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TMI Blog2017 (4) TMI 971X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. - Decided in favour of assessee. - Special Civil Application No. 21471 of 2016 - - - Dated:- 17-4-2017 - M. R. Shah And B. N. Karia, JJ. Mr BS Soparkar, Advocate for the Petitioner Mr KM Parikh, Advocate for the Respondent ORDER ( Per : Honourable Mr. Justice M. R. Shah ) JUDGMENT ( Per : Honourable Mr. Justice M. R. Shah ) 1.00. RULE. Mr. K.M. Parikh, learned advocate waives service of notice of rule on behalf of the respondent. 2.00. In the facts and circumstances of the case and with the consent of the learned advocates appearing on behalf of the respective parties, present petition is taken up for final hearing today. 3.00. By way of this petition under Article 226 of the Constitution of India, the petitioner has prayed for an appropriate writ, order and/or direction to quash and set aside the impugned notice dated 30/3/2016 issued upon the petitioner assessee under section 148 of the Income Tax Act, 1961 (hereinafter referred to as the Act for short), by whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 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 respect of any credit facility which has not been utilized. It was seen from the Note 19(xii) of the Notes of Accounts (Schedule 22) of the Balance Sheet ending as on 31st March 2009 that the following payments were made in foreign currency on cash basis : Particulars Amount in Lakhs Tanker Hire charges 111.96 Interest 93.57 Total 205.53 The Tanker Hire Charges of ₹ 111.96 lakh and interest of ₹ 93.57 lakh which were paid in foreign currency attracts the provisions of section 195 which says TDS was required to be deducted on interest or any s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 treaties. As per Section 43(3) the inclusive definition the word plant is widely defined to include a ship and therefore, a ship is equipment of the business of a ship owner. The moving ship has a place of business in the place where the ship docked and the fact that the ship moved from one point to another is the result of the nature of business contract. Also, the ship movement is an integrated one having business and geographical coherence. Accordingly, the foreign enterprise has the place of Permanent establishment (PE) in India. Even though the berth is a PE of the foreign enterprise yet the royalties paid not being effectively connected with or attributed to such PE, the payment would fall for consideration only under Article 13 (rela ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 submitted that, as such, the assessment for the A.Y. 2009-2010 is sought to be reopened beyond the period of four years. It is submitted that unless and until the conditions mentioned in the proviso to section 147 of the Act are satisfied, i.e. there is any failure on the part of the assessee in not disclosing the true and correct facts necessary for the assessment, reopening beyond the period of four years is not permissible. It is submitted that there was no failure on the part of the assessee in not disclosing true and correct facts necessary for the assessment for th year under consideration. 5.02. Mr.S.N. Soparkar, learned Senior Advocate appearing on behalf of the assessee has further submitted that even otherwise, there was no tan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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. Having heard the learned counsel appearing on behalf of the respective parties and considering the material on record and more particularly the reasons recorded and the decision disposing of the objections, it appears that according to the A.O. by not deducting T.D.S. on the payment of Tanker Hire Charges to the resident of France during the year under consideration, there is escapement of income from the assessment and therefore, the assessment is sought to be reviewed beyond the period of four years. However, it is required to be noted that it was specific case on behalf of the assessee so stated in the objection that there is no payment of Tanker Hire Charges to the resident of France during the year under consideration. The same has ..... X X X X Extracts X X X X X X X X Extracts X X X X
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