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TMI Blog2012 (10) TMI 662X X X X Extracts X X X X X X X X Extracts X X X X ..... scharged their liabilities towards tax by complying with the provisions of sec. 172, there is no question of any further liability in their hands - there is no justification in making the assessment again in the hands of the assessee company in the status of 'representative assessee', which tantamounts to double assessment, which is not permissible under the law - payment of tax made by the FSCs. under sec. 172 tantamounts to discharging of tax liability of those companies and there is no reason why those companies again be assessed - When the principal itself does not make any liability, the agent cannot be fastened with any liability - appeal filed by the assessee is allowed - IT APPEAL NO. 74 (MDS.) OF 2012 - - - Dated:- 3-4-2012 - DR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der sec. 148 and thereafter completed the assessment under sec. 143(3) read with sec. 147. 5. In response to the notice issued under sec.148, the 'representative assessee' had filed the return of income along with a statement of computation of income and tax. In the said statement, the assessee has made it clear that the tax liability was computed at 7.5% of gross income on presumptive basis and the assessee had claimed relief under the DTAA of the respective countries in respect of two FSCs. The assessee has also explained before the assessing authority that as the payments of taxes have already been made under sec.172 of the Act on the gross hire charges paid to the FSCs, there is no other income liable for taxation in the hands of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he following grounds : "2.1 The Ld. Commissioner of Income-tax (Appeals) ought to have followed the decision of the Hon'ble ITAT in the Appellant's own case for the same assessment year i.e. ITA No. 779/Chny/2011. 2.2 The Ld. Commissioner of Income-tax (Appeals) ought to have appreciated that the decision of the Hon'ble Income-tax Appellate Tribunal, in the same assessment year in the Appellant's own case, had held that the payments made to the Foreign Shipping Companies are not in the nature of 'Royalty'. 2.3 The Ld. CIT(A) ought to have noted that the crucial point is whether the payments made is 'royalty' or not and that the Ld. CIT(A) ought to have applied the ratio decidendi of the Hon'ble ITAT in the Appellant's own case for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee has been rightfully treated as a 'representative assessee', still whether the hire charges paid to the FSCs are exigible to taxes or not? 13. The Income-tax Appellate Tribunal, Chennai 'D' Bench had an occasion to consider the nature of hire charges paid by the assessee to FSCs. The issue was considered by the Tribunal in its common order dated 4.10.2011 passed in ITA Nos. 1206 779/Mds/2011. Those appeals also related to the impugned assessment year 2007-08. Those appeals arise out of the assessment order passed in the hands of the assessee as such and the issue considered in those appeals was whether the assessee was liable to make deduction of tax at source under sec. 195 or not. This is because, the Assessing Officer h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave appreciated that the case has only booked the freight space in the ship (time charter) and has not taken the vessel on hire, it is done under what is called "bare boat charter". Therefore, the payment made in this case would not constitute 'royalty' paid for the use of industrial, or commercial, or scientific equipments. The essence of the time charter agreement executed between the parties speaks clearly that the assessee can utilize the space in the vessel and not that the assessee is authorized to operate or exercise control over the vessel. The Hon'ble Karnataka High Court in the case of CBDT v. Chowgule Co. Ltd. 192 ITR 40 and in the case of Kar and Lima Lettoa Co. Ltd. v. UOI 70 ITR 518 has held that section 172 is a c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... continued business and in case of a person leaving India. The assessments are made in the previous year itself. In that special scheme, the tax on ships leaving Indian ports is calculated at a presumptive rate. Once the tax is paid on the basis of that presumptive rate, the liability of the foreign ship leaving the ports is discharged. In the present case, the tax has been paid under sec. 172, thereby the FSCs have discharged their liabilities towards Indian income-tax. When the FSCs themselves have discharged their liabilities towards tax by complying with the provisions of sec. 172, there is no question of any further liability in their hands. When there is no such tax liability in their hands, there is no justification in making the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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