9911796707
TMI Blog2014 (1) TMI 1274X X X X Extracts X X X X X X X X Extracts X X X X ..... e to tax in India as per Article 7 of the DTAA is the amount on which the assessee paid commission etc. to CMA, which is its AE and also a dependent agent - The receipt in the hands of the CMA has been determined at ALP under due process of law – The decision in Delmas, France vs. ADIT(IT) [2012 (1) TMI 9 - ITAT MUMBAI] followed – where the associated enterprise (that also constitutes a PE) is remunerated on ALP, then nothing further would be left to attribute to the PE – thus, the income in respect of 21 voyages cannot be included in the hands of the assessee - Decided partly in favour of Assessee. - ITA No.8847/Mum/2010 - - - Dated:- 24-7-2013 - Shri R. S. Syal, AM And Shri Vivek Varma, JM,JJ. For the Petitioner : Shri M. P. Lohia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng companies, the Assessing Officer held that the relief in respect of such 61 voyages was also not available under Article 8 of the DTAA. Total freight receipts in respect of 98 (37+61) voyages amounting to Rs.8.62 crores was declared as not eligible for relief under Article 8 of the DTAA. The Assessing Officer also observed that the assessee had shown detention charges of Rs. 49.41 lacs in respect of total 178 voyages. Proportionate amount of detention charges in respect of such 98 voyages was also held to be ineligible for relief under Article 8 of the DTAA. To sum up, the AO refused the benefit of Article 8 in respect of 98 voyages, out of total of 178 voyages, on a sum of Rs.8.09 crore (inclusive of detention charges). Thereafter, he p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the availability of the benefit of Article 8 of the DTAA in respect of such 21 voyages, we proceed to examine as to whether the amount is chargeable to tax as per Article 7 of the DTAA. The ld. AR was fair enough to accept that CMA may be considered as the dependent agent of the assessee. Thus, it satisfies the requirement of Article 5 of the DTAA. We therefore, hold that CMA was the agent of the assessee and hence constitutes its permanent establishment in India. 4. The next question is determination of the `Business profits' as per Article 7 of the DTAA. The ld. Counsel for the assessee contended that CMA was given commission, container controller fees and detention collection fees in respect of total 178 voyages which include 21 v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice cannot have the effect of obliterating the profit earned by the assessee from the shipping income. She stated that commission is simply one of the costs incurred by the assessee in earning the overall income. If one expense has been incurred at market price, it does not mean that there remains no profit from the overall business activity in the hands of the assessee. When the assessee has a permanent establishment in India and business income is attributable to such permanent establishment, then apart from the commission income earned by such agent in its individual capacity, the income from carrying on the business activity of the assessee relatable to the PE in India should also be taxed. She argued that the subject matter of taxation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e time of sale, but is actually earned at every stage, starting from making economical purchases with incurring of reasonable expenses and then managing to sell the goods at adequate price. She submitted that the mere fact of paying commission to the agent at the market rate does not mean that no profit was earned by the seller of goods from India, which amount in the present example is Rs.25. She, therefore, urged that the contention of the ld. AR that since the payee of the commission received it at arm's length price which stood taxed in its hands and hence there can be no tax liability in the hands of the assessee from shipping income, should be jettisoned. 6. It is observed that the income in respect of 21 voyages which has been cons ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
