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TMI Blog2013 (1) TMI 132X X X X Extracts X X X X X X X X Extracts X X X X ..... s concluding from the fact of the case and Clause 14 & Clause 13 that the risk and liabilities undertaken by the charterer M/s Puyvast is only in the event of the tonnage being less than 19500 tonnes. Rising of invoice by the charterer and charging 49 Euros per m.tonn is of no relevance, since substantial portion of the freight is paid to the owner of the ship namely, the Iranian entity. Therefore, the substantial freight beneficiary is the owner of the ship, the Iranian entity and the conclusion of the revenue authorities that relief under DTAA is not allowable is justified. In favour of revenue - IT Appeal NO. 184 (BANG.) OF 2011 - - - Dated:- 12-7-2012 - N. BARATHVAJA SANKAR AND GEoRGE GEORGE K., JJ. Padamchand Khincha for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Company that the beneficiary of the freight was the charterer of the ship. 3. Brief facts of the case are as follows:- The assessee is an agent of M/s Puyvast Chartering BV ("Puyvast"), a Netherlands based Shipping Company. The ships chartered by Puyvast regularly call Indian Ports for loading export cargo. MV Ocean Candle Voy 1 has been chartered by Puyvast in October, 2008. This ship is owned by M/s Islamic Republic of Iran Shipping Lines, Iran (owner). The ship was engaged to carry granite blocks from Mangalore to Antwerp, Belgium and other places. The ship reached Mangalore port on 7.11.2008. It sailed from the port on 10.11.2008. 3.1 The assessee filed the return of income under section 172(3) on behalf of Puyvast on 26.11.2008, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per the Income-tax Act. 4. Aggrieved, the assessee filed appeal before the first appellate authority. 5. The CIT(A) for his reasons mentioned in the impugned order, dismissed the appeal of the assessee. The relevant finding of the CIT(A) at para 5 reads as follows:- "The only issue to be decided is whether the freight beneficiary is Iranian entity or the Netherland's entity as the relief under DTAA is available for Netherland's entity and not for Iran's entity. The Assessing Officer observed that in the NOC Sl. No.3 of Form No.1, Netherland's company was shown as charterers and Iranian company was shown as owners. As per copy of the fixture note at Sl. No. 14 it was mentioned that 100% of the freight charges go to the account of ship ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the State in which the place of effective management of the enterprise is situated. The tax residency certificate with regard to Puyvast issued by the authorities in Netherlands is never in doubt. 7.1 With reference to clauses 13 and 14 of the charter party executed by the owner of the ship and the charterer of the ship, it was submitted that the Assessing Officer as well as the CIT(A) has only made reference to clause 14 of the charter party and concluded that the owner of the ship are the freight beneficiaries and not the charterer. The revenue authorities had come to this conclusion that the charterer acts as intermediary and got commission for the services rendered by them. It was submitted that the revenue authorities failed to appr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the entire freight payment is to be remitted into the bank account of the owner i.e. M/s Islamic Republic of Iran subject to commission payments to M/s Puyvast Chartering BV, Netherlands; whose agent is the present assessee. The Assessing Officer as well as the CIT(A) have limited their reasoning only to this point as is evident from para 4.2 to 4.4 of the order under section 172(4) of the Assessing Officer and para 5 of the CIT(A). To that limited point, the learned counsel for the assessee has not been able to controvert or being any material during hearing on 2/7/2012. His lengthy discussion on OECD charter and DTAA with Netherlands is completely beside the point as the Assessing Officer and the CIT(A) have not even delved into any of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cy and method of payment also beneficiary and bank account (Cl.4). 100 per cent freight less 3.75% commissions payable within 4 banking days, upon completion last load port by charterers to owners bank a/c". 9.1 Clause 14 clearly stipulates 100% freight charges reduced by 3.75% commission is payable within 4 banking days upon completion of last load port by the charterer to the owner's bank a/c. Out of commission of the 3.75%, 2.5% goes to M/s Puyvast (The charterer) and 1.25% to M/s Trading Marine Global, the ship broker. 9.2 Clause 13 stipulates minimum freight is to be paid to the owner of the ship (the Iranian party) at the rate of 46 Euros of minimum of 19500 tonnes. Clause 13 further stipulates if the tonnage exceeding 19500 m.t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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