Just a moment...

⚠✕
❮ Top
☎ Help
☰
×

By creating an account you can:

Logo TaxTMI
Keyword Search :
AI Tools : New
Ask tax questions in natural language. Powered by AI trained on the TaxTMI legal database. Use AI Tools ➞
Call Us / Help / Feedback✕

Contact Us At :

✉ E-mail: [email protected]

✆ Call / WhatsApp at: +91 99117 96707

For more information, Check Contact Us

FAQs :

To know Frequently Asked Questions, Check FAQs

Most Asked Video Tutorials :

For more tutorials, Check Video Tutorials

Submit Feedback/Suggestion :

Email :
Please provide your email address so we can follow up on your feedback.
Category :
Description :
Min 15 characters0/2000
Make Most of Text Search ✕
  1. Checkout this video tutorial: How to search effectively on TaxTMI.
  2. Put words in double quotes for exact word search, eg: "income tax"
  3. Avoid noise words such as : 'and, of, the, a'
  4. Sort by Relevance to get the most relevant document.
  5. Press Enter to add multiple terms/multiple phrases, and then click on Search to Search.
    6. Text Search
  6. The system will try to fetch results that contains ALL your words.
  7. Once you add keywords, you'll see a new 'Search In' filter that makes your results even more precise.
    8. Text Search
╳
Add to...
You have not created any category. Kindly create one to bookmark this item!
✕
Create New Category
Hide
Title :
Description :
❮❮ Hide
❮ Default View
Expand ❯❯
Close ✕
🔎 TMI Notes - Adv. Search ❯
TEXT SEARCH:

Press 'Enter' to add multiple search terms. Rules for Better Search

Search In:
Main Text + AI Text ❯
  • Main Text
  • Main Text + AI Text
  • AI Text
Law:
---- All Laws----❯
  • ---- All Laws----
  • Benami Property
  • Bill
  • Central Excise
  • Companies Law
  • Customs
  • DGFT
  • FEMA
  • GST
  • GST - States
  • IBC
  • Income Tax
  • Indian Laws
  • Money Laundering
  • SEBI
  • SEZ
  • Service Tax
  • VAT / Sales Tax
Types:
---- All Types ---- ❯
  • ---- All Types ----
  • Act Rules
  • Case Laws
  • Circulars
  • Manuals
  • News
  • Notifications
Sort By: ?
In Sort By 'Default', exact matches for text search are shown at the top, followed by the remaining results in their regular order.
RelevanceDefaultDate
    ManualsService Tax
    Whether proceedings can be reopened on the basis of a favourable decision in another case?
    ManualsService Tax
    Whether a wrong decision by jurisdictional court is binding on the parties in absence of any appeal ...
    ManualsService Tax
    Whether an order becomes a final order if no appeal has been filed against it?
    ManualsService Tax
    Whether right to appeal is a inherent right? Whether it is necessary that right of appeal must be ex...
    ManualsService Tax
    What is the meaning of 'Reason to Believe' in context to search & seizure provisions?
    ManualsService Tax
    Whether in case, composite price (inclusive of service tax) is shown in invoice and no separate duty...
    ManualsService Tax
    Whether Doctrine of unjust enrichment is applicable on finalisation of provisional assessments?
    ManualsService Tax
    Whether Doctrine of unjust enrichment is applicable on duty paid under protest?
    ManualsService Tax
    Whether data in "CD" can be a admissible evidence for refund claim under Section 11B? Whether data i...
    ManualsService Tax
    Whether limitation of refund filing is applicable on the cases where amount paid to the department a...
    ManualsService Tax
    Whether deposit of service tax before rendering services will be covered under limitation of refund...
    ManualsService Tax
    Whether Appellate authority has empowered to increase the penalty? Whether Appellate authority can i...
    ManualsService Tax
    Whether the penalty under section 78 of the Finance Act, 1994 can be reduced below the minimum limit...
    ManualsService Tax
    Whether the penalty under Section 76 of the Finance Act, 1994 can be reduced below the limit prescri...
    Act RulesService Tax
    Whether Service tax paid by back calculations i.e. service tax separately not charged will be covere...
    Act RulesService Tax
    Whether assessee is liable to pay collected service tax as per provision of Sec.73A even if his turn...
    ManualsService Tax
    Whether ignorance of law can be a factor for not to revoke extended period of limitation?
    ManualsService Tax
    In what circumstances extended period of limitation is not enforceable? Whether SCN can be issued fo...
    Act RulesService Tax
    Whether show cause notice related to period beyond 18 months or 5 years as the case may be, is valid...
    ManualsService Tax
    Whether it is mandatory to mention specific head / sub head of services in SCN in which demand of se...
❮
❯
❯❯
MaximizeMaximizeMaximize
0 / 200
Expand Note
Add to Folder

No Folders have been created

    +

    Are you sure you want to delete "My most important" ?

    NOTE:

    Open Link
    Notes
    Showing Results for :
    Reset Filters
    Results Found:
    Show All SummariesHide All Summaries
    ManualsService Tax
    Whether proceedings can be reopened on the basis of a favourable decision in another case?
    Show AI Summary
    Finality of proceedings: tax assessments cannot be reopened due to another taxpayer's favourable decision without recall in the same case.
    Reopening tax assessment proceedings based on a favourable decision in another assessee's case is ordinarily not permitted; a final order in an assessee's own case remains effective until it is specifically recalled or set aside in that same proceeding.
    ManualsService Tax
    Whether a wrong decision by jurisdictional court is binding on the parties in absence of any appeal ...
    Show AI Summary
    Finality of unappealed decisions: unchallenged jurisdictional rulings bind the parties until lawfully reversed.
    A jurisdictional court's unappealed ruling, even if incorrect, becomes final and binding between the parties and remains so until reversed by a higher forum or other statutory remedy; thus unchallenged classificatory or determinative decisions must be obeyed in subsequent proceedings unless lawfully set aside.
    ManualsService Tax
    Whether an order becomes a final order if no appeal has been filed against it?
    Show AI Summary
    Finality of administrative orders follows when no appeal is filed, and remand directions limit reconsideration scope.
    An administrative order attains finality where an entitled party does not file an appeal against a Tribunal disposition; remand orders limit reconsideration to the specific issues directed by the Tribunal, and parties who do not contest merits before the Tribunal forfeit the ability to re argue those merits, so that authorities acting on remand cannot expand review beyond the remand directions.
    ManualsService Tax
    Whether right to appeal is a inherent right? Whether it is necessary that right of appeal must be ex...
    Show AI Summary
    Right of appeal is not inherent; it exists only when statute creates and defines it, including scope and procedure.
    The right of appeal is not inherent but is a statutory construct: appellate existence, scope and procedure must be authorized by the creating provision; omissions in citation do not automatically bar an otherwise maintainable appeal; absence of an appellate provision does not prevent an order from becoming final.
    ManualsService Tax
    What is the meaning of 'Reason to Believe' in context to search & seizure provisions?
    Show AI Summary
    Reason to believe requires subjective belief grounded in material evidence, preventing arbitrary or capricious searches.
    The concept of reason to believe requires that a subjective opinion be based on material on the record, not arbitrary or whimsical; it must be held in good faith and courts may test whether the reasons have a rational and relevant connection to the formation of belief, excluding extraneous considerations.
    ManualsService Tax
    Whether in case, composite price (inclusive of service tax) is shown in invoice and no separate duty...
    Show AI Summary
    Inclusive pricing does not establish passing on of tax burden; composite invoices alone do not prove unjust enrichment.
    Showing a composite price on an invoice does not, by itself, establish that the supplier passed the tax burden to customers or realized unjust enrichment; where prices remained unchanged after a tax was imposed, inclusive pricing alone is insufficient evidence that any element of tax was added to the price, and proof of an added tax component is required to infer passing on of the tax.
    ManualsService Tax
    Whether Doctrine of unjust enrichment is applicable on finalisation of provisional assessments?
    Show AI Summary
    Doctrine of unjust enrichment excluded where a refund arises only after finalisation of provisional assessment.
    The doctrine of unjust enrichment does not apply to refund claims that arise after the finalisation of provisional assessments; refunds or recoveries consequent on the final determination of duty liability fall outside the interim statutory refund framework and are not barred by unjust enrichment objections.
    ManualsService Tax
    Whether Doctrine of unjust enrichment is applicable on duty paid under protest?
    Show AI Summary
    Unjust enrichment doctrine not bar to refund of duty paid under protest; provisional assessments preserve refund entitlement.
    The doctrine of unjust enrichment does not bar refund claims for duty paid under protest; recoveries or refunds consequent on final determination of duty liability fall outside bars that would deny restitution. Provisional assessments and unresolved price and classification lists render clearances provisional, supporting the taxpayer's entitlement to have refund claims adjudicated on the basis of final liability rather than dismissed as struck by unjust enrichment.
    ManualsService Tax
    Whether data in "CD" can be a admissible evidence for refund claim under Section 11B? Whether data i...
    Show AI Summary
    Admissibility of electronic records: computerised data on CD can support service tax refund claims and show no transfer of tax burden.
    Data on compact disc (CD) can be admissible evidence for service tax refund claims where it constitutes computerised records recognised under the Information Technology Act and the Service Tax Rules. Such electronic records may also be used to prove that the incidence of service tax was not transferred to another party (absence of unjust enrichment), provided the data meets the statutory criteria for admissible computerised evidence and forms part of the assessee's maintained electronic records.
    ManualsService Tax
    Whether limitation of refund filing is applicable on the cases where amount paid to the department a...
    Show AI Summary
    Limitation on refund filings: time-bar inapplicable where payments were not service tax and were excess realisations.
    Limitation under Section 11B(1) applies only to refund claims of a duty of excise and interest; payments not constituting service tax or lawful excise levy are outside that bar and may be refunded. Judicial authorities (M/s Natraj and Venkat Associates; ITC Ltd.) recognise that excess realisations beyond what the statute permits are realisations outside the Act and thus not subject to the statutory limitation on excise refunds.
    ManualsService Tax
    Whether deposit of service tax before rendering services will be covered under limitation of refund...
    Show AI Summary
    Limitation on service tax refunds: late claims are barred unless tax was paid under protest.
    Refunds of amounts paid as service tax are governed by the statutory limitation provisions; where payments were credited to the service tax account and the claimant acknowledged applicability of the limitation rule, a refund claim filed after the limitation period is barred unless the tax was paid under protest.
    ManualsService Tax
    Whether Appellate authority has empowered to increase the penalty? Whether Appellate authority can i...
    Show AI Summary
    Appellate authority power to increase penalties is limited; payment of tax and interest can justify mitigation of penalty.
    Appellate authority does not have power to increase or impose a fresh penalty; payment of tax and interest that neutralises pecuniary advantage is relevant for mitigation, and taxpayer status and proportionality are material in assessing whether a revised penalty is unduly harsh under the statutory penalty framework.
    ManualsService Tax
    Whether the penalty under section 78 of the Finance Act, 1994 can be reduced below the minimum limit...
    Show AI Summary
    Penalty minimums prohibited from reduction: statutory scheme prevents lowering prescribed service tax penalty through discretionary provisions.
    Penalty under section 78 of the Finance Act, 1994 cannot be reduced below the statutory minimum by invoking section 80; a conjoint reading of the provisions shows no discretion to levy or reduce a penalty below the prescribed floor, and appellate bodies and tribunals cannot read such power into the statutory scheme.
    ManualsService Tax
    Whether the penalty under Section 76 of the Finance Act, 1994 can be reduced below the limit prescri...
    Show AI Summary
    Penalty under Section 76 cannot be reduced below the statutory minimum; authority's discretion is confined to the prescribed range.
    Section 76 penalty under the Finance Act, 1994 confines the authority to a legislatively prescribed minimum-to-maximum range; authorities lack power to reduce the penalty below the statutory minimum per day of default, and courts have rejected construing any additional discretion into the provision as that would amount to rewriting the statute.
    Act RulesService Tax
    Whether Service tax paid by back calculations i.e. service tax separately not charged will be covere...
    Show AI Summary
    Service tax deposit obligations do not arise where tax was not invoiced or collected, limiting unjust enrichment claims.
    Where no invoice was raised and no amount was specifically collected as service tax from recipients, the statutory duty to deposit such tax does not arise because there is no collected tax to be held on behalf of the Government, and absence of pass through means the legal condition for invoking unjust enrichment is not satisfied.
    Act RulesService Tax
    Whether assessee is liable to pay collected service tax as per provision of Sec.73A even if his turn...
    Show AI Summary
    Deposit of collected service tax must be remitted even if small provider exempt; penalties apply for non-deposit.
    Section 73A requires that service tax collected from customers be deposited with the Central Government even if the collector avails the small service provider exemption; tribunals have held that collection triggers an obligatory deposit and failure to deposit and to file returns attracts penal action and enforcement for non-compliance.
    ManualsService Tax
    Whether ignorance of law can be a factor for not to revoke extended period of limitation?
    Show AI Summary
    Ignorance of law or illiteracy can undermine findings of willful suppression, affecting the validity of tax demand and penalties.
    Administrative demands and penalties based on alleged willful suppression of taxable services require supporting record evidence and must correspond to allegations in the show cause notice; where the record does not substantiate suppression and the allegation was not made in the notice, the resultant service tax demand and penalties are not sustainable.
    ManualsService Tax
    In what circumstances extended period of limitation is not enforceable? Whether SCN can be issued fo...
    Show AI Summary
    Extended limitation period: not available where assessee had bona fide belief or doubt about service tax liability.
    Extended limitation cannot be invoked where the assessee had a bona fide belief that no service tax was payable, where bona fide doubt existed about chargeability, where the assessee voluntarily approached the department earlier, where the issue is one of legal interpretation creating genuine confusion, or where earlier favorable decisions were subsequently overruled without evidence of suppression.
    Act RulesService Tax
    Whether show cause notice related to period beyond 18 months or 5 years as the case may be, is valid...
    Show AI Summary
    Limitation for recovery of service tax prevents collection for time barred periods but notice remains partly effective.
    A show cause notice that includes periods beyond the statutory limitation does not become wholly invalid; the Department cannot recover tax for time barred periods, and the assessee may raise the limitation defence during proceedings. The same rule applies to notices extending beyond a shorter statutory limitation-the excess period yields no departmental entitlement to recovery but does not vitiate valid allegations within the limitation.
    ManualsService Tax
    Whether it is mandatory to mention specific head / sub head of services in SCN in which demand of se...
    Show AI Summary
    Specific service allegation: tax liability cannot be confirmed unless the show-cause notice specifies the service head.
    A show-cause notice must specifically identify the service head or sub-head relied upon; absent a precise allegation as to the applicable classification, tax liability cannot be confirmed, and alternative classifications suggested by the Commissioner without being pleaded in the notice render any demand unsustainable.

    TMI Notes

    Back

    All TMI Notes

    Showing Results for :
    Reset Filters
      No Records Found

      TMI Notes

      Home› TMI Notes › Income Tax › Act-Rules › Category › This
      Back

      All TMI Notes

      whatsappJoin Channel
      Showing Results for : Reset Filters
      Income Tax

      Comparison of section 228 "Relevant shipping income and exclusion from book profit." between the Income-Tax Act, 2025 (as passed) and the Income-Tax Bill, 2025 (as originally introduced)

      6 September, 2025

      Contents
      Acts
      Rules & Regulations
      Summary
      Note

      Note

      -

      Bookmark

      Print

      Print

      Print Options

      Section 228 Relevant shipping income and exclusion from book profit.

      Income-tax Act, 2025

      At a Glance

      The document is Clause 228 of the Income-tax Bill, 2025 - (Old Version) which sets out the concept of "relevant shipping income" for a tonnage tax company and provides for exclusion of such income from the company's book profit for specified tax computations. It matters to shipping companies electing or eligible for tonnage taxation, tax authorities (Assessing Officers), and advisors in maritime and corporate taxation. Effective date or decision date: Not stated in the document.

      Background & Scope

      Statutory hooks: Clause 228 forms part of a Part dealing with special provisions relating to income of shipping companies within the Income Tax Bill, 2025. It defines "relevant shipping income" for a "tonnage tax company", lists core and incidental activities, prescribes limits for incidental income, empowers the Central Government to exclude or limit certain activities by notification, and directs treatment of transfers between tonnage and non-tonnage businesses, allocation of common costs and depreciation, and the exclusion of the relevant shipping book profit or loss from book profit for purposes of section 206. Definitions provided in the Clause include "pooling arrangement" and "contract of affreightment" (see sub-section (4)). Other definitional details and broader contextual definitions (e.g., "tonnage tax company", "qualifying ship", "turnover") are Not stated in the document.

      Statutory Provision Mode

      Text & Scope

      • The clause defines "relevant shipping income" (sub-section (1)) as the aggregate of:
        • profits from core activities (sub-section (3)); and
        • profits from incidental activities (sub-section (7)).
      • Sub-section (2) places a threshold limitation: incidental incomes in aggregate exceeding 0.25% of turnover from core activities shall be excluded from relevant shipping income and taxed under other provisions of the Act.
        • Core activities (sub-section (3)) comprise:
        • activities from operating qualifying ships; and
      • specified ship-related or inland-vessel-related activities including:
        • (i) shipping contracts - earnings from pooling arrangements and contracts of affreightment; and
        • (ii) specified shipping trades - passenger ship on-board/on-shore activities (fares; food and beverages consumed on-board) and container shipping operations such as slot/space/joint charters, feeder services and container box leasing.
      • Sub-section (4) defines "pooling arrangement" and "contract of affreightment". Sub-section (5) empowers the Central Government to exclude any activity referred to in sub-section 3(b) or prescribe limits to their inclusion in core activities by notification, with parliamentary laying and modification procedure specified in sub-section (6).
      • Sub-section (7) provides that incidental activities are those incidental to the core activities and "as prescribed for the purpose." Sub-section (8) disapplies this Part to income from non-qualifying ships - such income to be computed under other provisions of the Act.
      • Sub-sections (9)-(12) deal with related-party or non-arm's-length transfers between tonnage tax business and other businesses, market value adjustment, Assessing Officer's power to adopt reasonable basis where computation under (9) is exceptionally difficult, and ability to make adjustments where arrangements produce more than ordinary profits because of close connection or other reasons.
      • Sub-section (13) states that any loss in relevant shipping income shall be ignored for the purposes of computing tonnage income under this Part. Sub-sections (14) and (15) require reasonable allocation of common costs and allocation of depreciation for non-exclusive assets respectively. Sub-section (16) provides that the book profit or loss from the relevant shipping activities shall be excluded from the company's book profit for the purposes of section 206.

      Interpretation

      The clause adopts a purposive construction typical of sector-specific tax regimes: identify the operational income that is to be governed by tonnage-tax treatment (core and incidental); ring-fence (via the 0.25% threshold) peripheral income to prevent excessive unrelated trading from benefiting; and enable administrative adjustments to counter non-arm's-length transfers or artificial arrangements. The express inclusion of specific shipping trades and the definitional treatment of pooling and affreightment indicate legislative intent to capture customary shipping revenue streams within the tonnage regime. Where precise valuation is impracticable, the Assessing Officer is given discretionary power to adopt a reasonable basis - an administrative safeguard. The provision to exclude book profit/loss from section 206 computations indicates an aim to avoid double-counting or misaligned computation where tonnage rules produce separate tax outcomes.

      Exceptions/Provisos

      Carve-outs and conditions explicitly stated:

      • Incidental income exceeding 0.25% of turnover from core activities is excluded from relevant shipping income (sub-section (2)).
      • Income from non-qualifying ships is excluded from this Part and computed under other provisions (sub-section (8)).
      • Losses in relevant shipping income are ignored for tonnage income computation (sub-section (13)).
      • Central Government may exclude or prescribe limits by notification (sub-section (5)); such notifications are subject to parliamentary laying and possible modification/annulment under sub-section (6).

      Illustrations

      • Example 1: A tonnage tax company earns freight from qualifying ships and incidental revenue from sale of on-board merchandise equal to 0.1% of core turnover. Under the Clause, such incidental revenue remains part of relevant shipping income (since <= 0.25%).
      • Example 2: If incidental revenues aggregate to 0.5% of core turnover, the excess 0.25% is excluded from relevant shipping income and taxed under general provisions (per sub-section (2)).
      • Example 3: A company transfers fuel stored for tonnage business to a non-tonnage business at book value materially below market. Under sub-section (9)-(11), the Assessing Officer will compute relevant shipping income as if the transfer occurred at market value, or adopt a reasonable basis if exceptional difficulties arise.

      Interplay

      Explicit interaction: sub-section (16) links with section 206 (computation/use of book profit). The Clause prescribes that relevant shipping book profit or loss is to be excluded from book profit for section 206 purposes. Other cross-references - for example, to definitions such as "qualifying ship", "tonnage tax company", or procedural rules - are Not stated in the document. References to notifications and parliamentary laying follow standard legislative procedure but do not identify subordinate rules or forms; those are Not stated in the document.

      Practical Implications

      • Compliance and risk areas grounded in the Clause: ensuring correct segregation of core vs incidental activities; monitoring incidental income relative to the 0.25% threshold; documenting transfers between tonnage and other business at market value or maintaining supporting valuations to withstand AO scrutiny under sub-section (9)-(11); contemporaneous allocation methods for shared costs and depreciation in mixed-use assets per sub-sections (14)-(15).
      • Record-keeping/evidence: maintain detailed accounts of core activity turnover to calculate the 0.25% threshold; contracts and agreements (pooling arrangements, contracts of affreightment) and terms; market value evidence for inter-business transfers; allocation methodology documentation for common costs and depreciation; and contemporaneous justification where Assessing Officer is required to adopt or review "reasonable basis".

      Key Takeaways

      • The Clause defines "relevant shipping income" as profits from enumerated core and incidental shipping activities for tonnage tax purposes.
      • Incidental income exceeding 0.25% of core turnover is excluded from the tonnage tax measure and taxed under general provisions.
      • Core activities specifically include qualifying ship operations and listed ship-related trades (pooling, contracts of affreightment, passenger on-board revenue, container shipping services).
      • Transfers between tonnage and non-tonnage businesses are to be tested against market value; Assessing Officer may adopt reasonable basis where computation is exceptionally difficult.
      • Losses in relevant shipping income are ignored for tonnage income computation; common costs and depreciation for non-exclusive assets must be reasonably allocated.
      • The book profit/loss from relevant shipping activities is expressly to be excluded from the company's book profit for section 206 computations.
      • The Central Government retains power to exclude or limit inclusion of listed activities by notification subject to parliamentary procedure.

      Differences between Clause 228 of the Income-tax Bill, 2025 - (Old Version) and Section 228 of the Income-tax Act, 2025

      Comparison based solely on the provided documents reveals primarily drafting and one substantive cross-reference change:

      • Drafting/wording changes: Minor phrasing differences appear in sub-section (4) introductory wording ("In sub-section..." vs "For the purposes of sub-section...") and in sub-section (7) ("as prescribed for the purpose" vs "as may be prescribed for the purpose"). These are stylistic and do not materially change scope.
      • Substantive cross-reference change: Clause 228 (Bill) sub-section (16) refers to "the purposes of section 206" generally; Section 228 (Act) refers more specifically to "the purposes of section 206(1)(c)".
        • Practical impact: the Act's more specific cross-reference narrows the provision's structural application to a particular sub-clause of section 206 (presumably the clause dealing with a particular computation of book profit). This narrows the operational effect and reduces ambiguity as to which part of section 206 the exclusion applies to. The Bill's broader reference could be read to exclude from multiple or all computations u/s 206; the enacted text confines the exclusion to a specific sub-provision. Any further implications depend on the content of section 206(1)(c), which is Not stated in the document.
      • Other provisions, thresholds, definitions and AO powers remain substantively the same between the two texts provided.

      Practical impact of the differences

      • Operational certainty: The Act's specific reference to section 206(1)(c) provides greater precision on which book-profit computation the exclusion affects; taxpayers and tax authorities will have clearer guidance for compliance and assessment. Exact consequences depend on section 206(1)(c)'s scope (Not stated in the document).
      • Administrative effect: Minor drafting changes do not materially alter Assessing Officer powers or taxpayer obligations under the Clause as presented in the Bill. The main compliance tasks-segregation of incomes, valuation on transfers, allocation of costs-remain required under both texts.

      Full Text:

      Section 228 Relevant shipping income and exclusion from book profit.

      Topics

      ActsIncome Tax
      Next ➔