Case Law Details
Bengal Tiger Line Pte. Ltd. Vs DCIT (ITAT Chennai)
Introduction: The legal battle between Bengal Tiger Line Pte. Ltd. and the Deputy Commissioner of Income Tax (DCIT) reached a significant milestone with the recent order from the Income Tax Appellate Tribunal (ITAT) in Chennai for the Assessment Year 2015-16. The dispute revolves around the applicability of Article 8 of the India-Singapore Double Taxation Avoidance Agreement (DTAA) concerning Vessel Handling Charges.
Detailed Analysis:
1. Background of the Case: The appeal stems from the final assessment order issued by the Assessing Officer (AO) under various sections of the Income Tax Act. The Ld. Dispute Resolution Panel-2, Bengaluru, directed this assessment, and the subsequent appeal challenges this order.
2. Legal Grounds and Objections: The crux of the legal argument presented by the assessee is the absence of income escapement, contending that both documents and Vessel Handling Charges were previously subjected to taxation by the Indian entity. The primary defense relies on the provisions of Article 8 of the India-Singapore DTAA.
3. DRP’s Decision and Assessee’s Plea: The objections raised by the assessee were dismissed by the Ld. Dispute Resolution Panel, citing earlier orders for different assessment years. The appeal contends that the issue should be considered on its merits, and the assessee is entitled to the benefits outlined in Article-8.
4. Tribunal’s Previous Ruling: The article highlights the precedent set by the Tribunal in favor of the assessee in prior assessment years (2012-13, 2013-14, 2016-17, and 2017-18). The Tribunal’s order emphasized that there was no escapement of income, and the reassessment proceedings were deemed unsustainable.
5. Consistency in Legal and Merits Grounds: Examining the current case and comparing it with past decisions, the bench concludes that the legal and merits grounds are consistent. The Tribunal reaffirms its previous stance that the reassessment proceedings are unsustainable, both on legal and merit grounds.
6. Final Ruling and Directions: The Tribunal, in its order dated October 17, 2023, unequivocally allows the appeal, rendering the stay application infructuous. The Ld. AO is directed to re-compute the assessee’s income, ensuring the allowance of credits in accordance with the law.
Conclusion: The recent order from ITAT Chennai reinforces the assessee’s position, extending the benefit of Article-8 of the India-Singapore DTAA. This victory establishes a precedent for cases involving Vessel Handling Charges, providing clarity on taxation matters under the bilateral agreement.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
1. Aforesaid appeal by assessee for Assessment Year (AY) 2015-16 arises out of final assessment order passed by Ld. Assessing Officer, [AO] u/s.143(3) r.w.s 147 r.w.s 144C(13) of the Act on 27-01-2023 pursuant to the directions of Ld. Dispute Resolution Panel-2, Bengaluru u/s 144C(5) dated 14-11-2022. The appeal is accompanied by stay application wherein the assessee is seeking stay of recovery of outstanding demand by the revenue.
2. During hearing, it transpires that the assessee has assailed the reassessment proceedings, inter-alia, on the legal ground that there was no escapement of income since document as well as Vessel handling charges were already offered to tax by the Indian entity. The assessee assails the issue on merits by relying upon Article-8 of India-Singapore DTAA. The Ld. DRP has dismissed the objections of the assessee by relying upon earlier DRP order for AYs 2012-13, 2013-1 4, 2016-17 & 2017-18.
3. The undisputed position that emerges is that the assessee assailed the final assessment order for AYs 2012-13, 2013-14, 2016-17 & 2017- 18 before this Tribunal wherein the appeals have been allowed by the Tribunal on legal grounds as well as on merits vide IT(TP) 18/Chny/2021 & ors., common order dated 04-05-2023. A copy of the same has been placed on pages nos. 331 to 399 of the paper-book. This position could not be controverted by revenue before us. The Ld. AR pleaded that the issue is squarely covered in assessee’s favor.
4. Upon perusal of case records and after considering the cited decision of Tribunal, the bench concurs with the submission of Ld. AR that the issue on legal grounds as well as on merits is covered in assessee’s favor and there is no change in material facts. The bench, in paras 11 to 16 of the order, has held that the reassessment proceedings as well as consequential assessment framed therein are unsustainable in law and accordingly, liable to be quashed. The issue, on merits, has been dealt with by the bench in paras 17 to 28 of the order. It has finally been held that the assessee would be entitled for the benefit of Article-8 of the treaty and the impugned charges would not be taxable in India in the hands of the assessee. Therefore, facts and circumstances being the same, taking the same view, we allow the legal grounds as well as grounds on merits. The appeal stand allowed which render the stay application infructuous. The Ld. AO is directed to re-compute the income of the assessee and allow credit of taxes in accordance with law.
5. The appeal stand allowed. The stay application stand dismissed as infructuous.
Order pronounced on 17th October, 2023.
