TaxTMI 
TaxTMI 
2018 (6) TMI 1785
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....7,642 under normal provisions and Rs. 14,65,02,499 under provisions of section 115JB. The Order u/s.143(3) of the Income-tax Act, 1961 (in short 'the Act') was passed on 14.12.2010 and assessed the total income at Rs. 12,73,91,732/- and raised a demand of Rs. 52,34,417/-. 2.1 Later, certain discrepancies were observed from the details submitted by the assessee and, therefore, a notice u/s.148 was issued and served on 26.03.2013 after getting approval from CIT- IV for reopening of the assessment u/s 147 of the Act. In response to the notice, the assessee company filed a letter on 02.04.2013 stating that the revised return filed may be treated as the return filed with reference to notice u/s.148 of the Income-tax. Consequently, a notice u/s 143(2) was issued on 23.07.2013, posting the case on 02.08.2013. In response to the notice, Authorized Representative of the assessee company filed the information on 05.11.2013 in support of its return of income. After examining the information, the assessment u/s.143(3) r.w.s.147 of the I.T. Act, was completed as under: 2.2 During the course of assessment, on verification of books it was found that the assessee has declared other income of....
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....seen from the computation of written down value of the Tonnage division, filed along with the return of income, that none of the situations prescribed in section 50(1) or 50(2) are attracted. The safe of the Tonnage vessel namely Ocean melody has not resulted in any credit balance of the block of assets of Tonnage ships and hence section 50(1) is not attracted. Further, the sale of the ship Ocean melody has not resulted in the block of ships of Tonnage division ceasing to exist, and hence section 50(2) is not attracted. (F) The credit of Rs. 5,43,03,629 in the books of accounts, and the statement of allocating profits division wise, is only an accounting exercise. The amount so credited to the Profit & Loss account of the Tonnage division is only "profit on sale of asset", and does not represent the amount chargeable to tax as capital gains. It is settled law and practice that capital gains is to be computed as provided in section 45 to 51, and that there is no relationship to the amount credited in the Profit & Loss account/Books of accounts as profit on sale of asset. In the present case while the profit on sale of the vessel relating to Tonnage division, is Rs. 5,43,03,....
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..../- as income from other sources is not correct. 5. The CIT(A) rejecting the submissions of the assessee, confirmed the order passed by the AO by passing cryptic order without discussing on the main plea of the assessee. 6. Aggrieved by the order of CIT(A), the assessee is in appeal before us raising the following grounds of appeal: "1. The CIT(Appeals) has erred in law and in the facts and circumstances of the case in confirming the addition of an amount of Rs. 5,43,03,629/- as "income from other sources", being profit on sale and vessels ignoring the contention of the assessee that the said profit on sale of vessel pertains to Tonnage tax division of the assessee and hence is not liable to tax. 2. The learned CIT(Appeals) has completely erred in law in confirming the said amount of profit on sale of assets as income from other sources. The learned CIT(Appeals) ought to have appreciated that the Assessing Officer having held that the provisions of Section 50(1) or 50(2) of the Act are not invoked has no reason, basis or authority of law to treat the same as income from other sources. 3. The learned CIT(Appeals) ought to have noted that a receipt can....
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....eads of income. In the given case, sale of ships, which are depreciable assets will fall under the head 'income from capital gains. From the record, which is submitted before us, the assessee has sold two ships and realized sale consideration of Rs. 14,59,08,000/-. It has worked out the profit on sale of ships as below (which is taken from the depreciation schedule as per Companies Act, refer page 12 and 32 of paper book) Sale consideration 14,59,08,000 Accumulated depreciation Rs. 964,39,932 (-)Rs. 41,61,449 9,22,78,483 Profit on sale Rs. 5,36,29,517 For the purpose of Income-tax, assessee has followed the depreciation schedule as per concept of Block assets as per section 2(11) of the Act. Since the above assets are depreciable and fall under Block I of assets in the depreciation schedule of income as followed by assessee, which is reproduced below: Block - I Ships: tonnage Written down value as on 01/04/2007 641,981,602 Less: Sales during the year 145,908,000 496,073,602 Add: Transfer from non tonnage ships 54,829,921 Add: Additions during the year....
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....ts ceases to exist as such, for the reason that all the assets in that block are transferred during the previous year, the cost of acquisition of the block of assets shall be the written down value of the block of assets at the beginning of the previous year, as increased by the actual cost of any asset falling within that block of assets, acquired by the assessee during the previous year and the income received or accruing as a result of such transfer or transfers shall be deemed to be the capital gains arising from the transfer of short-term capital assets." From the above, it is clear that in one of the situation, the value of such transfer is more than the value of block of assets, the excess is chargeable to tax under the head 'capital gains'. In the given case, the excess i.e. profit is reduced from the block of assets and Block continue to have assets value and both situations highlighted in section 50(1) & 50(2) are not attracted. Therefore, as per Income Tax Act, this transaction has not generated any capital gains. 7.2 Therefore, income has to be determined strictly as per the provisions of I.T. Act and not as per Companies Act/Book profit. Only in specific situatio....
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....9, with a view to preventing the misuse of tax holiday u/s 80IA, it has been provide to clarify with retrospective effect that the benefit under section 80IA(4) will not be available in the case of a works contract awarded by any person and executed by an undertaking or enterprise referred to in section 80IA(1). He, therefore, concluded that as the assessee's nature of activity is execution of contract works, assessee is not eligible for claiming deduction u/s 80IA of the Act. 10. Aggrieved by the order of AO, the assessee preferred an appeal before the CIT(A), who by following the decision of ITAT in AY 2009-10 and 2010-11 in assessee's own case, directed the AO to allow deduction u/s 80IA with regard to Jamnagar, Kakinada and Dahej Ports and disallow 80IA deduction with regard to Karaikal Port, for which the CIT(A) in AY 2010-11 rejected the claim of assessee due to non submission of certificate. 11. Aggrieved, the assessee is in appeal before us. 12. Considered the rival submissions and perused the material on record. This issue is squarely covered by the decision of the coordinate bench of ITAT in assessee's own case for AYs 2009-10 and 2010-11 (Revenue's appeals) in I....