9911796707
TMI Blog2017 (1) TMI 981X X X X Extracts X X X X X X X X Extracts X X X X ..... d UAE (DTAA) and accordingly taxed 7.5% thereof amounting to Rs. 12,62,942 as the Appellants business income for the above year by treating the Appellants agents M/s. Samsara Shipping Private Limited as their Permanent Establishment (PE). The Appellants submit as under: i) that "slot hire charges" being covered by Article 8 of the DTAA, are not liable for tax in India as per ruling of the Authority of Advance Ruling (AAR) in the Appellants own case (Order dated 29.10.1997 in AAR no.356 of 1997). ii) that "slot hire charges" received by the Appellants during the year are in the nature of income earned from the operation of ships in international traffic and is accordingly covered by Article-8 of the DTAA. iii) that without prejudice to the above, even assuming that the said income from "slot hire charges" is not covered by Article 8 and is in the nature of business profits covered by Article 7 of the DTAA, the same cannot be brought to tax in India as the Appellants do not have a PE in India. iv) that, M/s. Samsara Shipping Private Limited, are the independent agents of the Appellant in India and do not constitute a PE of the Appellants under the DTAA as held by the AO as no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see is a limited company, incorporated in UAE and engaged in the business of shipping operations of running feeder line between India and Dubai. The assessee operates the feeder services using their own vessels as well as vessels taken on charter. During the year, the assessee had received "slot hire charges" of US $ 366070, which in terms of INR comes to Rs. 1,68,39,220/-. The assessee's case before the AO was that its "slot hire charges" was from shipping operations and thus covered by Article 8 of the DTAA between India and UAE, and therefore, the same is not taxable in India. It was further brought on the record that in assessee's own case, the Authority of Advance Ruling (in short 'AAR') vide order dated 29-10-1987 has held that the assessee's business is from shipping operations and benefit of Article 8 of India and UAE DTAA is available to the assessee. Relying on the said decision of AAR, the assessee submitted before the AO that its freight receipts are not taxable in India. Alternatively, it was also submitted that it is not covered under Article 7 of DTAA as there is no PE in India and therefore, business income cannot be computed under Section 44B. The assessee referred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered the rival submissions and also perused the material placed on record. From the perusal of the DRP's direction, it is seen that the assessee's objection and submissions on various aspects have not been properly considered and have been summarily rejected. The assessee's main contention that its case is covered by AAR ruling, has not been analyzed at all. As pointed out by the learned AR, in para 3 of the AAR ruling there is a categorical averment that the assessee would operate services using its own vessels or vessels on charter and it would also resort to "slot hire charges" on vessels owned by it or operated by others. At several places, it has been noted by the AAR that the assessee will not only operate ships owned by it but also do business as an agent and other incidental business relating to shipping operations. Based on these facts, the AAR has given a categorical finding, firstly, that the assessee is a resident of UAE and its taxation of income in India would be governed by DTAA between India and UAE and secondly, the income derived by the assessee by operations of ships in international traffic would be governed by Article 8 of the DTAA and thirdly, the income of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... soul of the matter. The Hon'ble Delhi High Court further observed that a well reasoned and well discussed order also facilitates appreciation when the same is called in question before the superior forum. Keeping in view the decision of the Hon'ble Delhi High Court in the case of Vodafone Essar Ltd. (supra) as well as that of the coordinate bench of this Tribunal in the case of Gap International Sourcing India (P) Ltd. (supra) and having regard to the fact that the DRP has passed the order giving directions to the AO u/s 144C without giving proper consideration to elaborate submissions made on behalf of the assessee, on this main preliminary issue, we set aside the order and remit the matter to the file of the DRP with a direction to consider the objections of the assessee on this issue as well as the other issues once again and pass a proper and speaking order giving direction u/s 144C. Accordingly, the appeal filed by the assessee is allowed for statistical purposes. 9. In the result, the appeal of the assessee is allowed for statistical purposes." 3.4. Thus, in pursuance to the above order of the Tribunal, the DRP again passed its order dated 28.03.2013 wherein the stand taken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l perusal of Article 8 of the DTAA, the Authority does not find much merit in the Department's view and accepts the interpretation given by Shri Dinesh Kanabar that article 8 of DTAA is clearly applicable to the applicant's case." 3.8. Para 17 of the order of AAR is also relevant as under: "17. Given thus the aforesaid background and wide range of shipping services which Article 8(2) of the DTAA between India and UAE is capable of encompassing within its purview, it is clear that applicants proposed shipping activities would fall under that provision. As such under Article 8(1), the applicant, being a resident of UAE, will not be liable to income tax in India on the income from the proposed shipping operations. The provisions of the DTAA, being more beneficial to the applicant, would prevail over section 44B of the Income tax Act, 1961." 3.9. While answering all the questions raised before the AAR, it was clearly answered as yes with respect to all the following questions: " Question Answer 1. Whether, the applicant company Orient Shipping Services LLC, UAE is a resident of UAE and taxation of its income in India would be governed by the agreement for Avoidance of Double Taxa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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