TaxTMI 
TaxTMI 
TaxTMI 
2015 (7) TMI 598
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....r XII G of the Income-tax Act, 1961 ?" 3. In brief, the relevant facts are that the assessee is a company incorporated under the provisions of Companies Act, 1956, and is inter-alia, engaged in the business of hiring and operation of ships. For the assessment year 2009-10, it filed a return of income declaring total income of Rs. 2,67,88,623/-, which inter-alia included an income of Rs. 2,48,72,672/- with respect to its shipping business. In the said return of income assessee company declared its income from the shipping activities on a presumptive basis in terms of Chapter XII-G of the Act, which deals with "Special Provisions Relating to Income of Shipping Companies". In common parlance, such scheme of presumptive taxation is known as tonnage tax scheme. Broadly speaking, in terms of the tonnage tax scheme, income from the business operation of qualifying ships is computed in accordance with the provisions of subsections (2) and (3) of section 115VG of the Act. Notably, in terms of the said scheme of taxation, the income from operation of the qualifying ships is deduced ignoring the actual Profit & Loss Account that may be prepared by an assessee. 4. In the course of assessmen....
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....lared and assessed as per the special provisions contained in Chapter XIIG which lay down tonnage tax scheme. As per the provisions of section 115VA contained in Chapter XIIG, the income from the business of operating qualifying ships can be computed at the option of the assessee in accordance with the provisions of Chapter XIIG and once this option is exercised by the assessee, the income so computed shall be deemed to be the profits and gains of such business chargeable to tax under the head "Profits and Gains of business or profession" notwithstanding anything to the contrary contained in section 28 to 43C. It, therefore, follows that when the income of the assessee from the business of operating ships is computed as per the special provisions contained in Chapter XIIG, only the expenses incurred by the assessee for earning income of the said business are deemed to be allowed and nothing else. It, therefore, cannot be said that when the income of the assessee from the business of operating ships is computed as per the special provisions of Chapter XIIG, any expenditure other than the expenditure incurred for the purpose of the said business has been allowed and consequently no a....
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....ll be reduced from the book profit for arriving at taxable MAT liability. The CIT(A) erred in confirming the addition of expenditure of Rs. 38,58,497/- disallowed u/s l4A r.w.rule 8D to the book profit computed u/s l15JB of the Act. The Appellant submits that disallowance u/s 14A r. w. rule 8d of the Act computed under Chapter IV of the Act has no application to books profit computed under Chapter XII-B of the Act and hence no disallowance u/s l4A r.w.rule 8D is called for." 9. In so far as the Ground of appeal no. 1 is concerned, the dispute relates to the computation of Book Profits for the purposes of section 115JB of the Act. Pertinently, the expression 'Book Profit' for the purposes of section 115JB of the Act, has been defined in Explanation 1 to section 115JB to mean the 'net profit' as shown in the Profit & Loss Account for the relevant previous year prepared under sub-section (2) as increased and reduced by adjustments specified in the said Explanation. In the context of the present controversy, it would also be relevant to observe that in terms of section 115VO of the Act, the Book Profit or loss derived from the activities of a tonnage tax company, referred to in s....
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.... the book profit of the Company for the purposes of section 115JB of the Act. Thus, according to the Ld. Representative, on a combined application of sections 115VO and 115JB of the Act, aforesaid aspect of the controversy would not have any effect on the resultant 'Book Profit' subject to tax u/s 115JB of the Act. Furthermore, the Ld. Representative submitted that in the assessee's own case for assessment year 2008-09, the Tribunal in its order dated 30.11.2011 (supra) has appreciated the aforesaid legal position. 12. On the other hand, the Ld. DR appearing for the Revenue has merely reiterated the stand of the lower authorities, which is to the effect that the impairment loss debited in the Profit & Loss Account was a Provision for diminution in the value of the asset, which could not be reduced in order to compute the Book Profits for the purposes of section 115JB of the Act. 13. Having considered the rival submissions, we find that the income tax authorities have grossly mis-directed themselves in enhancing the Book-Profit u/s 115JB of the Act. Infact, there can be no dispute that insofar as the adjustment of Provision for impairment loss is concerned, the same is well founde....
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.... the return of income filed in response to notice issued u/s 142(1)(i). The Auditors thus are required to certify that the book profit declared by the assessee company in its return of income has been computed in accordance with the provisions of section 115JB. However, if the book profit so computed by the assessee is found to be not in accordance with the provisions of section 115JB, the AO is duly empowered or rather is duty bound to make the adjustment so as to compute the book profit of the assessee company in accordance with the provisions of section 115JB. In the present case, such adjustments indeed have been made by the AO to the book profit computed by the assessee and certified by the Auditors after having found that the book profit so computed and certified by the Auditors was not in accordance with the provisions of section 115JB. The AO thus has not gone by the Auditor's report furnished in form No. 29B for the purpose of computation of book profit of the assessee company u/s 115JB and has made the adjustment by adding back two amounts in question to the book profit declared by the assessee u/s 115JB and certified by the Auditors in their report furnished in form No. ....
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....e by the Assessing Officer under the normal provisions of the Act by invoking the provisions of section 14A of the Act is concerned, the same has already been deleted by us while dealing with the Cross Appeal of the Revenue in earlier paras. Further, the Revenue has justified the enhancement of Book Profit u/s 115JB of the Act on the ground that the statutory disallowance computable u/s 14A of the Act is applicable while working out the Book Profits u/s 115JB of the Act. In this context, the plea set up before us is that no expenditure has been claimed by the assessee relating to the exempt dividend income so as to justify any such adjustment in the computation of Book Profit u/s 115JB of the Act. The controversy with regard to the adjustment relating to the amount of disallowance computed u/s 14A of the Act while computing the book profit u/s 115JB of the Act, has been a subject matter of consideration by various Co-ordinate Benches of the Tribunal. The Delhi Bench of the Tribunal in the case of Goetze (India) Pvt. Ltd. [32 SOT 101] (del) held that for the purposes of computation of book profit, the provisions of section 14A of the Act cannot be imported into clause (f) of the Exp....