Demurrage charges under shipping income were taxable as part of total income under the amended Section 44B.

Demurrage charges received by a non-resident shipping assessee were held includible in total income under the amended Section 44B of the Income-tax Act because the Explanation inserted by the Finance Act, 1997 was treated as retrospective from 1 April 1976. The provision expressly brings demurrage, handling charges and similar amounts within the amount paid or payable in connection with carriage of passengers, livestock, mail or goods shipped at any port in India. As the demurrage was received in India, the amended provision governed the relevant assessment years and the issue was answered against the assessee and in favour of the Revenue.

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Issues: Whether demurrage charges received by a non-resident assessee from shipping operations are includible in its total income under the amended Section 44B of the Income-tax Act, 1961 for the relevant assessment years.

Analysis: The relevant Explanation inserted by the Finance Act, 1997 was made effective from 1 April 1976 and therefore governed the assessment years in question. Under Section 44B, demurrage charges, handling charges and other similar amounts are expressly treated as part of the amount paid or payable in connection with the carriage of passengers, livestock, mail or goods shipped at any port in India. Since the demurrage was admittedly received in India, the amended provision applied to the assessee's receipts.

Conclusion: The demurrage charges were includible in the assessee's total income. The question was answered against the assessee and in favour of the Revenue.

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