TaxTMI 
TaxTMI 
2022 (9) TMI 550
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....aged in executing offshore dredging activities under the Ministry of Shipping, Govt. of India, filed its return of income for the A.Y.2015-16 electronically on 23.09.2015 declaring a total income of Rs.8,21,67,900/- and claiming a refund of Rs.14,80,79,080/-. Subsequently, the assessee company filed it's revised return of income on 07.05.2016, admitting total income of Rs.8,59,91,810/- and claiming a refund of Rs.14,61,78,510/-. The case was selected for limited scrutiny under CASS and a notice u/s 143(2) was issued to the assessee on 07.04.2016. Assessment order u/s 143(3) of the Income Tax Act, 1961 (in short 'Act') was passed on 18.12.2017 with the addition of other operating revenue of Rs.9,43,65,403/-. 3. Aggrieved by the order of the AO, the assessee preferred an appeal before the CIT(A) and the Ld.CIT(A) partly allowed the appeal of the assessee. 4. Aggrieved by the order of the Ld.CIT(A) the assessee preferred an appeal before the Tribunal and raised the following grounds : 1. The order of the learned Commissioner of Income Tax (Appeals) is contrary to the facts and also the law applicable to the facts of the case. 2. The learned Commissioner of Inco....
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....facturing, mining, transportation or generation of power. Since the receipts do not fall under the purview of Tonnage Tax either in core activity or incidental activity of shipping as per the provisions of Chapter XII-G, the AO viewed same is to be added as income from non-core activity of dredging operations. The AO observed that the assessee company had claimed an amount of Rs.8,49,74,705/- and Rs.2,24,96,730/- for the A.Y.2014-15 and 2013-14 respectively, which was added back to the taxable income as income from non-core activity. Maintaining consistency in the view taken by the department in the earlier years on the above issues, the AO disallowed the 'other operating revenue' and added to the taxable income as income derived from non core activity. 7. On being aggrieved, the assessee preferred an appeal before the CIT(A) and the Ld.CIT(A) confirmed the addition made by the AO and dismissed the appeal of the assessee on this ground that the issue has been in dispute from 2006-07 to 2012-13, the AO has been consistently holding that this receipt is not part of core activity of the assessee, the Ld.CIT(A) has been confirming the addition and the Tribunal has also been holding ....
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....pping related activities. Therefore, the interest received on delayed payments and other miscellaneous receipts such as recruitment fee, cancellation of DD, seminar expenses, EMD forfeited, vender registration form/tender form, transportation of pipeline guarantee amount forfeited and miscellaneous receipts (bifurcation under process) cannot be held to be received from the shipping activities. Therefore, we do not find any infirmity in the order of the Ld. CIT(A) and the appeals of the assessee are dismissed." 19.2. Respectfully following the view taken by the Tribunal in the assessee's own case, we uphold the order of the Ld.CIT(A) and dismiss the appeal of the assessee." With respect to ground No.2(d) regarding receipt of an amount of Rs.2,21,31,709/- towards 'Liquidated Damages', the Ld.CIT(A) relied on the decision of the coordinate bench of the Tribunal in assessee's own case in I.T.A.No.437/Viz/2017 for the A.Y.2012-13 and dismissed the appeal of the assessee. For the sake of clarity and convenience, we extract relevant part of the order of the ITAT as under : "8. We have considered the submissions made by both the parties and perused the material placed ....
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....excess shall not form part of the relevant shipping income for the purposes of this Chapter and shall be taxable under the other provisions of this Act. (2) The core activities of a tonnage tax company shall be- (i) its activities from operating qualifying ships; and (ii) other ship-related activities mentioned as under:- (A) shipping contracts in respect of- (i) earning from pooling arrangements; (ii) contracts of affreightment. Explanation.-For the purposes of this sub-clause,- (a) "pooling arrangement" means an agreement between two or more persons for providing services through a pool or operating one or more ships and sharing earnings or operating profits on the basis of mutually agreed terms; (b) "contract of affreightment" means a service contract under which a tonnage tax company agrees to transport a specified quantity of specified products at a specified rate, between designated loading and discharging ports over a specified period; (B) specific shipping trades, being- (i) on-board or on-shore activities of passenger ships comprising of fares and food and beverages consumed ....
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....essing Officer, the computation of the relevant shipping income in the manner hereinbefore specified presents exceptional difficulties, the Assessing Officer may compute such income on such reasonable basis as he may deem fit. Explanation.-For the purposes of this sub-section, "market value", in relation to any goods or services, means the price that such goods or services would ordinarily fetch on sale in the open market. (8) Where it appears to the Assessing Officer that, owing to the close connection between the tonnage tax company and any other person, or for any other reason, the course of business between them is so arranged that the business transacted between them produces to the tonnage tax company more than the ordinary profits which might be expected to arise in the tonnage tax business, the Assessing Officer shall, in computing the relevant shipping income of the tonnage tax company for the purposes of this Chapter, take the amount of income as may reasonably be deemed to have been derived therefrom. Explanation.-For the purposes of this Chapter, in case the relevant shipping income of a tonnage tax company is a loss, then, such loss shall be ....
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....ome. Whereas in the case of tonnage tax as provided u/s 115VI, the income required to be computed as per Chapter XIIG of I.T. Act at the option of the assessee. Once, the assessee opts tonnage tax scheme, the income of the assessee from shipping company required to be computed as provided in Chapter XIIG .Therefore, the decision relied upon by the Ld.AR is distinguishable and not applicable in the assessee's case. Accordingly, we hold that Ld.CIT has rightly confirmed the addition and dismissed the appeal of the assessee on this ground. 8.1. Since the issue involved in this appeal is identical, respectfully following the view taken by the Coordinate Bench of this Tribunal, we uphold the order of the Ld.CIT(A) and dismiss the appeal of the assessee on this ground. On careful examination of the orders of the lower authorities and the decision of the coordinate bench of the Tribunal, it is evident that the income received and claimed by the assessee as exempt income, do not fall under the purview of Tonnage Tax either in core activity or incidental activity of shipping as per the provisions of Chapter XII-G and the same is to be added as income from non-core activity of dr....
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....-09 directed the AO to delete the addition made and allowed the appeal of the assessee. 15. Aggrieved by the order of the Ld.CIT(A), the revenue preferred an appeal before the Tribunal and submitted that the Ld.CIT(A) erred in holding that the income from sale of scrap, sale of empties, sale of waste oil, exchange difference and machinery scrap sales as part of income from core business, as they are not falling in the purview of provision of incidental to the core business. Therefore, the Ld.DR pleaded to set aside the order of the Ld.CIT(A) and allow the appeal of the revenue on this ground. 16. We have heard both the parties and perused the material placed on record. It is evident that the Tribunal in assessee's own case in I.T.A. No.464/Viz/2017 decided the issue against the revenue on the same issue for the A.Y.2012-13, relying on the assessee's own case for the A.Y.2009-10 to 2011-12 in I.T.A.No.555/Viz/2013, 602/Viz/2013, 78-80/Viz/2014 and 167/Viz/2016. For the sake of clarity and convenience, we extract relevant part of the order of the Tribunal in I.T.A.No.464/Viz/2017 which reads as under : "24. Ground Nos. 2 and 3 are related to the receipts on account of ....
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....oduct and was thus directly relatable to the manufacturing activity of the industrial undertaking. The income generated on sale of such empty containers could be set off against the purchase cost, in other words bringing down the purchase price of raw material, or it could be treated as income directly relatable to the activity of industrial undertaking. The net result would be the same-either the cost of raw material gets reduced and thus increases profits of manufactured products on sale or the sale price of containers is directly added to swell the total profits. Therefore, in the light of the decision of this High Court in the case of Dy.CIT v. Harjivandas Juthabhai Zaveri [2002] 258 ITR 785 , there was no infirmity in the impugned order of the Tribunal". Applying the above said ratio, the income received by the assessee on sale of scraps and sale of assets could be treated as income directly relatable to the activity of operating qualifying ships. Accordingly, we affirm the order of Learned CIT(A) on these two types of income. 9.1 The amount received on insurance claim was held to be derived from industrial undertaking by Hon'ble Delhi High Court in the c....