2008 (10) TMI 652 - AT - Income Tax

Summary

Issues Involved:
The judgment involves issues related to taxation of income from shipping business in India by a non-resident company through its agent, and the taxability of inland haulage charges.

Taxation of Income from Shipping Business:
The non-resident company, engaged in the business of shipping in India through its agent, declared gross receipts from shipping business. The Assessing Officer disallowed benefits in respect of freight of cargo transported through feeder vessels, estimating profits assessable in India. The CIT(A) held that such activity falls within the operation of ships in international traffic and is not taxable in India. The revenue appealed against this decision.

Assessment of Agent as Representative Assessee:
The Assessing Officer also assessed the agent company as a representative assessee. The CIT(A) held that the agent cannot be assessed as a representative assessee. The revenue appealed against this order as well.

Judgment Details:
The Tribunal considered legal issues arising from the appeals. Referring to a previous decision, it held that the non-resident company is entitled to benefits under the treaty for income from transportation of cargo through feeder vessels. The Tribunal also ruled in favor of the non-resident regarding the taxability of inland haulage charges, following a previous decision. The matter was remitted to the Assessing Officer for verification of factual discrepancies. The order of the CIT(A) regarding one appeal was modified, while the order in the other appeal was upheld. The appeals of the revenue were dismissed, subject to the observations made.

Conclusion:
The Tribunal's judgment favored the non-resident company on legal issues related to taxation of income from shipping business and the taxability of inland haulage charges. The matter was remitted for verification of factual discrepancies, and the orders of the CIT(A) were modified and upheld accordingly.