Case Law Details
Avana Global FZCO Vs DCIT (ITAT Mumbai)
Article – 8 of India-UAE DTAA deals with profits derived by operation of ships in international traffic. Clause 2(b) of Article-8 refers to profit from the rental of ship including operation of container and related equipment used in connection with operation of ships in international traffic. Though Article-8 of India -UAE DTAA does not spell out explicitly that rental of containers include trailers and related equipment for the transport of container as has been mentioned in India -Belgium DTAA Article 8(2)(c) or India -Denmark DTAA, Article -9(4)(b), nevertheless, considering the nature of activity and the services provided by the assessee to its customers vide a composite Bill of Lading it can be safely inferred that the activity of Inland Haulage is directly connected with transportation of goods in international traffic. The leg of transportation of containers from Inland to Port for further transportation in International traffic is a composite activity for which single Bill of Lading is issued by the assessee.
Inland Haulage Charges (IHC) earned by the assessee are inextricably linked to shipping business in international traffic. The activity of shipping container from inland to the Port for further shipping it to international traffic is an integral part of operation of ships. Hence, ‘IHC’ cannot be disintegrated from profit derived from shipping business as envisaged under Article -8 of India-UAE DTAA. Ergo, ‘IHC’ are not taxable as business profit in India.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
This appeal by the assessee is directed against assessment order date 12/04/2021 passed u/ss. 143 (3) r.w.s. 144C(13) of the Income Tax Act, 1961 [in short ‘the Act’] for the Assessment Year 2017-18.
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