2012 (7) TMI 929 - HC - Income Tax

Addition on account of not allowing relief of the DTAA - Held that - From the material documents allowed to be produced, the assessee could satisfy the Commissioner (Appeals) that the place of effective management of its enterprises was situated at Netherlands and thus, the requirement of condition in Article 8A of DTA agreement was met with. Tribunal has rightly confirmed the decision of the Appellate Commissioner holding the assessee to be eligible for benefits of DTAA. While confirming the findings of the Commissioner, the Tribunal also observed that Revenue had failed to point out any contrary material either from the record or at the time of hearing before it. Commissioner (Appeals) as well as the Tribunal, have concurrently arrived at the findings that the assessee is eligible for the benefit. The finding arrived at by the Tribunal is based on material before it and was based on the reading of the documents submitted by assessee whereby it was pointed out that necessary requirement about place of effective management under the relevant clause of agreement was satisfied. No substantial question of law.

Summary

Issues:
- Appeal against ITAT order for Assessment Year 2007-08
- Disallowance of relief under DTAA
- Lack of evidence regarding place of effective management

Analysis:
1. The appeal was filed by the Revenue against the ITAT order for the Assessment Year 2007-08. The main issues raised were the disallowance of relief under the Double Taxation Avoidance Agreement (DTAA) and the lack of evidence regarding the place of effective management.

2. The case involved MV African Halcyon, a Shipping Company registered in Netherlands, represented in India by M/s. Mitsutor Shipping Agency Pvt Ltd. The company filed provisional returns claiming DTAA benefits to avoid double taxation and fiscal evasion.

3. The Assessing Officer rejected the claimed benefit under DTAA, demanding tax payment due to the lack of necessary documents provided by the assessee. However, during the appeal proceedings, the appellate commissioner allowed the production of additional documents by the assessee, which were then submitted to the Assessing Officer for review.

4. Article 8A of the DTAA between India and Netherlands stipulates that profits from international shipping operations are taxable only in the state where the place of effective management is located. The Appellate Commissioner accepted the documents presented by the assessee, indicating that the place of effective management was in Netherlands, thus making the assessee eligible for DTAA benefits.

5. The Revenue appealed the Appellate Commissioner's decision, but the ITAT upheld the decision, stating that the documents submitted were acceptable, and no contrary evidence was presented by the Revenue to dispute the findings regarding the place of effective management.

6. The Tribunal confirmed that the assessee met the conditions of the DTAA agreement by establishing the place of effective management in Netherlands. Both the Appellate Commissioner and the Tribunal agreed that the assessee was eligible for DTAA benefits based on the evidence provided, and no substantial questions were raised for further consideration.

7. Consequently, the Tax Appeal was dismissed, affirming the decision in favor of the assessee regarding the DTAA benefits and the place of effective management.