Itat/146/2023 Ia No: Ga/1/2023 Ultimo Logistics Private Limited v. Principal Commissioner Of Income Tax-1, Kolkata

OD – 5 IN THE HIGH COURT AT CALCUTTASPECIAL JURISDICTION (INCOME TAX)ORIGINAL SIDE ITAT/146/2023IA NO: GA/1/2023ULTIMO LOGISTICS PRIVATE LIMITEDVSPRINCIPAL COMMISSIONER OF INCOME TAX-1, KOLKATA BEFORE:-THE HON'BLE THE CHIEF JUSTICE T. S. SIVAGNANAM -A N D-HON'BLE JUSTICE HIRANMAY BHATTACHARYYADATE : 9 AUGUST, 2023. Appearance :Mr. J.P. Khaitan, Sr. Adv.Mr. Pratysh Jhunjhunwala, Adv.Mr. Mrigank Kejriwal, Adv.Ms. Sretapa Sinha, Adv.…for appellantMr. Vipul Kundalia, Adv.Mr. Soumen Bhattacharjee, Adv.…..for respondent The Court :- This appeal by the assessee filed under Section260A of the Income Tax Act, 1861 (the Act) is directed against theorder dated September 23, 2022 passed by the Income Tax AppellateTribunal “B” Bench Kolkata (the Tribunal) in I.T.A. No. 345/Kol/2019for the Assessment Year 2012-13. The assessee has raised the following substantial questions oflaw for consideration :- i)Whether there is any liability to deduct tax at source onpayments made to foreign shipping companies and/ortheir agents who are liable to be assessed under section172 of the Income Tax Act, 1961 ?payments made to foreign shipping companies and/ortheir agents who are liable to be assessed under section172 of the Income Tax Act, 1961 ? ii)Whether the Circular No. 723 dated September 19,1995 is binding of the income tax authorities and as such in caseof foreign shipping companies and/or their agents, no taxis required to be deducted at source ? iii) Whether the Income Tax Appellate Tribunal can hold thatthere is lack of examination by the Commissioner ofIncome Tax (Appeals) without considering the documentsand submissions filed before the Commissioner of IncomeTax (Appeals) ? iv) Whether the findings of the Income Tax AppellateTribunal that the Commissioner of Income Tax (Appeals)has allowed the appeal by simply relying on the listprovided by the appellant with respect foreign shippingcompanies and their agents and not made anydiscussions or given any basis for its conclusions iswholly arbitrary and perverse ? We have heard Mr. J.P. Khaitan, learned Senior Advocateappearing for the appellant and Mr. Vipul Kundalia, learned standingCounsel appearing for the respondent. The short question involved in this appeal is whether thelearned Tribunal was justified in remanding the matter back to the fileof the Assessing Officer to consider the correctness of the order passedby the Commissioner of Income Tax (Appeals) [CIT(A)] by which theCommissioner granted partial relief in favour of the assessee inrespect of certain disallowances concerning the non resident shipping lines. The relevant paragraphs which concern the subject issue areparagraphs 11 and 12 of the order of the learned Tribunal, from whichwe find that the learned Tribunal was of the view that the CIT(A) hasnot given any detailed or factual finding as to which of the payeeswere foreign shipping companies or their agents and simply reliedupon a list given by the assessee without discussing as to which of thepayees were resident companies and which of the payees were nonresident companies and no basis has been given for his conclusion.With this finding the learned Tribunal had remanded the matter to theAssessing Officer on the limited issues which have been indicated inparagraph 12 of the impugned order. To examine the correctness ofthe findings rendered by the learned Tribunal, we have carefullyperused the order passed by the CIT(A) dated 6.9.2018. The subjectissues have been discussed in ground no. 4. The assessee companypaid shipping company charges to the following companies :- Out of the ten companies, the Assessing Officer granted relief tothe assessee in respect of shipping company charges paid toConfreight Shipping and APL India Pvt. Ltd. The CIT(A) rejected theassessee’s appeal in respect of the shipping company charges paid tothree phases in the Transpose System Pvt. Ltd., AL Logistics and VNLogistics. The assessee was not on appeal against these findings of theCIT(A). This leaves us with five companies namely MSC Agencies Pvt.Ltd., Hanjin Shipping Co. Ltd., Samudera Shipping Line Pvt. Ltd.,Overseas Container Line Ltd. and Maersk Line India Pvt. Ltd. On a perusal of the order passed by the CIT(A), we find thatthere is sufficient discussion as to why the CIT(A) was convinced thatrelief should be granted to the assessee in respect of the HanjinShipping Co. Ltd. and Maersk Line India Pvt. Ltd. It is noted by theCIT(A) that on perusal of the materials available on record, payment ofshipping charges was admittedly paid to Hanjin Shipping Co. Ltd.,which is an agent of non resident shipping company and the copy ofthe order under Section 197 dated 29.03.2017 in case of HanjinShipping Co. Ltd. by the DDIT (International Taxation) 3(1), Mumbai,certifying that provisions of 195 and 194C of the Act are notapplicable in respect of the payments made to Hanjin Shipping Co.Ltd. or their agent Hanjin Shipping India Pvt. Ltd. Thus, the findingin our view, takes note of the relevant order passed by the DDIT (International Taxation). This finding is duly supported by a notementioned in the invoice dated 31.05.2012 raised by Hanjin ShippingCo. Ltd. wherein it has been clearly stated that there is an order underSection 197 of the Act and a request was made not to deduct any taxon the said invoice. Therefore, we find that so far as the payment ofshipping charges to Hanjin Shipping India Pvt. Ltd. was rightlyconstrued by the CIT(A) and also that no tax need to be deducted atsource. With regard to Maersk Line India Pvt. Ltd., the CIT(A) notedthat similar payment for shipping charges found to have been made tothe shipping company during the previous year ending 31.03.2012.That apart, the CIT(A) after placing reliance on the decision of the co-ordinate Bench of the Tribunal in the case of D.C.I.T. Circle 10,Kolkata Vs. Associated Pigment Ltd. , the CIT(A) concluded thatassessing officer was not justified in making disallowance of theamount of Rs.4,56,40,926/- paid to the agents and non residentshipping companies where on the provision of Section 195 and 194Cof the Act were not applicable. Further, we note that in the invoicedated 30.04.2012, it is seen that there is a specific mention that TDSis not applicable as per Circular No. 723, dated 19.09.1995. Thus we are of the view that CIT(A) rightly granted relief to theassessee in respect of the payment of shipping charges to those twocompanies namely Hanjin Shipping Co. Ltd. and Maersk Line IndiaPvt. Ltd.. The learned Tribunal was right in so far as the paymentsmade by the assessee to MSC Agencies Pvt. Ltd., Samudera Shipping Line Pvt. Ltd. and Overseas Container Line Ltd. There is no specificdiscussion by the CIT(A) while granting relief to the assessee.Therefore, to that extent we agree that the findings rendered by thelearned Tribunal that the issue has to be reconsidered by theassessing officer afresh only in respect of those three companies asmentioned above. In the result, the appeal is partly allowed and the finding of thelearned Tribunal in so far as it relates to the payment of shippingcharges paid to Hanjin Shipping Co. Ltd. and Maersk Line India Pvt.Ltd. stands set aside and the order passed by the CIT(A) is confirmed. The order of remand passed by the learned Tribunal is confinedto the payment for the shipping companies charges for MSC AgenciesPvt. Ltd., Samudera Shipping Line Pvt. Ltd. and Overseas ContainerLine Ltd. stand remanded to the Assessing Officer for fresh decision interms of the directions issued by the learned Tribunal. The appeal is accordingly partly allowed. In the result, the appeal is partly allowed and the finding of thelearned Tribunal in so far as it relates to the payment of shippingcharges paid to Hanjin Shipping Co. Ltd. and Maersk Line India Pvt.Ltd. stands set aside and the order passed by the CIT(A) is confirmed. The order of remand passed by the learned Tribunal is confinedto the payment for the shipping companies charges for MSC AgenciesPvt. Ltd., Samudera Shipping Line Pvt. Ltd. and Overseas ContainerLine Ltd. stand remanded to the Assessing Officer for fresh decision interms of the directions issued by the learned Tribunal. The appeal is accordingly partly allowed. Consequently, the substantial questions of law are left open.Accordingly, the application for stay is closed. (T. S. SIVAGNANAM) CHIEF JUSTICE (HIRANMAY BHATTACHARYYA,J.)