{"id":7482,"date":"2014-01-01T13:46:56","date_gmt":"2014-01-01T08:16:56","guid":{"rendered":"http:\/\/itatonline.org\/archives\/?page_id=7482"},"modified":"2014-01-01T13:46:56","modified_gmt":"2014-01-01T08:16:56","slug":"digest-of-important-case-laws-january-to-october-2013","status":"publish","type":"page","link":"https:\/\/itatonline.org\/archives\/digest-of-important-case-laws-january-to-october-2013\/","title":{"rendered":"Digest Of Important Case Laws &#8211; January To October 2013"},"content":{"rendered":"<div id=AddressingEnvelope>\n<a href=\"https:\/\/i0.wp.com\/itatonline.org\/archives\/wp-content\/uploads\/2008\/10\/ksalegal.gif\"><img data-recalc-dims=\"1\" loading=\"lazy\" decoding=\"async\" src=\"https:\/\/i0.wp.com\/itatonline.org\/archives\/wp-content\/uploads\/2008\/10\/ksalegal.gif?resize=157%2C133\" alt=\"\" title=\"ksalegal\" width=\"157\" height=\"133\" class=\"alignleft size-full wp-image-183\" \/><\/a><\/p>\n<div id=MainEnvelope>\nNo time to read through voluminous case reports?<\/p>\n<div id=RSVP>\nCan\u2019t separate the wheat from the chaff?\n<\/div>\n<div id=Invite>\nFret Not! The KSA Legal team will bring you up-to-speed with the choicest of case-law so you can focus your attention only on the important ones. This section is updated on a monthly basis so make sure you bookmark this page.\n<\/div>\n<p><DIV class=team>Compiled By: KSA Legal Research Team<\/DIV><\/p>\n<\/div>\n<p><DIV class=clear-simple><\/DIV>\n<\/div>\n<div class=\"clock\">\n<table border=\"0\">\n<tr>\n<td colspan=\"2\"><strong>Digest of important case law &#8211; January 2013 to October 2013 <\/strong><\/td>\n<\/tr>\n<tr>\n<td width=\"264\" rowspan=\"2\" valign=\"top\">\n<script type=\"text\/javascript\"><!--\ngoogle_ad_client = \"ca-pub-6440093791992877\";\n\/* DLCenter_336x280 *\/\ngoogle_ad_slot = \"7705834990\";\ngoogle_ad_width = 336;\ngoogle_ad_height = 280;\n\/\/-->\n<\/script><br \/>\n<script type=\"text\/javascript\"\nsrc=\"http:\/\/pagead2.googlesyndication.com\/pagead\/show_ads.js\">\n<\/script><\/p>\n<\/td>\n<td width=\"271\" valign=\"top\">\n<script type=\"text\/javascript\"><!--\ngoogle_ad_client = \"ca-pub-6440093791992877\";\n\/* DLCenter_336x280 *\/\ngoogle_ad_slot = \"7705834990\";\ngoogle_ad_width = 336;\ngoogle_ad_height = 280;\n\/\/-->\n<\/script><br \/>\n<script type=\"text\/javascript\"\nsrc=\"http:\/\/pagead2.googlesyndication.com\/pagead\/show_ads.js\">\n<\/script><\/p>\n<\/td>\n<\/tr>\n<tr>\n<td valign=\"top\"><\/td>\n<\/tr>\n<tr>\n<td>Download Monthly <strong>October 2013<\/strong> Digest in pdf format<\/td>\n<td align=\"right\">Download <strong>Consolidated Digest<\/strong> (Jan 2013 to October 2013) in pdf format<\/td>\n<\/tr>\n<tr>\n<td align=\"left\" valign=\"top\"><a href=\"https:\/\/itatonline.org\/archives\/?dl_id=1139\" onclick=\"if (event.button==0) \r\n     setTimeout(function () { window.location = 'http:\/\/itatonline.org\/downloads.php?varname=dl_id=1139&varname2=Monthly_Digest_Oct_2013.pdf'; }, 100)\" ><strong>Click here to download the judgement (Monthly_Digest_Oct_2013.pdf) <\/strong> <\/a><\/p> <\/td>\n<td align=\"right\" valign=\"top\"><a href=\"https:\/\/itatonline.org\/archives\/?dl_id=1140\" onclick=\"if (event.button==0) \r\n     setTimeout(function () { window.location = 'http:\/\/itatonline.org\/downloads.php?varname=dl_id=1140&varname2=Consolidated_Digest_Jan_Oct_2013.pdf'; }, 100)\" ><strong>Click here to download the judgement (Consolidated_Digest_Jan_Oct_2013.pdf) <\/strong> <\/a><\/p> <\/td>\n<\/tr>\n<tr>\n<td colspan=\"2\">\n<div class=\"journal2\">Download <strong>Consolidated Digest<\/strong> (Jan 2012 to December 2012) in pdf format <a href=\"https:\/\/itatonline.org\/archives\/?dl_id=1087\" onclick=\"if (event.button==0) \r\n     setTimeout(function () { window.location = 'http:\/\/itatonline.org\/downloads.php?varname=dl_id=1087&varname2=Consolidated_Digest_Jan_Dec_2012.pdf'; }, 100)\" ><strong>Click here to download the judgement (Consolidated_Digest_Jan_Dec_2012.pdf) <\/strong> <\/a><\/p><\/div>\n<\/td>\n<\/tr>\n<tr>\n<td colspan=\"2\"><a href=\"http:\/\/itatonline.org\/archives\/index.php\/digest-of-important-case-laws-january-to-september-2013\/\">Looking for the Previous Month&#8217;s digest? Click here.<\/a> <\/td>\n<\/tr>\n<\/table>\n<\/div>\n<p><script type=\"text\/javascript\"><!--\ngoogle_ad_client = \"ca-pub-6440093791992877\";\n\/* DLCenter_728x90 *\/\ngoogle_ad_slot = \"3275635396\";\ngoogle_ad_width = 728;\ngoogle_ad_height = 90;\n\/\/-->\n<\/script><br \/>\n<script type=\"text\/javascript\"\nsrc=\"http:\/\/pagead2.googlesyndication.com\/pagead\/show_ads.js\">\n<\/script><\/p>\n<div class=\"journal\">\n<p><strong>Journals Referred <\/strong>: BCAJ, CTR, DTR, ITD, ITR, ITR (Trib),  Income Tax Review, SOT, Taxman, Taxation, TLR, TTJ, BCAJ, ACAJ,  www.itatonline.org\n <\/div>\n<div>\n<div style='float:left; margin-top:5px ; margin-left:5px ; margin-right:10px ; margin-bottom:5px ;'>\n<\/div>\n<p><strong>S.2(IA): Agricultural income-Ownership of  land is not a prerequisite-Firm can also claim exemption in respect of&nbsp;&nbsp; agricultural income derived from  agricultural activity. [S.2(23)] <\/strong><br \/>\n  Assessee firms claimed exemption in  respect of its agricultural Income. The AO rejected assessee&rsquo;s claim on two  grounds one is assesee was not the owner of the land and secondly being an  artificial person, created by law; it could not be an agriculturist, conducting  any of the agricultural activities of its own. The CIT(A) allowed&nbsp; assesee&rsquo;s claim. On revenue&rsquo;s appeal in  Tribunal, Tribunal dismissed the appeal of the revenue and held that in order  to come within the ambit of the Act, the person has to be an agriculturist and  it was sufficient if revenue was derived from agricultural activities conducted  on a land situated in India which is to be an agriculturist which derives  revenues from agricultural activity. Tribunal further held that a cultivator  may be the owner but it is not necessary that he has to be the owner. The  revenue was derived from land or from agricultural operations only.  Relationship between MSFC Ltd and the assesee firm could be described as that  of the landlord and a tenant.&nbsp; The  assessee firm had to make the payment of a fixed sum of Rs. 70 Lakhs every year  to &ldquo;M&rsquo; during the subsistence of the agreement regardless of production from  the agricultural farm. Therefore AO was not correct in taking such a view.  (A.Ys. 2002-03 &amp; 2003-04)<br \/>\n  <strong>ITO v. Gajanan Agro Farms (2013) 142 ITD  571 (Pune)(Trib.) <\/strong> <\/p>\n<p><strong>S.2(24):  Income&ndash;Interest on loan &#8211; Resolution  not to charge interest-Mercantile system of accounting.[S.145]<\/strong><br \/>\n  The assessee company passed a  resolution not to charge interest in view of financial difficulties of  borrowing companies. However, in the year under consideration, it was found  that the borrowing companies were in sound financial position. Therefore, the  addition of interest was held to be justified. (A. Y. 2007-2008) <br \/>\n  <strong>CIT v. <\/strong><strong>Brahmaputra<\/strong><strong> Capital and Financial  Services Ltd. (2013) 357 ITR 241 (<\/strong><strong>Delhi<\/strong><strong>)(HC)<\/strong><\/p>\n<p><strong>S.2(47): Transfer&ndash;Capital  gains&ndash;Accrual&ndash;consideration received in installments of four years &ndash; Capital  Gains assessable in the year transfer took place. [S. 45]<\/strong><br \/>\n  The assessee having parted with the  possession of the property in January, 2006 and received part consideration  during the year ending 31.03.2006, the capital gains arising on the sale of the  lands was assessable in A.Y. 2006-07 only, notwithstanding the fact that the  consideration was received in installments covering a period of four years. (A.  Y. 2008-09 &amp; 2009-10)<br \/>\n  <strong>Anwar Sadath &amp; Ors. v. <\/strong><strong>ACIT<\/strong><strong> (2013) 90 DTR 362 (Coch.)(Trib.)<\/strong><\/p>\n<p><strong>S.4: Income-Deposit&ndash;Levy of  sales tax-Amount is not trading receipt. [S.2(24)]<\/strong><br \/>\n  The  deposits were received by the assessee were neither collected &lsquo;as sales tax&rdquo;  nor were they collected &lsquo;by way of tax&rdquo; .They were towards possible levy of  sales tax on packaging charges and freight. Amounts to be returned if sale tax  were not levied .Deposit cannot be assessed as trading receipt. (A.Y. 1985-1986) <br \/>\n  <strong>Dalmia Cement (Bharat) Ltd.  v. CIT (2013) 357 ITR 419 (<\/strong><strong>Delhi<\/strong><strong>) (HC)<\/strong><br \/>\n  <strong>&nbsp;&nbsp;<\/strong><br \/>\n  <strong>S.4:<\/strong><strong> Charge of Income-tax-Dharmada  receipt.<\/strong> <br \/>\n  Assessee  collected 2 per cent in bill amounts from purchasers as dharmada for charitable  purposes. Assessing Officer treated the said amount as income of in the hands  if the assessee . Tribunal endorsed finding of Assessing Officer observing that  there was no material to show that assessee made contribution to some of  institutions on regular basis.&nbsp; High  Court answered reference in favour of revenue. Assessee claimed that impugned  decision of High court was not good law in light of decision of Apex Court in CIT v.  Bijli Cotton Mills (P.) Ltd. [1979] 116 ITR 60. Since in impugned order High  Court clearly stated that finding recorded by Tribunal purely related to  appreciation of evidence and it did not give rise to any question of law and  had answered question accordingly, High Court did not lay any law in respect of  issue of Dharmada. therefore, impugned order was not contrary to decision of Apex Court in Bijli  Cotton Mills (P.) Ltd. &#8216;Decision of Division Bench of Madhya Pradesh in  Lilasons Breweries (P.) Ltd. v. CIT [MCC No. 668 of 1993, dated 16-7-1996] did  not lay down any law in respect of issue of Dharmada and, hence, the same could  not be held contrary to decision of Apex Court in CIT v. Bijli Cotton Mills  (P.) Ltd. [1979] 116 ITR 60 [AY. 1981 -82, 1984-85 to 1986-87]<br \/>\n  <strong>Lilasons  Breweries Ltd. v. CIT (2013) 260 CTR 73 (<\/strong><strong>Cal.<\/strong><strong>)(HC)<\/strong><\/p>\n<p><strong>S.4: Charge of  income-tax-Mutual concern-Miscellaneous expenses and meeting expenses were  incurred in pursuit of objects-No third party benefitted, status of mutuality  could not be denied. <\/strong><br \/>\n  The Tribunal held that where  miscellaneous expenses were incurred by assessee-association in pursuit of its  objects and it could not be said that some third parties were benefited by incurring  these expenses by assessee, status of mutuality could not be denied to  assessee. (A.Ys. 2000-01 &amp; 2003-04)<br \/>\n  <strong>Tiruchirapalli District Bus  Operators Association v. Dy. CIT (2013) 144 ITD 382 \/ 24 ITR 242  (Chennai)(Trib.)<\/strong><\/p>\n<p><strong>S.4: Charge of  income-tax&ndash;Diversion of sale proceeds of property held as stock-in-trade  towards discharge of loan liability&ndash;loan borrowed on capital account&ndash;neither be  claimed as deduction nor can be allowed as revenue expenditure. [S.28(i),37(1)]<\/strong> <br \/>\n  Repayment of loan amount is application of  income as loan is on capital account and therefore, amount diverted by the  assessee out of sale proceeds of a property held as stock-in-trade for  discharging the loan liability in lieu of its obligation to transfer the said  property under the terms of the consent decree was application of income to the  extent of the principal amount of loan, and the same can neither be claimed as  deduction in the computation of profits and gains from business nor can be  allowed as revenue expenditure.<br \/>\n  <strong>Swan Energy Ltd. v. Addl.  CIT (2013) 90 DTR 261 (Mum.)(Trib.)<\/strong><\/p>\n<p><strong>S.5: Scope of total  income&ndash;Derivates-Stock in trade-Accrual in case of F&amp;O contracts-Taxable in  the year of its actual realization. <\/strong><br \/>\n  Notional gains from derivates held as  stock-in-trade is taxable in the year of its actual realization. The notional  loss is allowable as no contingencies are attached. (A.Y. 2008-09)<br \/>\n  <strong>Urudavan Invt. &amp; Tdg.  (P.) Ltd. v. Addl. CIT (2013) 56 SOT 69 (Mum.)(Trib.)<\/strong><\/p>\n<p><strong>S.5: Scope of total  income&ndash;Accrual-Release of retention money in respect of ongoing project against  bank guarantee is not taxable.<\/strong><br \/>\n  Tribunal held that the project was  ongoing, so the release of retention money against bank guarantee was not  assessable during the relevant year. Tribunal &amp; CIT(A) both followed the  decision of Hon&rsquo;ble Bombay High Court in the case of&nbsp; CIT v. Associated Cables (P) Ltd. (2006) 286  ITR 596 (Bom.) (A.Y. 2003-04)<br \/>\n  <strong>Addl. DIT (IT) v. Ballast  Nedam Dredging (2013) 154 TTJ 280 \/ 85 DTR 307 (Mum.)(Trib.)<\/strong><\/p>\n<p><strong>S.5: Scope of total  income&ndash;Accrual- Advisory fee\/commission in connection with grant of loans. <\/strong><br \/>\n  The Tribunal held that the entire fee \/  commission accrued in this year and no part of it can be spread to next year.  The CIT(A) was not justified in directing the spread over of the advisory fee  over the period of loan. (A.Y. 2000-01)<br \/>\n  <strong>Dy. DIT v.  Toronto Dominion Bank Ltd. (2013) 153 TTJ 303 \/ 84 DTR 377 (Mum.)(Trib.)<\/strong><\/p>\n<p><strong>S.9(1)(ii):<\/strong><strong> Income deemed  to accrue or arise in <\/strong><strong>India<\/strong><strong> &ndash; Salaries-Dependent personal  services-In view of provisions of Treaty between <\/strong><strong>India<\/strong><strong> and <\/strong><strong>Denmark<\/strong><strong>, remuneration paid to Danish nationals was  taxable in <\/strong><strong>Denmark<\/strong><strong> and not in India-<\/strong>&nbsp;&nbsp; <strong>DTAA-India-Denmark. [S. 5(2),  Art.16]<\/strong><br \/>\n  Assessee  was a non-resident company engaged in certain businesses in India. In respect  of those businesses it employed certain Danish nationals for doing work in India and  remunerated them for doing such work. Each of those Danish nationals was  remunerated in respect of employment in India for a period not exceeding 183  days in concerned fiscal year and that remuneration was paid by or on behalf of  an employer, who was not a resident of country and, in any event, remuneration  was not borne by a permanent establishment or a fixed base, which employer had  in India. In view of provisions of Treaty between India and Denmark,  remuneration paid to Danish nationals was taxable in Denmark and not in India . The court  held that where Danish nationals were remunerated in respect of employment in  India for a period not exceeding 183 days in concerned fiscal year and such  remuneration was paid by or on behalf of an employer, who was not a resident of  country and, in any event, remuneration was not borne by a permanent  establishment or a fixed base, which employer had in India, said remuneration  would be taxable in Denmark and not in India.<br \/>\n  <strong>DIT (IT) v. Maersk  Co. Ltd.(2013) 351 ITR 366 \/ 215 Taxman 258 (Uttarakhand)(HC)<\/strong><\/p>\n<p><strong>S.9(1)(vi): Income  deemed to accrue or arise in <\/strong><strong>India<\/strong><strong> &ndash;&nbsp; Royalty-Copy right-C<strong>ustomized  software-Non-exclusive &amp; non-transferable license to use customized  software not taxable as &ldquo;royalty&rdquo; under Article 12-DTAA- India-USA.[Art 12,Copy  right Act,1857, S. 14(1),.]<\/strong><\/strong> <br \/>\n  The assessee, a USA company, set up a branch office in India for the supply of software called &ldquo;MX&rdquo;.  The software was customized for the requirements of the customer (not &ldquo;shrink  wrap&rdquo;). The Indian branch imported the software package in the form of floppy  disks or CDs and delivered it to the customer. It also installed the software  and trained the customers. The AO &amp; CIT(A) held that the software was a &ldquo;<em>copyright<\/em>&rdquo; and  the income from its license was assessable as &ldquo;royalty&rdquo; under Article 12 of the  India-USA DTAA. On appeal by the assessee, the Tribunal held, following <strong>Motorola<\/strong> 270 ITR (AT) (SB) 62, that the income from license of software was not taxable  as &ldquo;<em>royalty<\/em>&rdquo;.  Before the High Court, the Department argued that in view of <strong>CIT vs. Samsung  Electronics<\/strong> Co. Ltd. (2012) 345 ITR 494 (Kar), the right to  make a copy of the software and storing it amounted to copyright work u\/s 14(1)  of the Copyright Act and payment made for the grant of a license for the said  purpose would constitute royalty. HELD by the High Court dismissing the appeal:<br \/>\n  In order to qualify  as a royalty payment under Article 12(3) of the India-USA DTAA, it is necessary  to establish that there is a transfer of all or any rights (including the  granting of any licence) in respect of a copyright of a literary, artistic or  scientific work. There is a clear distinction between royalty paid on transfer  of copyright rights and consideration for transfer of copyrighted articles. Right  to use a copyrighted article or product with the owner retaining his copyright,  is not the same thing as transferring or assigning rights in relation to the  copyright. The enjoyment of some or all the rights which the copyright owner  has, is necessary to invoke the royalty definition. Viewed from this angle, a  non-exclusive and non-transferable licence enabling the use of a copyrighted  product cannot be construed as an authority to enjoy any or all of the  enumerated rights ingrained in Article 12 of DTAA. Where the purpose of the  licence or the transaction is only to restrict use of the copyrighted product  for internal business purpose, it would not be legally correct to state that  the copyright itself or right to use copyright has been transferred to any  extent. The parting of intellectual property rights inherent in and attached to  the software product in favour of the licensee\/customer is what is contemplated  by the Treaty. Merely authorizing or enabling a customer to have the benefit of  data or instructions contained therein without any further right to deal with  them independently does not, amount to transfer of rights in relation to  copyright or conferment of the right of using the copyright. The transfer of  rights in or over copyright or the conferment of the right of use of copyright  implies that the transferee\/licensee should acquire rights either in entirety  or partially co-extensive with the owner\/ transferor who divests himself of the  rights he possesses pro tanto. The license granted to the licensee permitting  him to download the computer programme and storing it in the computer for his  own use is only incidental to the facility extended to the licensee to make use  of the copyrighted product for his internal business purpose. The said process  is necessary to make the programme functional and to have access to it and is  qualitatively different from the right contemplated by Article 12 because it is  only integral to the use of copyrighted product. Apart from such incidental  facility, the licensee has no right to deal with the product just as the owner  would be in a position to do. Consequently there is no transfer of any right in  respect of copyright by the assessee and it is a case of mere transfer of a  copyrighted article. The payment is for a copyrighted article and represents  the purchase price of an article and cannot be considered as royalty either  under the Income-tax Act or under the DTAA&nbsp;  ( ITA No. 1034 of 2009 dt. 22\/11\/2013.) <\/p>\n<p><strong>DIT v. Infrasoft Ltd (Delhi)(HC).www.itatonline.org<\/strong><\/p>\n<p><strong>&nbsp;<\/strong><br \/>\n    <strong>S.9(1)(vi): <\/strong><strong>Income deemed  to accrue or arise in India &#8211; Royalty -Bare-boat charter of a shipping vessel  from a foreign party-<\/strong><strong> &nbsp;Equipment rental is taxable as &ldquo;royalty&rdquo; even  if payer does not have control. The retrospective insertion of Explanation 5 to  s. 9(1)(vi) is purely clarificatory-DTAA &ndash;<\/strong><strong>India<\/strong><strong>-[S. 163,195 201,Art, 7, 12]<\/strong> <br \/>\n  The High Court had  to consider the following issues in the context of a bare-boat charter of a  shipping vessel from a foreign party, the income whereof was held assessable as  &ldquo;<em>royalty<\/em>&rdquo;  u\/s 9(1)(vi) &amp; Article 12 in the hands of the foreign party: (i) whether  the expression &lsquo;<em>use  or right to use<\/em>&lsquo; in clause (iva) of Explanation 2 to s. 9(1)(vi)  &amp; Article 12 of the DTAA requires that there should be a &ldquo;<em>transfer of effective  control for use<\/em>&rdquo; in favour of the lessee?, (ii) what is the impact  of the retrospective insertion of Explanation 5 to s. 9(1)(vi) on the  taxability of equipment royalty?, (ii) whether a ship can be regarded as &ldquo;<em>equipment<\/em>&rdquo;?,  (iii) whether if the ship is used for plying between coastal waters, it can be  said to be used for &ldquo;<em>international traffic<\/em>&rdquo;?, (iv) whether the two berths  reserved for the ships chartered by the assessee can be said to be a &ldquo;<em>permanent establishment<\/em>&rdquo;  of the foreign owner? &amp; (v) whether a person who is treated as an &ldquo;<em>agent<\/em>&rdquo; u\/s 163  can also be proceeded against u\/s 201 for failure to deduct TDS? HELD by the  High Court:<\/p>\n<p>(i) The assessee&rsquo;s  argument that in a case where physical possession is not with the transferee or  the lessee or the hirer, the payment made for the use of or right to use of  equipment would not constitute &lsquo;<em>royalty<\/em>&lsquo; is not acceptable. Under clause (iva) of  Explanation 2 to s. 9(1)(vi) &lsquo;<em>royalty<\/em>&lsquo; means the consideration paid for &ldquo;<em>the use or right to use<\/em>&ldquo;.  Irrespective of whether there is any transfer or not, the consideration paid  for use or right to use simpliciter is sufficient for the consideration being  called as &lsquo;<em>royalty<\/em>&lsquo;.  The presence or absence of possession, effective\/general control and custody  with the assessee, even though may be matters of agreement, are not of any  relevance to decide the character of payment. The same result applies under  Article 12 of the DTAA (UOI v. <strong>Gosalia Shipping<\/strong> (P) Ltd. (1978) 113  ITR 307 (SC), OECD Commentary referred);<\/p>\n<p>(ii) Explanation 5,  inserted by Finance Act, 2012, w.r.e.f. 01.06.1976 clarifies that irrespective  of control or possession or use or location in India such right, property or information with  the payer; the payment is taxable as royalty. The Revenue does not need the  assistance of Explanation 5 because even if the possession of the ship is with  the owner, he has parted with the &ldquo;right to use&rdquo; the ship and the consideration  thereof constitutes &ldquo;royalty&rdquo; even without Explanation 5;<\/p>\n<p>(iii) The  assessee&rsquo;s argument that ship is not an &ldquo;<em>equipment<\/em>&rdquo; for purposes of s. 9(1)(vi)  is not acceptable. The word &lsquo;<em>any<\/em>&lsquo; preceding an equipment clearly points out the need for  construing &lsquo;<em>equipment<\/em>&lsquo;  widely so as to embrace every article employed by the employer for the purposes  of his business. A ship is &ldquo;<em>plant<\/em>&rdquo; u\/s 43(3). &ldquo;<em>Plant<\/em>&rdquo; includes &lsquo;all equipment&rsquo; used by  a business man for carrying on his business. As a ship is used to carry on  business, it is &ldquo;<em>equipment<\/em>&rdquo;; <\/p>\n<p>(iv) The argument  that a ship used for plying between coastal lines on the Indian shore is used  in &ldquo;<em>international  traffic<\/em>&rdquo; is not acceptable in view of the OECD Commentary;<\/p>\n<p>(v) On the question  of permanent establishment, a moving ship is a place of business in the place  where the ship is docked. The fact that the ship moved from one point to  another is the result of the nature of business contract and the movement is an  integrated one having business and geographical coherence. Accordingly, the  foreign enterprise has a permanent establishment in India when its ships are in India and the berths are reserved for it.  However, the royalties paid are not &ldquo;<em>effectively connected<\/em>&rdquo; or attributable  to such permanent establishment. Accordingly, the payment falls for  consideration only under Article 12 and not under Article 7; <\/p>\n<p>(vi) The assessee&rsquo;s  argument that a person who is treated as an &ldquo;<em>agent<\/em>&rdquo; u\/s 163 cannot be proceeded  against u\/s 201 for failure to deduct TDS is not correct because the two  provisions operate in different spheres. S. 195 casts an obligation on TDS on  any person responsible for paying, whereas s. 163 is for assessment purposes.  Proceedings u\/s 201 has nothing to do with the status of the assessee as an  agent u\/s 160 and 163 which would assume significance only for assessment  purposes. <\/p>\n<p><strong>Poompuhar Shipping  Corporation Ltd. v. ITO (2013) 38 Taxmann.com 158\/95 DTR 161(Mad.)(HC)<\/strong><\/p>\n<p><strong>West Asia Maritime  Ltd v.ITO (2013) 95 DTR 161(Mad)(HC) <\/strong><\/p>\n<table border=\"1\" cellspacing=\"0\" cellpadding=\"5\">\n<tr>\n<td width=\"90%\" valign=\"top\">The contents of this document are solely for informational purpose. It does not constitute professional advice or a formal recommendation. While due care has been taken in preparing this document, the existence of mistakes and omissions herein is not ruled out. Neither the author nor itatonline.org and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any inaccurate or incomplete information in this document nor for any actions taken in reliance thereon. No part of this document should be distributed or copied (except for personal, non-commercial use) without express written permission of itatonline.org. <\/td>\n<\/tr>\n<\/table>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>No time to read through voluminous case reports? Can\u2019t separate the wheat from the chaff? Fret Not! The KSA Legal team will bring you up-to-speed with the choicest of case-law so you can focus your attention only on the important &hellip;<\/p>\n<p class=\"read-more\"> <a class=\"\" href=\"https:\/\/itatonline.org\/archives\/digest-of-important-case-laws-january-to-october-2013\/\"> <span class=\"screen-reader-text\">Digest Of Important Case Laws &#8211; January To October 2013<\/span> Read More &raquo;<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"parent":0,"menu_order":0,"comment_status":"open","ping_status":"closed","template":"","meta":{"_acf_changed":false,"jetpack_post_was_ever_published":false,"footnotes":""},"class_list":["post-7482","page","type-page","status-publish","hentry"],"acf":[],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/archives\/wp-json\/wp\/v2\/pages\/7482","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/itatonline.org\/archives\/wp-json\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/itatonline.org\/archives\/wp-json\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/itatonline.org\/archives\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/itatonline.org\/archives\/wp-json\/wp\/v2\/comments?post=7482"}],"version-history":[{"count":0,"href":"https:\/\/itatonline.org\/archives\/wp-json\/wp\/v2\/pages\/7482\/revisions"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/archives\/wp-json\/wp\/v2\/media?parent=7482"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}