9911796707
TMI Blog1999 (4) TMI 111X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment year 1996-97 and claimed refund on the basis of the relief available under the double taxation avoidance agreement. The Assessing Officer processed the return under section 143(1) and issued an intimation on 27-10-1997; but in the intimation the claim of double taxation relief was disallowed on the reasoning that the agreement had become operative in India with effect from 1-4-1996 only i.e., from the assessment year 1997-98 and so for the assessment year 1996-97 the claim was not allowable. The assessee took up the matter in appeal before CIT(Appeals). The finding of the appellate authority was that the question whether the double taxation avoidance agreement had become effective from the assessment year 1996-97 or from the assessment year 1997-98 was highly debatable and so the Assessing Officer was not justified in making the disallowance as a prima facie adjustment while processing the return under section 143(1)(a). The revenue is in appeal before the Tribunal against that finding of the CIT(Appeals). 3. We have heard the departmental representative, Shri C.D. Nair and the assessee's counsel Shri R. Vijayaraghavan, Advocate. The Central Board of Direct Taxes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... axation entered into on 8-2-1995. As per article 29 of the agreement, the provisions made are as under : --- "Article 29(2) - The agreement shall enter into force thirty days after the date of the later of the notifications referred to in paragraph (1) and its provisions shall have effect :-- (a) in India; as regards income for any fiscal year beginning on or after the first day of April of the calendar next following that in which this agreement enters into force." 5. It can be seen from the above that the provisions of the agreement have effect in India as regards the income of any 'fiscal year' beginning on or after the first day of April of the calendar year next following that in which this agreement enters into force. The agreement was entered into on 8-2-1995. If the word 'that' in the article 29(2)(a) refers to the calendar year, then the provisions of the agreement came into force in the calendar year 1996. If the word 'that' in the Article refers to the fiscal year, then the provisions would have effect in India from 1-4-1995 which is be beginning of the fiscal year (i.e., 1995-96) following the fiscal year in which the agreement was entered into [i.e., 1994-95). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of interest. 7. It was submitted by the learned senior departmental representative that the return of income filed by the assessee was not before the due date under section 139(1) and so the assessee was liable for the interest under section 234A. According to him, in the case of a belated return, levy of interest was mandatory and so the CIT (Appeals) ought to have upheld the levy. The learned counsel for the assessee, on the other hand, contended that section 172 is a self-contained code in which there was no provision for levy of interest. According to Shri Vijayaraghavan, the law did not require the assessee to file the return under section 172(7) and that the option was on the assessee to file the return or not to file the return. Section 172(7) gave the assessee the choice of getting the assessment made on the basis of the return under that section and that only condition to be fulfilled was that the return should be filed before the end of the assessment year. The assessee filed the return of income on 25-3-1997 which was well before the end of the assessment year 1996-97 and so there was no question of levying interest on the ground that it was a belated return. Shri V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the expiry of the assessment year. In case such option is exercised, the Assessing Officer has to make the assessment and determine the tax payable in India. Credit will be given for the cumulative tax paid during the previous year under the provisions of section 172 which shall be treated as payment in advance and the difference between the aggregate amount so paid and the amount of tax payable by him shall be paid by him or refunded to him, as the case may be. In the present case, the result of the amount after the assessee exercised the option under section 172(7) was that there was a balance amount determined as payable by the assessee. The Assessing Officer also levied interest of' Rs. 3,75,704 under section 234A. 10. As already stated, the provisions of section 172 are self-contained and apply in regard to levy and recovery of tax on the profits of non-residents from occasional shipping business. The provisions of section 172 are to apply, notwithstanding anything contained in other provisions of the Act. There is nothing in the provisions of section 172 to show that the other provisions of the Act are applicable in respect of the assessment under 172. The right to claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dent assessee, he is a mere ship owner who is a non-resident or a charterer of a ship, who is a non-resident. In the heading under 'H' in Chapter XV assumes significance. The heading is --- "H --- Profits of non-residents from occasional shipping". The heading denotes that the persons intended to be covered by section 172 are persons who are not regularly in shipping business in India. If it is so understood, it is not difficult to differentiate between the income from shipping business accruing in India in respect of non-resident ship owners or charterers and the income received from occasional shipping by nonresident ship owners or charterers. It is not difficult to come to the conclusion that in respect of the income of non-resident ship owners or charterers from occasional shipping in Indian Ports, the procedure laid down under sub-sections (3) to (7) in section 172 are to be followed. in the case of such a non-resident ship owner or charterer falling under the provisions of section 172, there is no requirement of filing the return of income under section 139(1). If there is no statutory obligation to file the return within the time allowed under section 139(1), there woul ..... X X X X Extracts X X X X X X X X Extracts X X X X
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