2009 (4) TMI 46 - HC - Income Tax

Assessing Officer held that clearing and forwarding activities is not a profession but a business and brought the assessee s income to tax accordingly - Division Bench in identical case held that The assistance rendered by the clearing and shipping agent to those who import or export by attending to the documentation and ensuring the clearance of goods cannot be regarded as profession action of AO is justified - Supreme Court in the case of Cochin Shipping Co. vs. ESI Corporation (1992) 81 FJR 387 - Decided in favor of the revenue

Summary

Issues:
- Whether a clearing and forwarding agent is considered a professional firm for tax purposes.

Analysis:
1. Issue: Classification of Clearing and Forwarding Agent
- The appeal revolves around determining whether a clearing and forwarding agent can be categorized as a professional firm for tax assessment. The appellant, engaged in such activities, declared its status as a professional firm for the assessment year 1991-92. However, the Assessing Officer disagreed, treating the activities as a business rather than a profession, leading to tax implications.

2. Issue: Legal Precedents and Interpretation
- The Court referred to the case of Commissioner of Income Tax vs. International Clearing and Shipping Agency, where a similar question was addressed. The Division Bench in that case concluded that the services provided by clearing and shipping agents do not qualify as a profession based on intellectual attainments or specialized skills. The Court cited the Supreme Court's decision in Cochin Shipping Co. vs. ESI Corporation to support this interpretation.

3. Judgment and Decision
- Considering the legal precedents and interpretations, the High Court ruled in favor of the revenue and against the assessee. The Court aligned with the reasoning from previous cases, stating that the nature of services provided by clearing and forwarding agents does not meet the criteria to be classified as a profession for tax purposes. Consequently, the appeal was allowed, upholding the decision that a clearing and forwarding agent is not to be considered a professional firm, affirming the tax implications set by the Assessing Officer.