Whether Inland Haulage Charges derived as income from operation of ships are taxable as business profits in India in accordance to Article 8 of India-Belgium DTAA?

Last updated: 29 July 2014

Court :
Bombay High Court

Brief :
The Respondent assessee is a company incorporated in Belgium and a tax resident of Belgium engaged in business of operation of ships in international traffic. The Assessee collected Inland HaulageCharges from it’s customers in respect of transportation of goods fromICDs to the Port. The Assessing Officer held that such InlandHaulage Charges are not within the purview of section 44B of the Act and therefore chargeable to tax as business profits. Aggrieved, the assessee filed an appeal before the CIT (Appeals). CIT (Appeals) held that the said income formedpart of the income from the operation of ships in international traffic andtherefore the assesse is entitled to claim benefit under Article 8 of India-Belgium DTAA. Being dissatisfied with the order of the CIT (Appeals), the Revenuepreferred an Appeal before the ITAT. the ITAT decided the issue in favour ofthe Assessee. Being aggrieved, the revenue appealed before the Bombay High Court. Relying upon the Delhi High Court judgment in Director of Income-Tax Vs. KLM Royal Dutch Airlines (2009, the court held that the assesse can claim benefit under Article 8 of DTAA and income from Inland Haulage Charges shall not be taxable as business profits.

Citation :
Director of Income Tax (International Taxation) – Appellant – Versus – M/s Safmarine Container Lines NV - Respondent