Tribunal remands tonnage tax issue, upholds Section 50C for property sale capital gains.

The Tribunal allowed the revenue's appeal for statistical purposes, remanding the tonnage tax scheme issue for fresh consideration by the CIT(A) based on the data available at the application date. The assessee's appeal was dismissed, upholding the application of Section 50C to the property sale, determining the higher value for capital gains calculation.

---

---

Issues Involved:
1. Entitlement to opt for the tonnage tax scheme.
2. Applicability of provisions of Section 50C of the Income Tax Act to the transaction of sale of property.

Detailed Analysis:

1. Entitlement to Opt for Tonnage Tax Scheme:
The revenue's appeal concerns the decision of the CIT(A) allowing the assessee to opt for the tonnage tax scheme. The assessee, a public limited company incorporated in 1935 and engaged in various business activities including operating ships, filed an application for the tonnage tax scheme on 01-12-2004. The Addl. Commissioner of Income-tax rejected this application on 28-01-2005, citing two reasons:
- The Memorandum and Articles of Association listed 73 objectives, with shipping as only one of them.
- The ship charter receipts formed a small portion of the gross receipts of the company.

The assessee challenged this decision in the Kerala High Court, which ruled that the Addl. CIT's interpretation of the company's main objective was illegal. The High Court restored the matter to the CIT(A) to reconsider the proportion of shipping receipts vis-`a-vis gross receipts. The CIT(A) then considered data from 31-03-2005, 31-03-2006, and 31-03-2007, concluding that the assessee was eligible for the tonnage tax scheme.

However, the Tribunal held that the CIT(A) should have only considered data available as of 03-12-2004, the application date. The Tribunal thus set aside the CIT(A)'s order and remanded the case for fresh consideration based on the material available at the time of application.

2. Applicability of Section 50C to Property Sale:
The assessee's appeal contested the application of Section 50C to the sale of a property at Race Course Road, Coimbatore. The property was sold for Rs. 4,82,20,200, while the stamp authorities valued it at Rs. 5,67,63,700. The Assessing Officer invoked Section 50C to consider the higher value for capital gains calculation, a decision upheld by the CIT(A).

The assessee argued that the difference should be treated as a gift to a charitable trust, exempt under Section 47(iii). The CIT(A) rejected this, noting the absence of any gift deed or corroborative evidence. The Tribunal agreed, emphasizing that Section 50C is a deeming provision, and the concept of gift does not apply here. Even if considered a gift, the transaction would not qualify under Section 47(iii) as it involved constructive receipt and payment of money.

Conclusion:
The Tribunal allowed the revenue's appeal for statistical purposes, remanding the tonnage tax scheme issue for fresh consideration by the CIT(A) based on the data available at the application date. The assessee's appeal was dismissed, upholding the application of Section 50C to the property sale.

---