIC BY OPERATION OF SHIPS WHICH ARE OWNED / CHARTERED BY THE ASSESSEE. FURTHER INSOFAR AS AMOUNT RECEIVED FROM CARRIAGE OF GOODS IN INTER NATIONAL TRAFFIC ON VESSELS BELONGING TO OTHER OPERATORS BUT TAKEN UND ER SLOT CHARTERING/ FEEDER ARRAIGNMENTS THE ASSESSEE HAS INCLUDED THE RECEIPTS FOR TAXATION IN INDIA. DURING THE COURSE OF ASSESSMENT PROCEEDINGS BEFORE THE LD. AO THE ASSESSEE VIDE ITS LETTER DA TED 15/12/2016 FILED A REVISED COMPUTATION OF INCOME FOR CLAIMING THE BENEFIT ARTICLE 8 ON SHIPPING INCOME FROM CARRIAGE OF GOODS IN INTE RNATIONAL TRAFFIC ON VESSELS BELONGING TO OTHER OPERATORS BUT TAKEN UNDER SLOT CHARTERING/ FEEDER ARRANGEMENTS WHICH WAS INADVERT ENTLY NOT CLAIMED IN THE ORIGINAL RETURN OF INCOME. THE ASSES EE COULD NOT FILED REVISED RETURN UNDER THE PROVISION OF SECTION 139(5 ) BECAUSE THE ORIGINAL RETURN WAS FILED BELATEDLY. THE LD. AO REJ ECTED THE CLAIM OF THE ASSESSEE TOWARDS BENEFIT OF ARTICLE 8 OF THE TA X TREATY IN RESPECT OF SHIPPING INCOME FROM CARRIAGE OF GOODS IN INTERN ATIONAL TRAFFIC ON VESSELS BELOGING TO OTHER OPERATORS BUT TAKEN UNDE R SLOT CHARTERING/FEEDER ARRANGEMENTS MAINLY ON THE GROUND THAT ANY FRESH CLAIM CAN BE MADE ONLY BY WAY OF REVISED RETURN OF INCOME BUT NOT BY FILING REVISED STATEMENT OF TOTAL INCOME BY FOL LOWING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF GOETZE(IND IA PVT.LTD). VS CIT 284 ITR 323. THE LD. AO FURTHER HELD THAT ARTI CLES OF THE DTAA WOULD APPLY IN A CASE WHERE THE SHIPPING COMPANY I TSELF DERIVED TRAFFIC FROM TRANSPORTATION BY SEA OF PASSENGERS ET C. BY THE OWNER AND TO CLAIM THE BENEFIT IT IS THE FREEE CONDITION THAT THE ASSESSEE SHOULD OPERATE ITS OWN OR CHARTERED VESSELS IN THE INTERNATIONAL ITA NO.7206/MUM/2018 UNITED ARAB SHIPPING COMPANY LIMITED 4 WATERS. SINCE THE ASSESEE HAS NOT OPERATED IN THE INTERNATIONAL WATERS BY ITSELF BUT ARRANGED INTERNATIONAL CONSIG NMENT THROUGH SAID ALL ARRANGEMENTS WHICH MAY BE CALLED AS SLOT CHART ERING HOWEVER TO GRANT THE BENEFIT OF ARTICLE 8 TO SHIPPING INCOME UNDER THESE FACTS MAY RESULT INTO DOUBLE RELIEF I.E IN THE HANDS OF T HE ASSESEE AND THE OTHER ENTITY WHO HAD RECEIVED SLOT CHARTERING ACC ORDINGLY REJECTED THE CLAIM OF THE ASSESSEE. 4. AGGRIEVED BY THE ASSESSMENT ORDER THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD.CIT(A). BEFORE THE LD.CIT(A) THE ASSESEE REITERATED ITS SUBMISSION MADE BEFORE THE LD. AO TO ARGUE THAT THE RESTRICTIONS IMPOSED BY THE HONBLE SUPREME COURT I N THE CASE OF GOETZE(INDIA PVT.LTD) VS CIT (SUPRA) IS APPLICABLE ONLY TO THE AO BUT NOT TO THE APPELLATE AUTHORITIES AND ACCORDINGLY R EQUESTED TO ADMIT THE CLAIM OF THE ASSESSEE REGARDING REVISION OF INC OME IN RESPECT OF AMOUNT RECEIVED FROM SHIPPING INCOME ON VESSELS BE LONGING TO OTHERS BUT TAKEN ON SLOT ARRANGEMENTS. THE LD.CIT( A) AFTER CONSIDERING RELEVANT SUBMISSION OF THE ASSESEE AND ALSO BY RELIED UPON VARIOUS JUDICIAL PRECEDENTS REJECTED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE ADOPTION OF APPEAL ROOT TO C IRCUMVENT INELIGIBLE CLAIM IS NOT ACCEPTABLE AND LEGALLY IMPE RMISSIBLE BECAUSE THE LAW IS VERY CLEAR IN RESPECT OF FILING OF RETUR N AS PER WHICH ANY CLAIM CAN BE MADE ONLY BY FILING A RETURN OR REVISE D RETURN WITHIN THE PRESCRIBED TIME ALLOWED UNDER THE ACT. FURTHER IN CASE THE CLAIM MADE WITHOUT FILING REVISED RETURN THE SAME CANNOT BE ADMITTED AND ACCORDINGLY REJECTED CLAIM OF THE ASSESEE. AGGRIEVE D BY THE LD.CIT(A) ORDER THE ASSESSEE IS IN APPEAL BEFORE U S. ITA NO.7206/MUM/2018 UNITED ARAB SHIPPING COMPANY LIMITED 5 5. THE LD. AR FOR THE ASSESSEE SUBMITTED THAT THE L D.CIT(A) WAS ERRED IN REJECTION OF CLAIM OF THE ASSESSEE TOWARDS THE BENEFIT OF ARTICLE 8 OF THE TAX TREATY IN RESPECT OF INCOME R ECEIVED FROM SHIPPING BUSINESS EVEN THOUGH THE HONBLE SUPREME COURT CLEARLY HELD THAT THE RESTRICTION IMPOSED AN ADMISSION OF ADDITIONAL CLAM WITHOUT FILING A REVISED RETURN IS APPLICABLE ONLY TO THE LD. AO BUT NOT TO THE APPELLATE AUTHORITIES IN THE CASE OF GOETZ (IND.LTD.) VS CIT(SUPRA). THE LD. AR FURTHER SUBMITTED THAT IF T HE CLAIM OF THE ASSESEE IS ADMITTED THEN THE ISSUE IS SQUARELY COV ERED IN FAVOR OF THE ASSESEE BY THE DECISION OF HONBLE JURISDICTION AL HIGH COURT OF BOMBAY WHERE IT WAS HELD THAT THE BENEFIT OF ARTIC LE 8 OF THE TAX TREATY IS EQUALLY APPLICABLE TO SHIPPING INCOME DER IVED FROM CHARTERED/SLOT ARRANGEMENTS FROM OTHER SHIPS OPERAT ED BY DIFFERENT OPERATORS BUT IN CONNECTION WITH INTERNATIONAL SHI PPING. THEREFORE HE ARGUED THAT THE ADDITIONAL CLAIM OF THE ASSESEE MAY BE ADMITTED AND THE ISSUE MAY BE SET ASIDE TO THE FILE OF THE L D.CIT(A) FOR ADJUDICATING THE ISSUE ON THE MERIT. 6. THE LD. DR ON THE OTHER HAND STRONGLY SUPPORTE D ORDER OF THE LD.CIT(A). 7. WE HAVE HEARD BOTH THE PARTIES PERUSED THE MATE RIAL AVAILABLE ON RECORD AND GONE THROUGH ORDERS OF THE AUTHORITIE S BELOW. IT IS AN ADMITTED FACT THAT THE LD. AO IS PREVENTED FROM ADM ITTING ANY ADDITIONAL CLAIM WITHOUT FILING A REVISED RETURN AS PER THE PROVISION OF THE ACT. THE SAID LEGAL PROPOSITION HAS BEEN EXPLAI NED BY THE HONBLE SUPREME COURT IN THE CASE OF GOETZ (IND.LT D.) VS CIT SUPRA). HOWEVER THE RESTRICTION IMPOSED FOR ADMISS ION OF ADDITIONAL CLAIM WITHOUT FILING A REVISED RETURN OF INCOME IS NOT APPLICABLE TO ITA NO.7206/MUM/2018 UNITED ARAB SHIPPING COMPANY LIMITED 6 APPELLATE AUTHORITIES BECAUSE THE HONBLE SUPREME COURT HAS MADE IT VERY CLEAR IN THE SAID JUDGMENT THAT THERE IS NO RESTRICTION ON THE APPELLATE AUTHORITIES TO ADMIT ANY LEGAL/ADDITIONAL ISSUE AND SUCH ADMISSION IS SOLELY ON THE DISCRETION OF THE APPELL ATE AUTHORITIES. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. P RUTHVI BROKERS AND SHAREHOLDERS PVT.LTD. 349 ITR 336 HAD ALSO HELD THAT THE ASSESEE ENTITLED TO RAISE NOT MERELY ADDITIONAL LEG AL SUBMISSIONS BEFORE THE APPELLATE AUTHORITIES BUT IS ALSO ENTIT LED RAISE ADDITIONAL CLAIMS BEFORE THEM. THE COURT FURTHER HELD THAT T HE HONBLE SUPREM COURT DID NOT LAID DOWN THAT A CLAIM NOT MADE BEFOR E THE LD. AO CANNOT BE MADE BEFORE THE APPELLATE AUTHORITIES. TH E JURISDICTION OF APPELLATE AUTHORITIES TO ENTERTAIN SUCH A CLAIM HAS NOT BEEN NEGATED BY HONBLE SUPREME COURT IN THIS JUDGMENT. IN THIS CASE THE LD.CIT(A) HAS REJECTED THE CLAIM OF THE ASSESEE ONL Y ON THE BASIS OF DECISION OF HONBLE SUPREME COURT IN THE CASE OF CI T VS GOETZ (IND.LTD.) (SUPRA) EVEN THOUGH THERE IS NO SUCH R ESTRICTIONS IS IMPOSED BY THE HONBLE SUPREME COURT ON APPELLATE A UTHORITIES. FURTHER THE ISSUE INVOLVED ON MERIT AS PER THE ASS ESEE IS SQUARELY COVERED IN ITS FAVOR BY THE DECISION OF VARIOUS HIG H COURTS. THEREFORE WHEN AN ISSUE IS COVERED IN FAVOR OF THE ASSESEE BY THE DECISION OF JURISDICTION HIGH COURT OR ANY OTHER HIGH COURTS T HEN NOT ADMITTING SAID CLAIM ON TECHNICAL GROUNDS WOULD CERTAINLY CLA USE UN-DUE HARDSHIP TO THE ASSESSEE BECAUSE THE AUTHORITIES C ONCERNED ARE EXPECTED TO DETERMINE TRUE AND CORRECT INCOME OF TH E ASSESEE IN ACCORDANCE WITH LAW. THEREFORE CONSIDERING THE FAC T THAT THERE IS NO RESTRICTIONS ON THE APPELLATE AUTHORITIES FOR ENTER TAINING ADDITIONAL CLAIM EVEN THOUGH SAID CLAIM WAS NOT MADE BEFORE T HE LD. AO BY FILING REVISED RETURN OF INCOME AND ALSO TAKEN NOT E OF THE FACT THAT THE LD.CIT(A) HAS NOT DECIDED THE ISSUE ON MERITS WE ARE OF THE ITA NO.7206/MUM/2018 UNITED ARAB SHIPPING COMPANY LIMITED 7 CONSIDERED VIEW THAT THE ISSUE NEEDS TO GO BACK TO THE FILE OF THE LD.CIT(A) FOR ADJUDICATION OF THE ISSUE ON MERITS. HENCE WE DIRECT THE LD.CIT(A) TO ADMIT THE CLAIM OF THE ASSESEE AND DECIDE THE ISSUE INVOLVED ON MERITS IN ACCORDANCE WITH LAW WITHOUT I NFLUENCED BY ANY OF OUR OBSERVATIONS GIVEN HEREINABOVE IN PRECEDING PARAGRAPHS. 8. IN THE RESULT APPEAL FILED BY THE ASSESEE IS TR EATED AS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 27 /11 /2019 SD/- ( C.N.PRASAD) SD/- (G. MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 27/11/2019 THIRUMALESH SR.PS COPY OF THE ORDER FORWARDED TO : BY ORDER (ASSTT. REGISTRAR) ITAT MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) MUMBAI. 4. CIT 5. DR ITAT MUMBAI 6. GUARD FILE. //TRUE COPY//