Demurrage received in India by a non-resident shipping company is taxable under the shipping income rule.

Demurrage received by a non-resident shipping company was held taxable where the income accrued and was received in India, bringing the receipts within the shipping income provision of the Income-tax Act, 1961. The court applied its prior ruling and treated Section 44B as applicable to such demurrage receipts, rejecting the assessee's claim based on the earlier tribunal view. The reference was answered in favour of the Revenue, and the Tribunal was found unjustified in allowing the assessee's appeal.

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Issues: Whether demurrage received by a non-resident shipping company was taxable income under the Income-tax Act, 1961.

Analysis: The Tribunal had allowed the assessee's claim following an earlier tribunal view. The reference was answered by applying the court's prior ruling that demurrage income, having accrued and been received in India, fell within the taxable ambit. Section 44B was held applicable to such receipts.

Conclusion: The question was answered in the negative and in favour of the Revenue. The Tribunal was not justified in allowing the assessee's appeal.

Ratio Decidendi: Demurrage received by a non-resident shipping company, where the income accrues and is received in India, is taxable under the applicable shipping income provision of the Income-tax Act, 1961.

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