ORIENT OVERSEAS CONTAINER LINE LIMITED, MUMBAI v. JDIT(IT) RANGE - 4, MUMBAI

ITA 7494/MUM/2013 | 2010-2011
Pronouncement Date: 31-07-2015 | Result: Partly Allowed

Appeal Details

RSA Number 749419914 RSA 2013
Assessee PAN AAACO5679E
Bench Mumbai
Appeal Number ITA 7494/MUM/2013
Duration Of Justice 1 year(s) 7 month(s) 11 day(s)
Appellant ORIENT OVERSEAS CONTAINER LINE LIMITED, MUMBAI
Respondent JDIT(IT) RANGE - 4, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 31-07-2015
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted C
Tribunal Order Date 31-07-2015
Assessment Year 2010-2011
Appeal Filed On 20-12-2013
Judgment Text
ORIENT OVERSEAS CONTAINER LINE LTD ITA 7498 /M/20 13 ITA 524/M/2014 1 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C MUMBAI . . BEFORE SHRI G S PANNU ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA JUDICIA L MEMBERITA ITA NO. : 7494 /MUM/20 13 (ASSESSMENT YEAR S : 20 1 0 - 11 ) ORIENT OVERSEAS CONTAINER LINE LTD C/O. OOCL (INDIA) PRIVATE LIMITED ICC CHAMBERS 5 TH FLOOR SAKI VIHAR ROAD POWAI OPP. SANTOGEN SILK MILLS MUMBAI - 400 0 72 .: PAN : AAAC O 5679 E VS JOINT C OMMISSIONER OF INCOME T AX(INTERNATIONAL TAXATION) - RANGE - 4 ROOM NO. 106 SCINDIA HOUSE 1 ST FLOOR BALLARD ESTATE MUMBAI 400 0 38 (APPELLANT) (RESPONDENT) APPELLANT BY : RESPONDENT BY : SHRI PERMANAND J ITA NO. : 524 /MUM/20 1 4 (ASSESSMENT YEAR S : 20 1 0 - 11 ) JOINT C OMMISSIONER OF INCOME T AX(INTERNATIONAL TAXATION) - RANGE - 4 MUMBAI - 400 038 VS ORIENT OVERSEAS CONTAINER LINE LTD MUMBAI 400 0 72 (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PERMANAND J RESPONDENT BY : /DATE OF HEARING : 30 - 0 6 - 2015 / DATE OF PRONOUNCEMENT : 31 - 07 - 2015 ORDER PER AMIT SHUKLA J.M. : TH E AFORESAID CROSS APPEAL S HA VE BEEN FILED BY THE ASSESSEE AND THE REVENUE AGAINST DIRECTIONS DATED 22.10.2013 OF THE DISPUTE RESOLUTION PANEL - I (DRP) U/S 144(5). ORIENT OVERSEAS CONTAINER LINE LTD ITA 7498 /M/20 13 ITA 524/M/2014 2 2. WE WILL FIRST TAKE - UP ASSESSEES APPEAL WHEREIN THE ASSESSEE HAS RAISED THE FOLLOWI NG ISSUES IN ITS GROUNDS OF APPEAL: I) LD. AO HAS ERRED IN LAW AND ON FACTS IN INCLUDING AN AMOUNT OF RS. 1 79 11 894/ - BEING SERVICE TAX COLLECTED AND PAID FOR THE PURPOSE OF PRESUMPTIVE INCOME U/S 44B. II) THE LD. AO HAS ERRED IN LAW IN LEVYIN G INTEREST U/S 234B WITHOUT FOLLOWING DRPS DIRECTION. III) LD. AO HAS ERRED IN NOT FOLLOWING THE DIRECTIONS OF THE DRP REGARDING LEVY OF INTEREST U/S 234C . IV) THE LD. AO HAS ERRED IN GRANTING SHORT CREDIT OF TDS AMOUNTING TO RS. 2 96 825/ - AND SHO RT CREDIT OF ADVANCE TAX OF RS. 1715/ - . V) THE ASSESSEE HAS CHALLENGED THE INITIATION OF PENALTY PROCEEDINGS U/S 271(1)(C) OF THE PENALTY PROCEEDINGS . 3. AT THE OUTSET THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL ORDER IN ASSESSEES OWN CASE FOR THE A SSESSMENT Y EARS 2007 - 08 AND 2008 - 09 IN ITA NO.7809/MUM/2010 AND 7365/MUM/2012. ON THE OTHER HAND LD. DR SUBMITTED THAT THOUGH THIS ISSUE IS COVERED IN FAVOUR OF THE ASSES S EE BY THE TRI BUNAL IN ASSESSEES OWN CASE HOWEVER THERE ARE VARIOUS CONTRARY DECISION WHICH FACT HAS BEEN NOTED BY THE DRP ITSELF IN THE IMPUGNED ORDER. THEY HAVE FOLLOWED TRIBUNAL DECISION OF CHINA SHIPPING CONTAINER LINES (HONGKONG CO. LTD.) REPORTED IN 145 ITD 230 TO DECIDE THIS ISSUE AGAINST THE ASSESSEE. 4. AFTER CONSIDERING THE RIVAL CONTENTIONS AND ON PERUSAL OF THE IMPUGNED ORDERS WE FIND THAT THE MAIN ISSUE WHICH HAS BEEN CHALLENGED IS WHETHER THE SERVICE TAX IS TO BE TREATED AS PART OF THE TOTAL RECE IPTS FOR THE PURPOSE OF COMPUTING THE PRESUMPTIVE INCOME U/S 44B. THE ASSES S EES CASE HAD BEEN THAT SERVICE TAX COLLECTED DOES NOT FORM TOTAL OF THE PART RECEIPTS AS IT DOES NOT INVOLVE ANY ELEMENT OF PROFIT BECAUSE IT HAS BEEN COLLECTED FROM THE CUSTOM ERS ON BEHALF OF THE GOVERNMENT AND CANNOT BE ORIENT OVERSEAS CONTAINER LINE LTD ITA 7498 /M/20 13 ITA 524/M/2014 3 INCLUDED IN THE TOTAL RECEIPTS . WE FIND THAT THE TRIBUNAL IN ASSESSEES OWN CASE HAS TAKEN A NOTE OF VARIOUS DECISIONS FOR AND AGAINST THE ASSESSEE AND HAS REACHED TO THE FOLLOWING CONCLUSION : - 6. WE HAVE CON SIDERED THE RIVAL SUBMISSIONS AND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. WE HAVE ALSO CAREFULLY GONE THROUGH THE VARIOUS JUDICIAL PRONOUNCEMENT RELIED UPON BY THE LD. REPRESENTATIVES OF BOTH THE SIDES IN SUPPORT OF THEIR RESPECTIVE STANDS ON THE ISS UE. IT IS OBSERVED THAT THE ASSESSING OFFICE IN HIS IMPUGNED ORDERS AND LD. DR AT THE TIME OF HEARING BEFORE US HAVE HEAVILY RELIED ON THE DECISION OF HON'BLE UTTARAKHAND HIGH COURT IN THE CASES OF HALLIBURTON OFFSHORE SERVICES INC. (SUPRA) SEDCO FOREX IN TERNATIONAL INC. (SUPRA) AND TRANS OCEAN OFFSHORE INC. (SUPRA) IN SUPPORT OF THE REVENUE'S THAT THE AMOUNT OF SERVICE TAX COLLECTED BY THE ASSESSEE SHOULD BE INCLUDED IN THE GROSS RECEIPTS FOR THE PURPOSE OF COMPUTING THE TOTAL INCOME AS PER THE PROVISIONS OF SECTION 44B. IT IS OBSERVED THAT RELIANCE ON THE SAID DECISIONS WAS PLACED BY THE REVENUE IN THE CASE OF DIT VS. SCHIUMBERGER ASIA SERVICE LTD. (SUPRA) WHERE THE ISSUE INVOLVED WAS WHETHER THE REIMBURSEMENT OF CUSTOM DUTY PAID BY THE ASSESSEE COULD FOR M PART OF THE GROSS RECEIPTS FOR THE PURPOSE OF DETERMINING THE DEEMED PROFIT OF THE ASSESSEE UNDER SECTION 44BB AND THE HON'BLE UTTARAKHAND HIGH COURT FOUND THE SAID CASES TO BE DISTINGUISHABLE ON FACTS OBSERVING THAT IN NONE OF THESE CASES THE ISSUE OF R EIMBURSEMENT OF THE CUSTOM DUTY WAS INVOLVED THE NATURE OF WHICH WAS STATUTORY PAYMENT. THEIR LORDSHIP HELD THAT REIMBURSEMENT TOWARDS THE CUSTOM DUTY PAID BY THE ASSESSEE BEING STATUTORY IN NATURE COULD NOT FORM PART ORIENT OVERSEAS CONTAINER LINE LTD ITA 7498 /M/20 13 ITA 524/M/2014 4 OF THE GROSS RECEIPTS FOR THE PURPOSE OF COMPUTING THE DEEMED PROFIT UNDER SECTION 44BB. 7. THE LD. DR HAS ALSO RELIED ON THE DECISION OF DELHI BENCH OF ITAT IN THE CASE OF DEPUTY DIRECTOR OF INCOME TAX VS. TECHNIP OFFSHORE CONTRACTING B.V. (SUPRA) WHEREIN IT WAS HELD THAT THE ASSESSING OF FICER WAS JUSTIFIED IN INCLUDING THE AMOUNT OF SERVICE TAX COLLECTED BY THE ASSESSEE IN CONNECTION WITH THE SERVICES OR FACILITIES OR SUPPLY SPECIFIED UNDER SECTION 44BB PROVIDED BY THE ASSESSEE IN THE TOTAL RECEIPTS FOR THE PURPOSE OF DETERMINING PRESUMPT IVE PROFIT OF 10% UNDER SECTION 44BB. IT IS OBSERVED THAT THE SAID DECISION OF DELHI BENCH OF ITAT IN THE CASE OF DEPUTY DIRECTOR OF INCOME TAX VS TECHNIP OFFSHORE CONTRACTING B.V. (SUPRA) WAS RELIED UPON BY THE RELY IN SUPPORT OF ITS CASE ON THE SIMILAR I SSUE CASE OF ISLAMIC REPUBLIC OF IRAN SHIPPING LINES (SUPRA) BEFORE MUMBAI BENCH OF ITAT AND RELYING ON THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE SUDARSHAN CHEMICAL INDUSTRIES 242 ITR 769 AND THAT OF HON'BLE UTTARAKHAND HIGH COURT IN THE CA SE OF DT VS. SCHLUMBERGER ASIA SERVICE LTD. (SUPRA) IT WAS HELD BY THE MUMBAI BENCHES THAT THE SERVICE TAX WHICH IS A STATUTORY LIABILITY WOULD NOT INVOLVE ANY ELEMENT OF PROFITS AND SINCE THE SERVICE PROVIDER HAS COLLECTED THE SAME FROM ITS CUSTOMERS ON BEHALF OF THE GOVERNMENT IT CANNOT BE INCLUDED IN THE TOTAL RECEIPTS FOR DETERMINING THE PRESUMPTIVE INCOME OF THE ASSESSEE UNDER SECTION 44B. THE DECISION OF MUMBAI BENCH IN THE CASE OF ISLAMIC REPUBLIC OF IRAN SHIPPING LINES (SUPRA) HAS BEEN SUBSEQUENT LY FOLLOWED BY THE TRIBUNAL AT LEAST IN THREE CASES CITED BY THE LD. COUNSEL FOR THE ASSESSEE INCLUDING THE CASE OF SIDCO FOREX INTT. DRILLING INC. (SUPRA) WHEREIN DELHI BENCH OF THE ITAT HAS DECIDED A ORIENT OVERSEAS CONTAINER LINE LTD ITA 7498 /M/20 13 ITA 524/M/2014 5 SIMILAR ISSUE IN FAVOUR OF THE ASSESSEE HOLDING THAT R EIMBURSEMENT OF SERVICE TAX BEING A STATUTORY LIABILITY WOULD NOT INVOLVE ANY ELEMENT OF PROFIT AND THE SAME THEREFORE COULD NOT BE INCLUDED IN TOTAL RECEIPTS FOR DETERMINING PRESUMPTIVE INCOME UNDER SECTION 44BB. 8. KEEPING IN VIEW ALL THE JUDICIAL PRO NOUNCEMENT DISCUSSED ABOVE WE ARE OF THE VIEW THAT THE PREPONDERANCE OF JUDICIAL OPINION IS IN FAVOUR OF THE ASSESSEE ON THE ISSUE AND KEEPING IN VIEW THE SAME WE DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE HOLDING THAT THE AMOUNT OF SERVICE TAX BEING I N THE NATURE OF STATUTORY PAYMENT WHICH DOES NOT INVOLVE ANY ELEMENT OF PROFIT CANNOT BE INCLUDED IN THE GROSS RECEIPTS FOR THE PURPOSE OF COMPUTING THE PRESUMPTIVE INCOME OF THE ASSESSEE UNDER SECTION 44B. GROUND NO. 1 OF THE ASSESSEES APPEAL FOR AY 2007 - 08 AND GROUND NO. 2 OF THE ASSESSEES APPEAL FOR AY 2008 - 09 ARE ACCORDINGLY ALLOWED. 5. SINCE IN ASSESSEES OWN CASE IN THE EARLIER YEARS ONE VIEW HAS BEEN TAKEN THEREFORE CONSISTENT WITH THE SAME PRECEDENCE WE ALSO HOLD THAT THE AMOUNT OF SERVICE TAX CANNOT BE INCLUDED IN THE GROSS RECEIPTS FOR THE PURPOSE OF COMPUTING THE PRESUMPTIVE INCOME OF THE ASSESSEE U/S 44B. ACCORDINGLY GROUND NO. 1 RAISED BY THE ASSES S EE IS ALLOWED. 6. WITH REGARD TO GROUND NO. 2 IT HAS BEEN CONTENDED THAT THIS ISSUE WIL L BECOME PURELY ACADEMIC IF GROUND NO. 1 IS ALLOWED. ACCORDINGLY GROUND NO. 2 IS TREATED AS INFRUCTUOUS. 7. REGARDING LEVY OF INTEREST U/S 234B AS RAISED IN GROUND NO.3 LD. COUNSEL SUBMITTED THAT THIS ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL AFTER FOLLOWING THE DECISION OF THE BOMBAY HIGH COURT IN THE CASE OF CIT VS. NGC NETWORK ASIA LLC REPORTED IN [2009] 313 ITR 187. ORIENT OVERSEAS CONTAINER LINE LTD ITA 7498 /M/20 13 ITA 524/M/2014 6 8. ON THE OTHER HAND LD. DR RELIED UPON THE DECISION OF DELHI HIGH COURT IN THE CASE OF DIT INTERNATIONAL TAX ATION VS ALCATEL LUCENT USA IN ITA NO. 328 329 336 337 AND 340 OF 2012 VIDE ORDER DATED 07.11.2013. 9. IN REJOINDER THE LD. COUNSEL SUBMITTED THAT IN A SUBSEQUENT DECISION HONBLE DELHI HIGH COURT VIDE JUDGMENT AND ORDER DATED 12.01.2015 IN THE CASE OF DIT VS G E PACKAGED INC. IN BUNCH OF APPEALS IN INCOME TAX APPEAL NOS. 352 TO 391 OF 2014 HAVE DISTINGUISHED THE DECISION OF ALCATEL LUCENT USA AND HELD THAT ASSESSEE WILL NOT BE LIABLE FOR INTEREST U/S 234B. FURTHER THE ITAT MUMBAI BENCH IN THE CASE OF ITO VS LINKLATERS & PAINES REPORTED IN [2014] 49 TAXMANN.COM 66 THE TRIBUNAL HAS DISTINGUISHED THE DECISION OF THE DELHI HIGH COURT IN THE CASE OF ALCATEL LUCENT USA AND THEREFORE THIS GROUND SHOULD BE ALLOWED IN FAVOUR OF THE ASSESSEE AND AGAINST. 10 . AFTER CONSIDERING THE AFORESAID SUBMISSION WE FIND THAT THE TRIBUNAL IN ASSESSEES OWN CASE HA S DECIDED THE ISSUE OF LEVY OF INTEREST U/S 234B IN FAVOUR OF THE ASSESSEE FOLLOWING THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT. FURTHER AS POINTE D OUT BY THE LD. COUNSEL THE DECISION IN THE CASE OF LINKLATERS & PAINES ( SUPRA ) HAS BEEN DISTINGUISHED BY THE HONBLE DELHI HIGH COURT IN SUBSEQUENT DECISION AND ALSO IN VARIOUS CASES THE TRIBUNAL HAS ALSO DISTINGUISHED THE APPLICABILITY OF ALCATEL LUCE NT USA . ACCORDINGLY CONSISTENT WITH THE MAJORITY VIEW AND ALSO THE VIEW TAKEN IN THE ASSESSEES OWN CASE FOR THE EARLIER YEARS WE HOLD THAT ASSESSEE IS NOT LIABLE FOR LEVY OF INTEREST U/S 234B. ACCORDINGLY GROUND NO. 3 IS DECIDED IN FAVOUR OF THE ASSESS EE AND AGAINST THE REVENUE. ORIENT OVERSEAS CONTAINER LINE LTD ITA 7498 /M/20 13 ITA 524/M/2014 7 11 . REGARDING LEVY OF INTEREST U/S 234C WE FIND THAT THE TRIBUNAL IN THE EARLIER YEARS HAS HELD THAT LEVY OF INTEREST U/S 234C IS CONSEQUENTIAL AND FOLLOWING THE SAME WE ALSO HOLD ACCORDINGLY. 1 2 . REGARDING GROUND NO. 5 TH E LD. COUNSEL SUBMITTED THAT THIS ISSUE IS NOT PRESSED AS RELIEF HAS ALREADY BEEN ALLOWED BY THE ASSESSING OFFICER IN THE ORDER PASSED U/S 154. ACCORDINGLY GROUND NO. 5 IS DISMISSED. 1 3 . GROUND NO. 6 HAS BEEN ADMITTED BY LD. COUNSEL THAT IT IS PREMATURE AND ACCORDINGLY THE SAME IS DISMISSED. 14 . IN THE RESULT ASSESSEES APPEAL IS PARTLY ALLOWED. 1 5 . IN THE REVENUES APPEAL THE FOLLOWING GROUNDS HAVE BEEN RAISED: WHETHER ON THE FACTS AND UNDER THE CIRCUMSTANCES OF THE CASE THE HONBLE DRP WAS CO RRECT IN HOLDING THAT INTEREST U/S 234B IS NOT LEVIABLE IN THE CASE OF NON - RESIDENT DESPITE A SPECIFIC FINDING BY THE HONBLE DELHI HIGH COURT IN THE CASE OF DIT VS . ALCATEL LUCENT USA INC DATED 14.11.2013 IN ITA NOS. 328 AND 329/2012 WHEREIN IT HAS BEEN SPECIFICALLY STATED THAT A NON - RESIDENT ASSESSEE WHICH DOES NOT ADMIT INCOME CHARGEABLE TO TAX MUST BE INFERRED TO HAVE INDUCED THE INDIAN PAYER NOT TO DEDUCT TDS RENDERING ITSELF LIABLE FOR ADVANCE TAX INTEREST. 1 6 . SINCE WE HAVE ALREADY ALLOWED THE LE VY OF INTEREST U/S 234B IN FAVOUR OF THE ASSESSEE AS DISCUSSED IN GROUND NO. 3 IN ASSESSEES APPEAL THEREFORE IN VIEW OF THE DECISION GIVEN THEREIN THE GROUND RAISED BY THE REVENUE IS DISMISSED. ORIENT OVERSEAS CONTAINER LINE LTD ITA 7498 /M/20 13 ITA 524/M/2014 8 1 7 . IN THE RESULT APPEAL OF THE ASSESSEE IS PARTLY ALL OWED AND THAT OF THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST JU LY 2015. SD/ - SD/ - ( . . ) ( ) ( G S PANNU ) ( AMIT SHUKLA ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DATE: 31 ST JU LY 2015 / COPY TO: - 1 ) / THE APPELLANT. 2 ) / THE RESPONDENT. 3) THE CIT (A )/DRP ) - II CONCERNED ____ MUMBAI 4 ) THE CIT CONCERNED____ MUMBAI . 5 ) / THE D.R. C BENCH MUMBAI. 6 ) COPY TO GUARD FILE. / BY ORDER / / TRUE COPY / / / DY. / ASSTT. REGISTRAR I.T.A.T. MUMBAI * . . *CHAVAN SR.PS