2002 (9) TMI 68 - HC - Income Tax

Non-resident - Shipping Business - Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that demurrage charges received by the assessee are not includible in the assessee s total income and accordingly in allowing the appeal filed by the assessee? Section 44B which is a special provision for computing profits and gains of shipping business in the case of non-residents, under the Explanation that was added by the Finance Act, 1997, expressly provides that demurrage charges or handling charges or any other amount of similar nature shall be regarded as the part of the amount paid or payable to the person engaged in the business of operation of ships on account of the carriage of passengers, livestock, mail or goods shipped at any port in India. In this case, as the amount of demurrage was admittedly received in India, the amended provision is clearly applicable. The question is, therefore, answered against the assessee and in favour of the Revenue.

Summary

The High Court of Madras ruled that demurrage charges received by the assessee are includible in the total income, based on the amended provision of Section 44B of the Income-tax Act. The judgment was delivered by Judges R. Jayasimha Babu and K. Raviraja Pandian. The assessment years in question were 1983-84, 1984-85, and 1987-88.