9911796707
TMI Blog2021 (5) TMI 151X X X X Extracts X X X X X X X X Extracts X X X X ..... material facts are required to be taken note of. The assessee before us is said to be a limited company incorporated in the UAE, a tax resident of the UAE and engaged in the business of services like ship chartering, freight forwarding, sea cargo services, shipping line agents. The uncontroverted stand of the assessee, as noted by the Assessing Officer, is that the assessee charters the ships for use in transportation of goods and containers in international waters, including to Kandla and Mundra ports as indeed other ports in India and elsewhere. During the relevant previous year, the assessee had received Rs. 64,41,25,715 on account of total freight collection, including prepaid collections, which, under section 44B r.w.s. 172, result in a taxable income, computed @ 7.5%, of Rs. 4,83,09,429. The assessee, however, claimed that as the assessee is a tax resident of the UAE and as, under the Indo UAE tax treaty, the profits derived by an enterprise of a UAE or India from the operation by that enterprise of ships in international traffic shall be taxable only in the respective jurisdiction, the assessee is not to pay any tax in India. The relief was thus sought under section 90 read ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he actual beneficiaries of TRCs of the partners, such a non-furnishing of details is to escape from expositing the true structure and taking undue benefit of the Indo UAE tax treaty. The Assessing Officer thus concluded that the assessee is not entitled to the benefits of the Indo UAE tax treaty, and, accordingly, issued a draft assessment order holding that the income of Rs. 4,83,09,430 is taxable in India. Aggrieved, the assessee raised objections before the Dispute Resolution Panel, but without any success. The assessee had also filed additional detailed evidences before the DRP in support of its various submissions, including the submission that the assessee is a company and not a partnership firm, and a remand report from the Assessing Officer was also called on the additional evidence. The learned DRP nevertheless confirmed the action of the Assessing Officer and observed as follows: It is noted that the appellant company is in shipping business since year 2000. The appellant expanded its shipping business operations in June, 2013. Before 2013, the Appellant was a shipping agent. The assessee company commenced shipping business in India only from March, 2015. It is noted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany was controlled only by the Greek National Mr. Dimosthensis Lalagiannis. In the rejoinder also, the assessee has not rebutted this finding of the AO. e. It is claimed by the assessee that during the year under consideration, Mr. Dimosthenis Lalagiannis, a Greek national who is based in UAE, was the designated Manager, managing the affairs of the Company. Mr. Dimosthensis Lalagiannis holds 25% of the share capital of the LLC. However, the AO has brought enough arguments and facts to hold that there was no other manager or controller of the assessee. There is no evidence that this person was in UAE for a period in excess of 183 days. f. It is also claimed that all the employees of the assessee company have been issued work permits by the Ministry of Labour, UAE. This claim of the assessee is false. The assessee had not given any details of its employees to the AO pertaining to year under discussion. Further, the assessee did not file any details during the remand proceedings also. The assessee tried to surreptitiously claim that all its employees were resident of UAE in its rejoinder to the remand report but documents filed by the assessee related to Financial Year 2017-18 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... benefits in question. Article 4(1) defines a resident, inter alia, "in the case of the United Arab Emirates: ........a company which is incorporated in the UAE and which is managed and controlled wholly in UAE". While at the stage of initial proceedings before the Assessing Officer, it was AO's observation that the assessee entity is a partnership firm, we have noted that at the stage of proceedings before the Dispute Resolution Panel, it was pointed out by the assessee that the assessee is a limited liability company under the UAE laws, that it has duly obtained the requisite licence from the Department of Economic Development, that its annual accounts and audits are in accordance with the UAE laws and that its memorandum of association and articles of association were also placed on record. The details of the company incorporation are on record, including in the paper-book, and the learned Departmental Representative did not even dispute these pieces of evidence. There is nothing now, or even at the assessment stage, to controvert these pieces of evidence and submissions, and, therefore, the status as a company is now beyond any dispute or controversy. The main objection taken b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be incorporated in UAE and wholly managed and controlled in the UAE. The assessee company has its office in UAE, it is in business there since 2000, it has expatriate employees who have been given a work permit to work in UAE for the asseee company, the main driving force of the company and its director is an expatriate resident in the UAE. 8. Under these circumstances, there seems to be no basis, except for surmises and conjectures, to suggest that the company is not "wholly managed or controlled from the UAE". As for the inconsistencies pointed out by the Assessing Officer in the financial statement disclosures, even if in one statement an accounting disclosure about director's remuneration is given and in another statement for another year such an accounting disclosure is left out, that would not mean that the company was not managed from the UAE. The assessee has provided reasonable evidence in support of the stand that the business was wholly and mainly controlled from the UAE. The fact that the assessee could not give the documents, which he was not required to maintain statutorily anyway, cannot be put against the assessee. The assessee cannot be asked to prove a negative, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany were not bonafide. There is reasonable evidence before us, and was all along available before the authorities below, that the assessee was having bonafide business in the UAE, and, as such, the lack of bonafides could not be inferred. Once assessee submits reasonable evidence, including the evidence in support of the existence of an office, and dedicated employees, in UAE and the business being carried on from there- as also the financial statements showing the business being carried on from the UAE on a regular and commercial basis, unless the revenue authorities bring on record some material to dispute this position, one cannot proceed to conclude, as the Assessing Officer did, that the business activities of the assessee lacked bonafides. The authorities below were thus clearly in error in holding that the LOB clause was applicable on the facts of this case. 10. In view of the above discussions, as also bearing in mind the entirety of the case, we are of the considered opinion that the assessee company is a resident of the UAE, in terms of requirements of article 4(1)(b) of the Indo-UAE tax treaty, that the limitation of benefits provisions of article 29 of the Indo-UAE ..... 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