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TMI Blog2020 (10) TMI 503X X X X Extracts X X X X X X X X Extracts X X X X ..... e deciding identical issue involving more or less similar facts, has held that if the agent was not exclusively acting on behalf of the assessee enterprise, it cannot be considered as dependent agent so as to constitute a PE. Thus, the ratio laid down in the aforesaid decision would also support assessee s case. No infirmity in the order OF Commissioner (Appeals) holding that the assessee does not have a PE in India even under Article-5(5) of the Tax Treaty, hence, is eligible to avail the benefits of the Tax Treaty. More so, considering the fact that the Tax Authorities in Mauritius have issued Tax Residency certificate in favour of the assessee. Decided against revenue. - Shri Saktijit Dey, Judicial Member And Shri S. Rifaur Rahman, Accountant Member For the Assessee : Shri Dhanesh Bafna a/w Ms. Hirali Desai For the Revenue : Shri Avaneesh Tiwari ORDER PER BENCH The aforesaid appeals by the Revenue and cross objections by the assessee arise out of two separate orders passed by the learned Commissioner of Income Tax (Appeals), Mumbai, pertaining to the assessment year 1998 99 and 2001 02. ITA no.7128/Mum./2004 Revenue s Appeal for A.Y. 2001 02 2. In the aforesaid appeal the Reve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring gross total income of US $ 3,88,810, and claiming benefit of Article 8 of the Tax Treaty. During the assessment proceedings, the Assessing Officer on verifying the return of income filed by the assessee noticed that in the year under consideration, the assessee has shown gross receipt from freight at US $ 51,84,106, and applying the provisions of section 44B of the Act has determined the income @ 7.5% of the receipts which worked out to US $ 3,88,810. In support of his claim of benefit under the Tax Treaty, the assessee also furnished tax residency certificate issued by the tax authorities in Mauritius. Having examined assessee s claim, the Assessing Officer called upon the assessee to substantiate its claim that it effective place of management is in Mauritius. In response, the assessee filed its submissions in support of its claim. After verifying the explanation submitted by the assessee, the Assessing Officer noted that the assessee had two shareholders who are resident of UAE. Further, the shipping activity in India was carried on by the assessee through two agents viz. Parekh Marine Agency Pvt. Ltd. (in short Parekh ) and Samsara Shipping Pvt. Ltd. (in short Samsara). Fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia. He submitted, the effective control and management of the assessee has always remained in Mauritius and never was in India. Thus, he submitted, there cannot be a fixed place of business to treat it as PE in India. As regards the finding of the Assessing Officer that the assessee has dependent agents in India which constitutes PE under Article 5(5) of the Tax Treaty, drawing our attention to Article 5(5) of the Tax Treaty, the learned Counsel for the assessee submitted that both the agents employed by the assessee in India are not exclusively doing work of the assessee, but, they are independent entities and the work done for the assessee was in the ordinary course of their business. To emphasize the aforesaid aspect, the learned Counsel for the assessee drew our attention to the observations of learned Commissioner (Appeals) showing various streams of income earned by the Agents which were not restricted to the assessee alone. Thus, he submitted, since the assessee does not have a PE in India either under Article 5(1) or 5(5) and the agents appointed by the assessee in India are covered under the exceptions of Article 5(5), the assessee cannot be stated to be having a PE in I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidence. The allegation of the Assessing Officer that the directors of the assessee company are staying in UAE and are exercising their control over the affairs of the company from UAE, under no circumstances, creates a fixed place PE in India as none of the conditions of Article 5(1) of the Tax Treaty are satisfied. Thus, we are unable to accept the contention of the Revenue that the assessee has a fixed place PE in India under Article 5(1) of the Tax Treaty. 14. As regards the contention of the Revenue that the assessee has a PE in India through two dependent agents viz. Parekh Marine Agency Pvt. Ltd. and Samsara Shipping Pvt. Ltd,let us examine this aspect keeping in view Article 5(4) and 5(5) of the Tax Treaty. Article 5(4) of the Tax Treaty which overrides Article 5(1) and (2) says, where a person acts in a contracting State for or on behalf of an enterprise of the other contracting State, such person shall be deemed to be a PE in respect of any activities such person carries on for the enterprise. However, an exception has been carved out in Article-5(5) to exclude an agent from being treated as a PE, if such agent is of an independent status and provides services to the ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed upon by the learned Counsel for the assessee also express similar view. In view of the aforesaid, we do not find any infirmity in the order of learned Commissioner (Appeals) holding that the assessee does not have a PE in India even under Article-5(5) of the Tax Treaty, hence, is eligible to avail the benefits of the Tax Treaty. More so, considering the fact that the Tax Authorities in Mauritius have issued Tax Residency certificate in favour of the assessee. Grounds no. 1 and 2 are dismissed. 16. As regards the ground no.3 raised by the Revenue relying upon the decision of the Co ordinate Bench in BHL Operations B.V., Netherland, we must observe that the aforesaid aspect has been dealt with by the Co ordinate Bench in Bay Lines Mauritius (supra) wherein the Bench has observed that in view of the decisions of the Hon'ble Jurisdictional High Court in DCIT(IT) v/s B4U International Holdings Ltd., [2012] 23 taxmann.com 372 (Bom.), the decision rendered in DHL Operations B.V., Netherland (supra) is no more a good law. Therefore, this ground is also dismissed. 17. In the result, Revenue s appeal is dismissed. C.O. no.107/Mum./2003 By Assessee for A.Y. 1998 99 Arising out of Reven ..... X X X X Extracts X X X X X X X X Extracts X X X X
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