IT APPEAL NOS. 728 TO 730 (RJT.) OF 2014
[ASSESSMENT YEAR 2013-14]

SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER 
AND N.S. SAINI, ACCOUNTANT MEMBER

Avinash Kumar, D.R. for the Appellant. 
Anil N. Shah andAatish A. Shah, C.A. for the Respondent.

ORDER

1. These three appeals filed by Revenue pertain to same assessee are arising out from the orders of CIT(A), Gandhidham, Ahmedabad, dated 15.09.2014 on same issue for same assessment year i.e. 2013-14. So, they are being disposed of by way of this common order for the sake of convenience.
2. In ITA No. 728/Rjt/2014, Revenue has filed the appeal on the following grounds:

"1. The Ld. CIT(A) has erred on facts and in law in holding that transportation of goods from one port in India to another port in India would also constitute international voyage and not coastal voyage.

2. It is therefore prayed that the order of the Ld. CIT(A) may be cancelled and that of the Assessing Officer may be restored to the above extent."
Similar grounds have been raised by Revenue in ITA Nos. 729 & 730/Rjt/2014.

3. The sole issue before us is whether a vessel which has operated within Indian Ports as part of larger international voyage would get benefit of Article 8 of India-Singapore Double Taxation Avoidance Agreement ('DTAA') as term used therein are operation of ship in international traffic. It is undisputed that Assessing Officer has never doubted the eligibility of assessee to claim benefit under India-Singapore DTAA. The only issue raised by him was whether the vessels had performed voyage between two ports in India and not in international traffic, the benefit claimed on the basis of DTAA was not available. In case of Essar Oil Ltd. v. Dy. CIT [2006] 5 SOT 669 (Mum.), it was held that if any ship is operated by a non-resident, it shall be considered to have operated in international traffic even after it is operated between two places in India by chance or along with other voyages. A voyage becomes coastal traffic only if the foreign ship operated solely and exclusively between domestic ports in India. Assessing Officer has alleged that vessels have made coastal voyage run as under:

Assessee had on contrary stated in all above cases, ships were sailing through international water. In this regard, assessee filed tax residency certificate of Jaldhi Overseas Pvt. Ltd. Certificate issued by Assistant Commissioner of Custom Port Area Vishakhapatnam certifying that vessel M.V. Global Hope reverted to foreign run. In this background, let us go into relevant provisions of Article 8 of India-Singapore DTAA which reads as under:

"ARTICLE 8 : SHIPPING AND AIR TRANSPORT - 1. Profits derived by an enterprise of a Contracting State from the operation of ships or aircraft in international traffic shall be taxable only in that State.

2. The provisions of paragraph 1 shall also apply to profits from the participation in a pool, a joint business or an international operating agency engaged in the operation of ships or aircraft.

3. Interest on funds connected with the operation of ships or aircraft in international traffic shall be regarded as profits derived from the operation of such ships or aircraft, and the provisions of Article 11 shall not apply in relation to such interest.

4. For the purposes of this Article, profits from the operation of ships or aircraft in international traffic shall mean profits derived from the transportation by sea or air of passengers, mail, livestock or goods carried on by the owners or lessees or charterers of the ships or aircraft, including profits from :

Ships made coastal voyage as part of its larger international voyage. A ship or aircraft if operated exclusively between places in foreign country, i.e. during a particular voyage, if the place of departure and the place of arrival of ship or aircraft are both in a foreign country, then the voyage would be termed as 'International Traffic' as used in Article 8 of Treaty. In Essar Oil Ltd. case (supra), ship was sailing through international water from Singapore to Arabian Gulf. It came to the port of Chennai and loaded petroleum products and sailed it to port of Hazira for unloading goods. Thereafter, ship continued its sailing to Arabian Gulf. Assessee company remitted freight to foreign oil tanker without withholding tax u/s.195. It was held that if any ship is operated by a non-resident, it shall be considered to have operated in international traffic even after it is operated between two places in India by chance or along with other voyages. A voyage becomes coastal traffic only if foreign ship operated solely and exclusively between domestic ports in India. In present case, ship never operated between Kandla and Vizag solely and exclusively. It operated in international water as established by assessee which is not disputed. After examining the case in terms of Article 8 of treaty, ship had operated in international traffic even while carrying goods from Kandla to Vizag and hence it can be construed that there was no liability to pay tax by assessee in India. Similar view has been taken by ITAT, Mumbai Bench in case of Dy. DIT v. Safmarine Container Lines NV in ITA No. 3073/Mum/10. In view of above legal and factual discussion, it is clear that if ship voyages between two Indian ports, on part of its international voyage, it cannot be termed as Indian voyage as alleged by Assessing Officer. In view of above, CIT(A) was justified that assessee will get benefit of Article 8 benefit from operation of ship in international traffic of India-Singapore. The addition made by Assessing Officer was rightly deleted by CIT(A), same needs no interference from our side. We uphold the same.

4. Similar issue arose in ITA Nos. 729 & 730/Rjt/2014. Facts being similar, so following same reasoning, we are not inclined to interfere in the finding of CIT(A) who has granted relief to assessee. Same are upheld.

5. In the result, all three appeals filed by Revenue are dismissed