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TMI Blog2017 (4) TMI 919X X X X Extracts X X X X X X X X Extracts X X X X ..... thereby no income chargeable to tax has assessed the assessment, the impugned reassessment proceedings cannot be sustained and the same deserves to be quashed and set aside. It is required to be noted that one of the grounds on which the assessment is sought to be reopened is that the interest was paid to the banks situated in India. However, the same is factually not correct. As per the specific case on behalf of the assessee so stated even in the objections, no amount of interest was paid to any of the banks situated in India. Under the circumstances, assumption of jurisdiction to reopen the assessment on the aforesaid ground is on incorrect factual premise. Under the circumstances also the impugned reassessment proceedings deserve to be quashed and set aside. Present petition succeeds. The impugned notice issued upon the assessee under section 148 of the Income Tax Act, 1961 for the A.Y. 2009-2010 is hereby quashed and set aside. - Decided in favour of assessee. - SPECIAL CIVIL APPLICATION NO. 21471 of 2016 - - - Dated:- 13-2-2017 - MR. M.R. SHAH AND MR. B.N. KARIA, JJ. FOR THE PETITOINER : MR SN ROPARKAR, SENIOR ADVOCATE with MR BS SOPARKAR, ADVOCATE FOR THE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not been deducted or, after deduction, has not been paid during the previous year, or in the subsequent year before the expiry of the time prescribed under sub-section (1) of section 200 shall be allowed as deduction. Further, as per section 195(1) of the Act, any person responsible for paying to non-resident, not being a company, any interest of any other sum chargeable under the provisions of this Act (not being income chargeable under the head Salaries ) shall, at the time of credit of such income to the account of the payment thereof in cash or by the issue of a cheque or draft of by any other mode, whichever is earlier, deduct income-tax thereon at the rates in force. Failure to deduct tax at source make the expenditure disallowance under section 40(a)(i). Besides this, mandatory penalty equal to amount of tax is also leviable under section 271C. Further as per Section 2(28A) of the Income Tax Act, 1961 interest means interest payable in any manner in respect of any moneys borrowed or debt incurred (including a deposit, claim or other similar right or obligation) and includes any service fee or other charge in respect of the moneys borrowed or debt incurred or in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sident. The term royalty is defined in the Act to mean consideration for use or the right to sue any industrial, commercial or scientific equipment. The word equipment has not been defined in the India tax laws. As per Article 13 of the tax treaty (DTAAA) with France, the definition of royalty included receipts arising from the use or right to use of industrial, commercial and scientific equipment. Thus, lease income receipts were included under royalty. Time charter being one for usage of ship and the consideration is for the right to use the ship, the transaction would fall within the ambit of use under Clause (iva) of explanation 2 to section 9(v)(vi) of the Act. Section 43(3) of the Act defines plant to include ships, vehicles, books scientific apparatus and surgical equipment used for the purpose of the business or profession. Based on the inclusive definition in section 43(3) of the Act, the word plant is widely defined to include a ship. Since, the payments made by the India chartered under time charter agreement or for the use of ship between the ports in India, constitutes royalty under section 9(1)(vi) of the Income Tax Act, 1961 (the Act) for the relevant tax tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 2009-2010, the assessee submitted detailed objections. It was specifically submitted before the A.O. that as such no payment of Tanker Hire Charges was made to the resident of France during the year under considerate and the interest was also made to the Banks situated in India. 4.04. Despite the above, without dealing with the specific objections raised by the assessee and observing that the submissions of the assessee runs into 15 pages and same is too broad and general in nature and not tenable in law, the A.O. has disposed of the objections and has not agreed with the objections raised by the assessee and hence the petitioner has referred present Special Civil Application under Article 226 of the Constitution of India challenging the impugned reassessment proceedings. 5.00. Mr.S.N. Soparkar, learned Senior Advocate appearing on behalf of the assessee has vehemently submitted that in the facts and circumstances of the case the impugned notice under section 148 of the Act and the reassessment proceedings are absolutely bad in law, which deserves to be quashed and set aside. 5.01. Mr.S.N. Soparkar, learned Senior Advocate appearing on behalf of the assessee has further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at any payment of Tanker Hire Charges to the resident of France during the year under consideration was made by the assessee, but he is not in a position to point out any such material on the basis of which the A.O. has formed an opinion that the income chargeable to tax has escaped assessment. However, he has submitted that after considering the Notes to the Accounts of the Balancesheet in which the assessee itself has stated that ₹ 111.96 Lacs was paid in foreign currency on cash basis towards Tanker Hire Charges, the A.O. has formed his opinion that on the aforesaid amount, T.D.S. has not been deducted and therefore, income chargeable to tax has escaped assessment. However, when again a pointed question was asked to the learned counsel appearing on behalf of the revenue that in the Notes of Balance-sheet nothing has been mentioned that any payment was made towards Tanker Hire Charges in foreign currency on cash basis to any of the resident of France, again he has no answer. However, the learned counsel appearing on behalf of the revenue has submitted that In light of the aforesaid facts and circumstances of the case, present petition is required to be dismissed. 7.00. Havi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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