2015 (8) TMI 1568 - AT - Income Tax

Applicability of Tonnage Tax Provisions to Sundry credit balance written back u/s. 41(1) - CIT(A) has deleted the impugned addition/disallowances following the earlier years order of the Tribunal - HELD THAT - As decided in assessee own case 2011 (7) TMI 588 - ITAT, MUMBAI legislature in its wisdom provided the manner of computation of income under the tonnage tax scheme. In section 115VA, it is clearly provided that sections 28 to 43C would not over ride the computation of profits and gains under section 115VA. As section 41(1) falls within sections 28 to 43C, no separate addition under that section can be made. As section 41(1) seeks to bring to tax certain specified items of receipts under the head profits and gains of business the scheme should not be invoked while computing profits and gains of business under Chapter-XII-G. Hence, we are of the opinion that the argument of the assessee should succeed. As no distinguishing decision has been brought to our notice by the Revenue, respectfully following the orders of the Co-ordinate Bench, we uphold the findings of the Ld. CIT(A). Ground No. 1 to 4 of the Revenue is accordingly dismissed. Sundry receipts from core shipping and reimbursement of managed vessels - As decided in own case 2015 (3) TMI 751 - ITAT MUMBAI submitted that neither the A.O. nor the ld. CIT(A) has examined the relevant details placed at 157 of the paper book and urged that the matter may be sent back to the A.O. for deciding the same afresh after verifying the said detail. As the ld. D.R. has no objection in this regard, the issue relating to inclusion or exclusion of item No. 3 6 is restored to the file of the A.O. for deciding the same afresh. Receipts relateable to core activity of operation of qualified ship and part of incidental activity - applicability of provisions of Chapter XII-G relating to tonnage income are applicable - HELD THAT - We find that commission on disbursements (receipts) and Sundries have not been properly explained by supporting demonstrative evidences. We, therefore, restore these issues to the file of the AO. The assessee is directed to demonstrate its claim of receipts being directly related to the core activity/incidental activity by bringing cogent material evidences on record in respect of these 2 receipts and the AO is directed to examine the same and decide afresh whether these receipts can be clubbed under core activity/incidental activity of the assessee. In so far as rent on furniture and Application money-right to info Act are concerned, these receipts can be treated as taxable as business income under normal provisions of the Income tax. The assessee gets part relief in respect of impugned receipts. Adjustment of the calculation of turnover - Since we have restored the issues relating to 2 receipts to the file of the AO to be decided afresh, the second grievance of the assessee also goes back to the file of the AO which can be decided only after deciding the taxability of receipts or otherwise qua ground No. 1 of this appeal. The AO is directed to decide this issue after deciding the taxability of receipts. Ground No. 2 is allowed for statistical purpose. Disallowance of administrative expenses and in alternative allowance of proportionate expenditure incurred by the assessee - HELD THAT - As decided in own case 2011 (7) TMI 588 - ITAT, MUMBAI Assessing Officer has rightly held that the assessee would not have incurred the expenditure claimed for earning income. We restore this issue to the file of the AO. The AO is directed to decide this issue as per the directions of the Tribunal given in earlier years and as per the decision taken by him pursuant to the directions given by the Tribunal in earlier years. Ground No. 3 is allowed for statistical purpose.

Summary

Issues Involved:
1. Applicability of Tonnage Tax Provisions to various incomes.
2. Additions under Sundry receipts.
3. Adjustment to the calculation of turnover.
4. Disallowance of Administrative expenses.
5. Short claim of TDS.

Detailed Analysis:

1. Applicability of Tonnage Tax Provisions to Various Incomes:
The Revenue contended that the CIT(A) erred in denying the applicability of Tonnage Tax Provisions to sundry credit balance written back, excess provisions written back, prior period income, and sundry receipts of liquidated damages. The Tribunal referred to its earlier decisions, which clarified that income from core activities and incidental activities under the Tonnage Tax Scheme should be computed as per Chapter XII-G. The Tribunal upheld the CIT(A)'s findings, dismissing the Revenue's grounds, stating that such write-backs and provisions are part of the core activities and should be taxed under the Tonnage Tax Scheme.

2. Additions under Sundry Receipts:
The assessee's grievance involved the inclusion of various sundry receipts as income from core activities. The Tribunal examined the details and directed the AO to verify and decide afresh the inclusion of commission on disbursements and sundries. The Tribunal agreed that refunds of Director's fees and profits on bar/shop sales are related to core activities, while rent on furniture and application money from the Right to Information Act should be taxed under normal provisions.

3. Adjustment to the Calculation of Turnover:
The issue of turnover calculation was linked to the taxability of certain receipts. Since the Tribunal restored the issues of certain receipts to the AO for fresh examination, it also directed the AO to decide the turnover calculation after determining the taxability of those receipts.

4. Disallowance of Administrative Expenses:
The Tribunal referred to its earlier decisions, which upheld the disallowance of administrative expenses claimed by the assessee. The Tribunal restored the issue to the AO to decide afresh, in line with the Tribunal's directions in earlier years, and allowed the ground for statistical purposes.

5. Short Claim of TDS:
This issue was not pressed by the assessee and was accordingly dismissed.

Conclusion:
The Tribunal dismissed the Revenue's appeal and partly allowed the assessee's appeal for statistical purposes, directing the AO to re-examine certain issues based on the Tribunal's earlier decisions. The order was pronounced in the open court on 19th August 2015.