2022 (2) TMI 519

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....deleting the disallowance made u/s.40(a)(i) of the Act for ship hiring charges of Rs. 2,16,09,181/- and weather report expenses of Rs. 15,583/- paid to the non residents. (2) On the facts of the case, the Ld. CIT(A) ought to have upheld the order of the Assessing Officer. (3) It, is, therefore, prayed that the order of the Ld. CIT(A) may be set-aside and that of the Assessing Officer be restored." 3. The assessee is engaged in the business of manufacturing refined free flow iodized salt and in trading of salt and iron ore. The assessee filed its return of income on 29.10.2005 declaring 'nil' total income. As per the return of income the gross total income was Rs. 56,73,943/- which reduced to nil after claim of set off o....

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....de the observation that the amount paid for hiring of ship on time charter basis is chargeable to tax as the assessee had paid rent for sailing the ship in Indian water, which is not an international traffic. The income to non-resident ship owner was accrued in India and therefore, the assessee was liable to make TDS and pay the same to Government account as per the provisions of Section 195 of the Act. The ld. D.R. further submitted that Section 172(1) will not apply to payment for time charter of ships and the provisions of Section 195 are attracting to the payment as the income to the ship owner was accrued to the assessee in India. Thus, the ld. D.R. submitted that the CIT(A) erred in deleting the disallowance made under Section 40(a)(i....

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....1 of the Revenue's appeal be dismissed. As regards 2nd issue raised in ground no. 1, the Ld. AR relied upon the order of the CIT(A). 7. We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that the CIT(A) has categorically mentioned that Section 195 of the Act would apply only if payment is made which is chargeable under Income Tax Act 1961. The Assessing Officer has not given any reason as to why the chargeability of tax under Section 172 of the Act does not cover time charter of ships for which payment is made to non-resident. The Assessing Officer totally ignored the NOCs issued by Department allowing the ship for sailing in Indian Port as the payment is for time charter. Th....