TaxTMI 
TaxTMI 
2016 (8) TMI 1442
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.... assessee at Rs. 1,47,78,690/-. 2.Effective ground of appeal is about deleting the addition made by the AO u/s.14A r.w.r. 8 of the Income Tax Rules, 1962 (Rules), amounting to Rs. 78.18 lakhs. During the assessment proceedings the AO found that assessee had earned dividend income of Rs. 1,42,29,145/-,that it had also incurred interest expenses and finance charges of Rs. 6,18,33,378/-. He directed the assessee to show cause as to why expenses attributable to dividend income should not be disallowed u/s.14A r.w.r. 8D of the Rules. The assessee contended that none of the investments were made out of the borrowed funds that the interest/finance charges pertain to interest on loans and overdrafts taken for purchase and operation of vessels i.e....
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....idering submissions of the assessee the FAA held that as per the provisions of section 115 VG presumptive tax was leviable on the basis of vessel tonnage that no expenses including interest expenses, were being claimed or allowed that the condition precedent for invoking section 14A was missing in the case under consideration, that the assessee had incurred no expenses in the form of interest expenditure or had claimed the same either against the shipping income or against the non-shipping income, that the gross interest income of Rs. 33.45 lakhs earned on FDR.s had been offered to tax as non-shipping income without claiming any corresponding expenses that when no expenses were being claimed against the non-shipping income the question of d....
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....ing the provisions of section 14A was absent. Now we would like to discuss the TTS. Section 115VA of the Act is unique in the sense that it deals with the computation of income from the business of operating qualifying ships which opt for Tonnage Tax Scheme(TTS).The method of computation of income under the scheme as provided by the section stipulates that income has to be assessed in a particular manner. In other words no expenditure can be allowed or disallowance can be made while computing the income under TTS. The income of the assessee is computed at a fixed rate and all other provisions of the Act are not to be applied once an assessee opts for the scheme. In short if the assessee cannot claim any expenditure after opting out of the....