MISC BERHAD Vs. ASSTT. DIRECTOR OF INCOME TAX
LAWS(IT)-2014-7-14
INCOME TAX APPELLATE TRIBUNAL
Decided on July 16,2014

Misc Berhad Appellant
VERSUS
Asstt. Director Of Income Tax Respondents

JUDGEMENT

- (1.) THE aforesaid appeals have been filed by the assessee as well as the Revenue against the consolidated impugned order dated 2nd July 2012, passed by the learned Commissioner (Appeals) -XI, Mumbai, for the aforementioned assessment years. The appeals preferred for the assessment year 2004 -05 to 2007 -08, relate to the quantum of assessment passed under section 143(3) r/w section 147 r/w section 144C(3), whereas, the appeal for the assessment year 2009 -10, is in relation to the quantum of assessment passed under section 143(3) r/w section 144C(3).
(2.) SINCE all these appeals pertain to the same assessee involving common issues arising out of identical set of facts and circumstances, therefore, as a matter of convenience, these appeals were heard together and are being disposed off by way of this consolidated order.
(3.) WE will first take up the issues which are arising in assessee's appeal and are permeating through in all the years. For the sake of ready reference, grounds of appeal for the assessment year 2004 -05 are reproduced herein below: - ON the facts and in the circumstances of the case and in law, the Hon'ble Commissioner of Income -tax (Appeals) ['CIT(A)'] erred in confirming the action of the learned Assistant Director of Income -tax (International Taxation) -4(1) ['ADIT'] in reopening the assessment under section 147 of the Income Tax Act, 1961. On the facts and in the circumstances of the case and in law, the Hon'ble CIT(A) erred in confirming the action of the learned ADIT in denying the benefit of Article 8 of the India -Malaysia Double Taxation Avoidance Agreement (Tax Treaty) on freight income earned by the appellant from shippers for transporting cargo loaded on feeder vessels for onward transportation by vessels owned, leased or chartered by the Appellant. ON the facts and in the circumstances of the case and in law, the Hon'ble CIT(A) erred in not treating the freight income earned by the appellant from shippers for containers loaded on feeder vessels as income from use/maintenance/rental of containers, etc. and thereby erred in not granting the benefit of Article 8(3) of the Tax Treaty to such income. ON the facts and in the circumstances of the case and in law, the Hon'ble CIT(A) erred in confirming the action of the learned ADIT in holding Crescent Shipping Pvt. Ltd. ('Crescent') as a permanent establishment' ('PE') of the appellant in India under Article 5 of the Tax Treaty. 4a. On the facts and in the circumstances of the case and in law, the Hon'ble CIT(A) erred in confirming the action of the learned ADIT in holding Crescent as a Fixed Place PE under Article 5(1) of the Tax Treaty. 4b. Without prejudice to Ground No. 4(a) above, the Hon'ble CIT(A) erred in confirming the action of the learned ADIT in holding that the premises of Crescent are being used by the appellant as a 'sales outlet', thereby constituting a PE under Article 5(2)(h) of the Tax Treaty. 4c. On the facts and in the circumstances of the case and in law, the Hon'ble CIT(A) erred in confirming the action of the learned ADIT in holding Crescent as an agency PE under Article 5(5) of the Tax Treaty. 4d. On the facts and in the circumstances of the case and in law, the Hon'ble CIT(A) erred in not appreciating that Crescent is not a PE within the meaning of Article 5(7) of the Tax Treaty since Crescent is an independent agent as the transactions between the appellant and Crescent are on an arm's length basis. Furthermore, the Hon'ble CIT(A) erred in not appreciating that Crescent is a legally and economically independent entity. On the facts and in the circumstances of the case and in law, the Hon'ble CIT(A) erred in not appreciating that no income of the appellant could be brought to tax in India as the arm's length commission paid to Crescent, which is taxable in India in the hands of Crescent, fully extinguishes the tax liability of the appellant in India. ON the facts and in the circumstances of the case and in law, the ADIT erred in estimating freight attributable to the feeder vessels , by applying deemed rate of 10% instead of 7.5% under section 44B. ON the facts and in the circumstances of the case and in law, the Hon'ble CIT(A) erred in confirming the action of the learned ADIT in levying interest of Rs. 36,60,770 under section 234B of the IT Act despite the fact that the appellant was not liable to pay any advance tax on the basis of (a) Double Income Tax Relief Certificate issued by the Tax Department itself and (b) the fact that freight income of the appellant was tax deductible at source having regard to the specific provisions of section 209(1)(d) of IT Act. Besides this, the assessee has also taken a additional ground which is common in the appeals for the assessment year 2004 -05, 2005 -06 and 2006 -07 and 2007 -08. The same reads as under: - On the facts and in the circumstances of the case and in law the learned ADIT(IT), erred in passing the order under section 143(3) r/w section 147 and 144C(3) of the Act, without serving the notice under section 143(2) of the Act. Ground no. 1, relates to validity of re -opening of assessment under section 147.;


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