Case Law Details
Tata NYK Shipping Pte. Ltd. Vs CIT (ITAT Delhi)
ITAT Delhi held that revision of assessment order unjustifiable as the assessment order cannot be considered to be erroneous and prejudicial to the interest of revenue.
Facts- The assessee is a non-resident corporate entity incorporated in Singapore in 2007 and a tax resident of Singapore. The assessee is engaged in the business of owning, operating, and chartering ships to transport dry bulk and break-bulk cargo, such as coal, iron ore, bauxite, and steel products etc. The assessee is a joint venture between Tata Steel Company, an Indian firm, and NYK Holding (BV), a company incorporated in Netherland, which in turn is a subsidiary of a Japanese company, viz, Nippon Yusen Kabushiki Kaisha (NYK Japan).
In course of assessment proceedings, AO issued statutory notices u/s. 142(1) and 143(2) calling upon the assessee to reply to various queries made in the notices and also to furnish the necessary details. Further, noticing that the assessee had entered into international transactions with its Associated Enterprises (AEs), AO made a reference to the Transfer Pricing Officer (TPO) to examine arm’s length nature of such transactions. After considering the order of the TPO passed under section 92CA(3) of the Act, AO ultimately completed the assessment vide order dated 14.06.2019 accepting the income declared by the assessee. The assessment order so passed was taken up for review by learned CIT in exercise of power conferred u/s. 263 of the Act. While doing so, he was of the view that the assessment order passed is erroneous and prejudicial to the interest of Revenue, since, while accepting the return of income, the Assessing Officer has failed to conduct necessary enquiry/verification and appreciate the correct legal position.
Conclusion- A conjoint reading of the show cause notice as well as order passed under section 263 of the Act coupled with the fact that ultimately he has restricted his directions only to inward freight income, thereby, accepting assessee’s claim under section 44B in respect of income from coastal shipping and claim of exemption under Article 8 of the treaty in respect of income from outward freight amounting to Rs.56,13,86,432/-, reveals the mechanical approach of learned CIT in invoking jurisdiction under section 263 of the Act. Meaning thereby, various inconsistencies in the approach of learned CIT gives an impression that he himself was not sure about the nature and character of shipping income earned by the assessee.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
Author Bio
