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TMI Blog2015 (6) TMI 709X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer himself has assessed the UK based company, i.e. owner of the ship and not the charterer of the ship. By implication, thus, he accepts that the income was earned by the UK based company, and, if that be so, the provisions of Article 9(1) of the Indo UK tax treaty unambiguously provides that "income of an enterprise of a Contracting State (i.e. Tramp Shipping Ltd. UK) from the operation of ships in international traffic shall be taxable only in that State (i.e. UK)". In this view of the matter, and in view of the fact that it has not been the case of any of the authorities below that the income belonged to the charterer based in Bahamas and not the owner based in UK, we are unable to see any legally sustainable reasons to decline the benefit of Article 9 to the assesse before us. The grievance of the assessee must, therefore, be upheld. what would constitute a reasonable time limit? - Held that:- Subsequently with effect from 1st April 2007, the statute itself has considered the period of nine months from the end of the financial year, in which return under section 172(3) is filed, as reasonable time limit within which assessment order under section 172(4) i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;ble ITAT: 1. The learned CIT(A) has erred both in law and on facts in erroneously invoking the provisions of Section 172 r.w.s. 163 of the Act and that too without affording any opportunity of hearing which is illegal and without any jurisdiction. 2. The learned CIT(A) further erred in law and on the facts of the case in not appreciating the fact that the learned Assessing Officer had already passed the order under section 172(6) of the Act on 23/10/2001 granting port clearance certificate, after satisfying due compliance of the provisions under section 172(3) of the Act, and, therefore, the learned AO could not have passed order under section 172(4) of the Act on 29/03/2005. In any case, the order passed by the learned AO under section 172(4) of the Act on 29/03/2005 is barred by limitation. 3. Both the lower authorities have failed to appreciate that the freight beneficiary is Tramp Shipping Limited based in London, and, therefore, as per the DTAA entered into between the India and the Great Britain, the said income is not taxable in the hands of the appellant in India. 4. Having perused the said petition and having heard rival contentions on the same, we admit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... au, Bahamas. As for the assessee's submission that by way of a subsequent amendment, the responsibility of paying taxes was assigned to the Tramp Shipping Limited, it was noted that the since this amendment was dated 20.10.04, it has no relevance as it was not in existence on the date of issue of NOC . The Assessing Officer, accordingly, concluded that, In view of the above mentioned facts, it is very clear that (tax on) freight was payable by the charterer in Bahamas with which no DTAA is in existence. The relief under section 90 already granted at the time of issuing NOC is withdrawn . With these observations, tax liability was computed under section 172(4). Aggrieved, assessee carried the matter in appeal before the CIT(A) but without any success. The assessee is not satisfied and is in further appeal before us. 7. We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. 8. In our considered view, it was wholly erroneous on the part of the authorities below to determine the eligibility of treaty benefits on the basis of the domicile of the person liable to pay income tax d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer] a return of the full amount paid or payable to the owner or charterer or any person on his behalf, on account of the carriage of all passengers, livestock, mail or goods shipped at that port since the last arrival of the ship thereat : Provided that where the 1632a[Assessing Officer] is satisfied that it is not possible for the master of the ship to furnish the return required by this sub-section before the departure of the ship from the port and provided the master of the ship has made satisfactory arrangements for the filing of the return and payment of the tax by any other person on his behalf, the 1632a[Assessing Officer] may, if the return is filed within thirty days of the departure of the ship, deem the filing of the return by the person so authorised by the master as sufficient compliance with this sub-section. (4) On receipt of the return, the 1632a[Assessing Officer] shall assess the income referred to in sub-section (2) and determine the sum payable as tax thereon at the 1633[rate or rates in force] applicable to the total income of a company which has not made the arrangement referred to in section 194 and such sum shall be payable by the mast ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 33a. Ins. by Finance Act, 2007, s. 51 (retrospectively w.e.f. 1-4-2007). 1633b. Collector of Customs has been designated as Commissioner of Customs by Finance Act, 1995, s. 50, but no corresponding amendment has been made in the IT Act. 1633c. Circular No. 730, dated 14-12-1995 [(1995) 129 CTR (St) 45] clarifies that non-resident assessees engaged in the business of carriage by shipping of passengers and goods, etc., shall neither be liable to pay interest under sections 234B and 234C nor entitled to interest under section 244A, in respect of their income attributable only to the business of such carriage of passengers and goods, etc. 1633d. Ins. by Finance Act, 1997, s. 45 (retrospectively w.e.f. 1-4-1976). 9. As evident from a plain reading of Section 172(1), which highlights the fact that the provisions of Section 172 apply for the purpose of the levy and recovery of tax in the case of any ship, belonging to or chartered by, a non-resident, which carries passengers, livestock, mail or goods (emphasis supplied) shipped at a port in India , shows that the taxability under section 172 is qua a ship and not qua the enterprise owning or using it under a charter agre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2001. The assessment was thus framed almost three years after the end of the relevant previous year. Undoubtedly, as at the relevant point of time, there was no time prescribed under the statute for framing the assessment under section 172(4) and the provisions of Section 172(4A), which set this time limit as nine months from the end of the financial year in which return under section 172(3) is filed, came into effect from 1st April 2007, but that does not mean that in the absence of this time limit under section 172(4A), the assessment under section 172(4) could have been done at any point of time. As held by Hon'ble Bombay High Court, in the case of DIT (International Taxation) v. Mahindra Mahindra Ltd. [2014] 365 ITR 560, even when a legal provision, such as contained in section 201, does not prescribe any limitation period, the revenue authorities will have to exercise the powers in that regard within a reasonable time, and the Tribunal is quite justified, in principle, in deciding what would constitute a reasonable time limit. It is thus clear that even when the statute did not prescribe a time limit for completing assessment under section 172(4), we have to hold that su ..... X X X X Extracts X X X X X X X X Extracts X X X X
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