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TMI Blog2014 (7) TMI 725X X X X Extracts X X X X X X X X Extracts X X X X ..... in Director of Income-tax (International Taxation) Versus Balaji Shipping UK Ltd. [2012 (8) TMI 681 - BOMBAY HIGH COURT] followed – no substantial question of law arises for consideration – Decided against Revenue. - Income Tax Appeal No. 410 of 2012 - - - Dated:- 17-7-2014 - S. C. Dharmadhikari And B. P. Colabawalla,JJ. For the Appellant : Mr. Tejveer Singh For the Respondent : Mr. Porus Kaka Senior Counsel i/b Atul K. Jasani JUDGMENT (Per B. P. Colabawalla J.) :- 1. This Appeal under section 260A of the Income Tax Act 1961 has been filed by the The Director of Income Tax (International Taxation) -I challenging the order passed by the Income Tax Appellate Tribunal (hereinafter referred to as the ITAT ) dated 5th August 2011. The A. Y. in question is 2006-2007. The ITAT dismissed the Appeal preferred by the Revenue challenging the order of the CIT(Appeals) dated 29th October 2009 under which the CIT(Appeals) held that Inland Haulage Charges earned by the Assessee were only a part of the income derived from the operation of ships, and therefore, were covered under Article 8 of the Double Tax Avoidance Agreement (DTAA) entered into between India and B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore are chargeable to tax as business profits under the provisions of the Act. 4. Being aggrieved by the assessment order dated 15th December 2008, the Assessee filed an Appeal before the CIT (Appeals). Before the CIT (Appeals) the Assessee submitted that it was incorporated in Belgium and is a tax resident of that country. India had entered into a Double Taxation Avoidance Agreement (DTAA) with Belgium and that the Appellant is engaged in the business of the operation of ships. It was further submitted that during the business of handling of ships, the appellant had received Inland Haulage Charges from its clients and the same were included in receipts under the head permanent handling charges . The Assessee claimed that Inland Haulage Charges are part of its shipping business and are in the nature of handling charges and are therefore covered by phrase any other amount of similar nature mentioned in the explanation to section 44B of the Act. Since such charges were part of the shipping business of the Assessee, they were therefore eligible for DIT relief, was the submission of the Assessee. After examining the entire factual matrix, the CIT (Appeals) held that it wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is in challenge before us. 6. Mr Porus Kaka, the learned Senior Counsel appearing on behalf of the Assessee, placed reliance on an order dated 17th January 2013 passed by this Court in Income Tax Appeal No.952 of 2011 with Income Tax Appeal No.147 of 2009 passed in the case of this very Assessee. According to Mr Kaka, the issue involved in this Appeal was squarely covered by the order passed by this Court on 17th January 2013. On going through the said order, we find that the questions of law framed in the said Appeals are identical to the ones framed in the present Appeal before us and projected as substantial questions of law. After setting out the questions of law in paragraph 3 , this Court held as under :- The Advocates for the parties state that the issue arising in these appeals stand covered in favour of the respondent-assessee and against the revenue by the decision of this court rendered on 06.08.2012 in ITXA No.3024 of 2009 in the matter of Director of Income Tax v. Balaji Shipping UK Ltd. In this view of the matter, the questions as raised in the present appeals are not entertained. Accordingly, both the appeals are dismissed with no order as to costs. 7. Mr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er is certainly contemplated by art. 9. So would an enterprise that controls the management/operation of the ship be included in art. 9 even if it does not own the ship. Such enterprises earn income from the operation of ships chartered or otherwise controlled and managed by them. If art. 9 is to be construed narrowly, as suggested by the appellant, it would be denuded of much of its effect. 24. Slot hire agreements have been and remain a regular feature of the shipping industry for decades. Whether they constitute a charter of a portion of a ship or not is a different matter. In a case of the first type, the carriage of goods by availing of the slot hire facility is an integral part of the contract of carriage of goods by sea. Without it, the enterprise / assessee would be greatly hampered in its business in relation to international traffic, carriage of goods by sea. Enterprises operating in any mode or manner, do not always ply their ships all over the globe. Even if they do, their ships may not be readily available when required on a particular route in connection with a contract of carriage of goods. It is necessary, therefore in such cases for them to resort to slot hire a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the enterprise to perform its contracts and/or ensure there is no break in its services. This it can do by availing slot hire agreements. Their refusal or failure to do so, may well affect their business and reputation adversely. 27. By availing the facility of slot hire agreements, the enterprise does not arrange the shipment on behalf of the owner of the said vessel, but does so on its own account on a principal to principal basis with its clients. Such cases also have a nexus to the main business of the enterprise of the operation of ships. They are ancillary to and complement the operation of ships by the enterprise. If they are not merely ancillary to the main business of operation of ships but constitute the primary and main activities of the enterprise, it may be a different matter, which we are not called upon to consider in the facts and circumstances of the present case. 28. Our view is supported by the judgment of a Division Bench of the Delhi High Court. It is also in consonance with the various commentaries which deal with similar provisions. We will now refer to the same. 29. Mr. Kaka relied upon the judgment of the Delhi High Court in Director of Income-Tax. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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