Section 44B does not cover reimbursed demurrage charges; limitation alone survived for consideration on the TDS demand issue.

Reimbursement of demurrage charges paid in connection with crude oil imports was treated as expenditure incurred on behalf of the assessee and not as income falling within the scope of section 44B, which applies to profits and gains from the operation of ships. The concurrent factual findings of the appellate authorities were found to be possible and not perverse, so section 44B was held inapplicable to that reimbursement. On the proposed issue relating to deletion of demand under sections 201(1) and 201(1A), the appeal was admitted only on the limitation question, while the other proposed question was rejected as not raising a substantial question of law.

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Issues: (i) Whether the provisions of section 44B of the Income-tax Act, 1961 apply to reimbursement of demurrage charges paid in connection with import of crude oil; (ii) whether the appeal deserved admission on the question relating to deletion of demand raised under sections 201(1) and 201(1A) of the Income-tax Act, 1961 on the ground of limitation.

Analysis: The reimbursement of demurrage charges was treated as an expenditure incurred on behalf of the assessee and not as amounts falling within the scope of section 44B, which applies to profits and gains from the operation of ships. The concurrent factual findings of the appellate authorities were found to be possible and not perverse. On the other question, the appeal was admitted only on the limitation issue concerning sections 201(1) and 201(1A), while the other proposed question was rejected as not giving rise to a substantial question of law.

Outcome: Section 44B was held inapplicable to the reimbursement of demurrage charges. The appeal was not entertained on the second proposed question, but was admitted only on the limitation question.

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