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TMI Blog2014 (1) TMI 385X X X X Extracts X X X X X X X X Extracts X X X X ..... s case. 2. On the facts and in the circumstances of the case and in law, ld CIT(A) has erred in holding that the assessee is not having any Permanent Establishment (PE) in India within the meaning of Article 5 of the AADT and, therefore, the profits from the operation of ships is not taxable in India." 2. The assessee has also filed cross objections and ground taken in both cross objections are common, which read as under: "The ld CIT(A) erred in holding that your respondents are not entitled to the benefits of Article 8A of the Agreement for Avoidance of Double Taxation between India and Netherlands (AADT)." 3. Since the facts in the grounds of appeal taken by the revenue and cross objection are common for both ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laimed that in view of provisions of Article 8A of the agreement between Indo-Netherlands, said income is not taxable in India. However, AO stated that the assessee neither owned ships nor had any charter ships during the relevant assessmet years and the only activity of the assessee company during the years was hiring of the containers and as such, assessee is not entitled for the treaty benefits of Article 8A as the hiring of the containers are not incidental to the operation of ships. AO further stated that assessee is not eligible for benefit of the treaty and, therefore, not eligible for DIT relief. AO further stated that assessee's contention that it has no Permanent Establishment (PE) in India is not relevant for taxation of assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion which is only approximately 1% from the appellant's company. Considering these facts, I hold that since the appellant do not have PE in India, no income attributable to PE in India can be charged to tax under Article 7 of the India-Netherlands treaty. As a result, this ground is decided in the appellant's favour.' 7. Hence, these appeals by the department and cross objection by the assessee. 8. At the time of hearing, ld D.R. submitted that Ground No.2 of the appeals taken by the department has been considered by ITAT in appeal filed by the department for assessment year 2002-03 being I.T.A. No.2727/M/2006 and vide its order dated 2.7.2010, the Tribunal has restored the matter to the file of AO to decide it afresh after giving adequat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p; i) profits derived from the use, maintenance or rental of containers(including trailers and related equipment for the transport of containers) in connection with the transport of goods or merchandise in international traffic. ii) profits from the rental on a full or bareboat basis of ships if operated in international traffic. Provided that such profits are incidental to the profits described in paragraph 1. 5........................." Before the Assessing Officer, the assessee's representative had clearly admitted that the assessee was not owning any ships and had not acquired ships on lease basis, etc. therefore, it cannot be said that the assessee was in operation of ship business a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and, therefore, the assessee had fixed place of business in India and hence, the profits attributable to PE were required to be taxed in India. 11. Ld Sr. Counsel objects to this ground for the reason that this was not considered by the lower authorities and, therefore, he submitted that this amounts to enlargement of issue which is not permissible in view of the decision of the ITAT (SB) in the case of Prakash L. Shah (supra). We find it difficult to accept this plea of ld Sr. Counsel because admittedly the issue regarding PE was raised before the AO but he did not give any finding on the same because in his opinion, the profits were taxable in accordance with section 9(1) of the I.T.Act. However, ld CIT (A) has g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de the matter afresh after giving adequate opportunity to the assessee." 10. Since the issue is identical to that of assessment year 2002-03 in assessee's own case (supra), respectfully following the decision of a coordinate Bench of this Tribunal, we set aside the order of ld CIT(A) and restore the issue to the file of AO for fresh consideration. Hence, ground No.2 taken by the department is allowed for statistical purposes for both the assessment years. 11. In respect of cross objection filed by the assessee, it is observed that the coordinate Bench of this Tribunal in assessee's own case for the assessment year 2002-03 (supra) have held that Article 8A is not applicable, therefore the cross objection is dismissed. Pronounced in the op ..... X X X X Extracts X X X X X X X X Extracts X X X X
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