TaxTMI 
TaxTMI 
2005 (7) TMI 383
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.... S. $ 1,00,000 received by the assessee for towing away a merchant vessel ?" 2. The assessment year is 1987-88 and the relevant accounting period is March 31, 1987. The assessee-company was treated as an agent of M. T. Suhaili under section 163 of the Act by the Assessing Officer. Thereafter, assessment under section 143(3) read with section 5(2)(b) of the Act came to be made at a total income of Rs. 9,80,392. 3. It appears that one ship named M. V. Kranj which was in the port of Navlakhi was required to be towed away by M. T. Suhaili, a powerful tug, (the tug) from Navlakhi to Singapore/Japan. The owners of M. T. Suhaili who are non-residents were approached by owners of M. V. Kranj for chartering the tug to tow away M.....
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....Commissioner of Income-tax (Appeals), Rajkot, who for the reasons stated in his order dated January 20, 1989 did not approve of the action of the Assessing Officer in taxing the assessee under section 5(2)(b) of the Act, but upheld the taxability under section 172 of the Act. 6. The Department being aggrieved with the order of the Commissioner of Income-tax (Appeals) in relation to the finding about non-taxability under section 5(2)(b) of the Act preferred an appeal before the Tribunal. The assessee preferred cross-appeal against the part of the order of the Commissioner of Income-tax (Appeals) whereby he had upheld the assessee's liability to pay tax under section 172 of the Act. The Tribunal vide its order dated March 5, 1993, h....
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....pretation of provisions of section 172(1) of the Act it is necessary to reproduce the same for ready reference. "172. Shipping business of non-resident.-(1) The provisions of this section shall, notwithstanding anything contained in the other provisions of this Act, apply for the purpose of the levy and recovery of tax in the case of any ship, belonging to or chartered by a nonresident, which carries passengers, livestock, mail or goods shipped at a port in India." 10. The section opens with a non obstante clause and if the prescribed conditions are satisfied it would apply for the purpose of levy and recovery of tax in the case of any ship. The section requires in the first instance that a ship should belong to or be ch....
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....iom, i.e., "in tow" means in the context of a ship "if a ship is taken in tow", "it is pulled by another ship". (Source : Oxford Advanced Learner's Dictionary, Sixth edition, [2000]. This reference is also applicable hereinafter, except where a different source is specified.). 13. Therefore, applying the plain meaning of the term "tow" it becomes apparent that when a vessel is towed by another vessel it cannot be stated that the towing vessel "carries" another vessel which is towed. Therefore, when a vessel does not carry the other vessel, even if for the sake of argument the other vessel is termed to be "goods", yet it cannot be stated that such goods are carried by a ship and therefore the condition of goods being carried by a s....
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....ing of the term "ship" means "to send or transport something by ship or by another means of transport", for example "the company ships its goods all over the world". 17. The connected terms "ship-load" and "shipment" may also be examined. "Ship-load" has been defined to mean "as many goods or passengers as a ship can carry" ; while "shipment" has been defined as "the process of sending goods from one place to another". Shipment of the goods normally means putting the goods on board a ship. (Source Butterworths Words and Phrases Legally Defined, Volume 4.). Therefore, if these terms are read in the context of the phrase "shipped at a port in India", it is plainly discernible that a vessel/ship which is towed away can-not be treated....