Director Income Tax (International Taxation), Delhi-Ii, New Delhi v. M/S Maersk Company Ltd. ..…………

IN THE HIGH COURT OF UTTARAKHAND AT NAINITAL Income Tax Appeal No. 28 of 2011 Director Income Tax (International Taxation), Delhi-II, New Delhi ………….. Appellant Versus M/s Maersk Company Ltd. ..………… Respondent Income Tax Appeal No. 38 of 2010 Director Income Tax (International Taxation), Delhi-II, New Delhi ………….. Appellant Versus M/s Maersk Company Ltd. ..………… Respondent Income Tax Appeal No. 39 of 2010 Director Income Tax (International Taxation), Delhi-II, New Delhi ………….. Appellant Versus M/s Maersk Company Ltd. ..………… Respondent Income Tax Appeal No. 40 of 2010 Director Income Tax (International Taxation), Delhi-II, New Delhi ………….. Appellant Versus M/s Maersk Company Ltd. ..………… Respondent Income Tax Appeal No. 41 of 2010 Director Income Tax (International Taxation), Delhi-II, New Delhi ………….. Appellant Versus M/s Maersk Company Ltd. ..………… Respondent Income Tax Appeal No. 42 of 2010 Director Income Tax (International Taxation), Delhi-II, New Delhi ………….. Appellant Versus M/s Maersk Company Ltd. ..………… Respondent Income Tax Appeal No. 43 of 2010 Director Income Tax (International Taxation), Delhi-II, New Delhi ………….. Appellant Versus M/s Maersk Company Ltd. ..………… Respondent Income Tax Appeal No. 44 of 2010 Director Income Tax (International Taxation), Delhi-II, New Delhi ………….. Appellant Versus M/s Maersk Company Ltd. ..………… Respondent Income Tax Appeal No. 45 of 2010 Director Income Tax (International Taxation), Delhi-II, New Delhi ………….. Appellant Versus M/s Maersk Company Ltd. ..………… Respondent Income Tax Appeal No. 46 of 2010 Director Income Tax (International Taxation), Delhi-II, New Delhi ………….. Appellant Versus M/s Maersk Company Ltd. ..………… Respondent Income Tax Appeal No. 47 of 2010 Director Income Tax (International Taxation), Delhi-II, New Delhi ………….. Appellant Versus M/s Maersk Company Ltd. ..………… Respondent Income Tax Appeal No. 48 of 2010 Director Income Tax (International Taxation), Delhi-II, New Delhi ………….. Appellant Versus M/s Maersk Company Ltd. ..………… Respondent Income Tax Appeal No. 49 of 2010 Director Income Tax (International Taxation), Delhi-II, New Delhi ………….. Appellant Versus M/s Maersk Company Ltd. ..………… Respondent Income Tax Appeal No. 50 of 2010 Director Income Tax (International Taxation), Delhi-II, New Delhi ………….. Appellant Versus M/s Maersk Company Ltd. ..………… Respondent Income Tax Appeal No. 51 of 2010 Director Income Tax (International Taxation), Delhi-II, New Delhi ………….. Appellant Versus M/s Maersk Company Ltd. ..………… Respondent Income Tax Appeal No. 52 of 2010 Director Income Tax (International Taxation), Delhi-II, New Delhi ………….. Appellant Versus M/s Maersk Company Ltd. ..………… Respondent Income Tax Appeal No. 53 of 2010 Director Income Tax (International Taxation), Delhi-II, New Delhi ………….. Appellant Versus M/s Maersk Company Ltd. ..………… Respondent Income Tax Appeal No. 54 of 2010 Director Income Tax (International Taxation), Delhi-II, New Delhi ………….. Appellant Versus M/s Maersk Company Ltd. ..………… Respondent AND Income Tax Appeal No. 55 of 2010 Director Income Tax (International Taxation), Delhi-II, New Delhi ………….. Appellant Versus M/s Maersk Company Ltd. ..………… Respondent Director Income Tax (International Taxation), Delhi-II, New Delhi ………….. Appellant Versus M/s Maersk Company Ltd. ..………… Respondent Income Tax Appeal No. 53 of 2010 Director Income Tax (International Taxation), Delhi-II, New Delhi ………….. Appellant Versus M/s Maersk Company Ltd. ..………… Respondent Income Tax Appeal No. 54 of 2010 Director Income Tax (International Taxation), Delhi-II, New Delhi ………….. Appellant Versus M/s Maersk Company Ltd. ..………… Respondent AND Income Tax Appeal No. 55 of 2010 Director Income Tax (International Taxation), Delhi-II, New Delhi ………….. Appellant Versus M/s Maersk Company Ltd. ..………… Respondent Present: Mr. Hari Mohan Bhatia, Advocate for the appellant. Mr. Porus F. Kaka, Senior Advocate with Mr. Manish K. Kanth and Mr. Naresh Pant, Advocates for the respondent. Coram: Hon’ble Barin Ghosh, C.J.Hon’ble U.C. Dhyani, J. BARIN GHOSH, C.J. (Oral) All these appeals raise similar questions of law and facts and, accordingly, are taken up together and are decided by this common judgment. 2. Sections 4 to 9 are contained in Chapter II of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’). The said Sections are part of the charging Sections. Section 5 (2) of the Act provides, amongst others, that the total income of any previous year of a person, who is a non-resident, includes all income from whatever source derived which is received or is deemed to be received in India in such year by or on behalf of such person; or accrues or arises or is deemed to accrue or arise to him in India during such year. At the same time, Section 9(1)(ii) of the Act provides that income which falls under the head “salaries”, if it is earned in India shall be regarded as income earned in India. The explanation appended thereto provides that for removal of doubts, it is declared that income payable for service rendered in India will fall under the head “salaries”. Respondent/assess is a non-resident company. It was engaged in certain businesses in India. In respect of those businesses it employed 13 people. Each one of them was a Danish national. According to the respondent/assessee, such engagement though entailed those 13 people to receive salaries for work done by them in India, but those salaries were not directly paid by them to those 13 people, instead those were paid to some other non-resident company. Appellant is disputing the said contention. Therefore, the admitted facts are that in connection with the business activities of the assessee company, those 13 Danish nationals were engaged for doing work in India and for doing such work, they were also remunerated. The question is, whether such remuneration was taxable in India or not? As will be evident from the assessing orders forming part of the assessments pertaining to those 13 Danish people, on details being filed by the assessee company, the Assessing Officer accepted the fact that each of those 13 people were Danish nationals and stayed in India or worked in India, for which they were remunerated and, in respect whereof it was contended that such remuneration is taxable in India, for a period less than 183 days. It does not appear either from the orders of the Assessing Officer or from the orders of the Commissioner of Appeals that the Department, at any point of time, disputed either the nationality of those 13 people or the duration of their stay in India, when they worked and were remunerated with the remunerations, which were sought to be included as taxable in India. of the Assessing Officer or from the orders of the Commissioner of Appeals that the Department, at any point of time, disputed either the nationality of those 13 people or the duration of their stay in India, when they worked and were remunerated with the remunerations, which were sought to be included as taxable in India. 3. Having regard to the fact, principally, that those 13 Danish nationals received salaries for services rendered in India, it was held by the Assessing Officer and by the Commissioner of Appeals that those salaries are taxable in India. The matter, then, travelled to the Tribunal at the instance of the assessee. Tribunal noticed the treaties on Double Taxation Avoidance Agreements between the Government of Denmark and the Government of India, whereby it has been specifically provided that the remuneration derived by a resident of either of those two countries in respect of an employment exercised in the other country shall be taxable only in the country, to which he belongs, if he is present in the other country for a period or periods not exceeding in the aggregate 183 days in the fiscal year of the other country and the remuneration is paid by or on behalf of an employer, who is not a resident of the other country and the remuneration is not borne by a permanent establishment or a fixed base, which the employer has in the other country. Therefore, by reason of the said treaty the Government of India has accepted that such income while shall not be deemed to have arisen in India, the same will also not be construed as payable in India. The fact remains that the Tribunal found as a fact that each of those 13 Danish nationals were remunerated in respect of employment in India for a period not exceeding 183 days in the concerned fiscal year and that the remuneration was paid by or on behalf of an employer, who is not a resident of the country and, in any event, the remuneration was not borne by a permanent establishment or a fixed base, which the employer has in India. Tribunal, accordingly, held that those remunerations are, therefore, in view of the said treaty, taxable at Denmark and not in India. The facts, upon which the said conclusion were arrived at by the Tribunal, are not in dispute as the same stand admitted right from the time the original assessment was made. There appears to be a purported dispute as to the residence of the assessee. It is being contended that the assessee is not a resident of Denmark, instead it is a resident of UK. That is of hardly any importance, inasmuch as, treaty requires employer to be a non-resident of India and not necessarily a resident of Denmark. The other dispute seems to be, whether the assessee has a permanent establishment or fixed base in India? Even if the assessee has a permanent establishment or fixed base in India, the same is of no consequence, inasmuch as, it is to be shown and established that the remuneration is borne by that establishment or fixed base, which the assessee has in India. Tribunal has noted that the remuneration was not borne by any permanent establishment or a fixed base, which the assessee had, if any, in India. 4. That being the situation, no question of law has arisen in these appeals. They are basically questions of facts and the decisions rendered are based on accepted facts. We, accordingly, dismiss these appeals. P. Singh (U.C. Dhyani, J.) (Barin Ghosh, C.J.) 23.11.2012 23.11.2012