9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (10) TMI 296 - AT - Income TaxExemption under Tonnage Tax Scheme - assessee company is engaged in the business of operation of ships for exploitation of mineral oil for ONGC and also for providing infrastructure facilities at New Mangalore Port - MAT computation - HELD THAT - ITAT, in assessee s own case 2022 (11) TMI 1404 - ITAT DELHI respectively had decided the very same issue in favour of the assessee. Respectfully following the same, the grounds No.2(1) raised by the Revenue is dismissed. Applicability of Tonnage Tax while computing the book profit u/s 115JB - We find that the provisions of section 115VO specifically provides that the book profit or loss derived from the activities of the Tonnage Tax Company referred to in section 115VI(1) shall be excluded from the book profit of the company for the purpose of section 115JB of the Act. Hence, ground No.2(2) raised by the Revenue is dismissed. Disallowance of interest - interest free advances made to subsidiary company is not for business purpose - HELD THAT - We find that this issue is no longer res integra in view of the decision of this Tribunal in assessee s own case 2022 (11) TMI 1404 - ITAT DELHI As held it was for the AO to establish such nexus between the borrowings and advances to prove that the expenditure was for non-business purposes, which the AO failed to do. In the present case also, it is found that the appellant has sufficient funds of its own which he could have advanced and therefore the interest liability on the borrowings made could not be disallowed, particularly when the AO failed to prove that the expenditure was for non-business purposes - Decided against revenue. Disallowance of employees contribution to PF and ESI - sum as remitted beyond the due date prescribed under the respective Acts, but, were remitted before the due date of filing of return of income u/s 139(1) of the Act - HELD THAT - This issue is no longer res integra in view of the decision of the Hon ble Supreme court in the case of Checkmate Services Pvt. Ltd. 2022 (10) TMI 617 - SUPREME COURT as decided against assessee. Since the assessee is paying presumptive tax on its income under Tonnage Tax Scheme, there is no need to make any separate disallowance towards employee s contribution to PF/ESI - HELD THAT - We find that business income for qualifying ships under Tonnage Tax Scheme is calculated based on the Tonnage capacity of the ship and number of days the ship was on voyage. This income is computed on presumptive basis irrespective of actual profit or loss derived by the assessee from the operation of its qualifying ships. Hence, any disallowance made on account of employee s contribution to PF/ESI would have no relevance to the assessee herein as, ultimately, its business income is only determined based on tonnage capacity on presumptive basis and not on actual income basis. Hence, the contention raised by the assessee, vide revised ground No.2(a) is justified and is hereby allowed. Cash deposits made during demonetization period in specified bank notes - HELD THAT - As the assessee has been consistently holding huge cash balance which meets the entire cash deposits made during the whole year including the cash deposits made during the demonetization period in specified bank notes. Hence, there is absolutely no case for the Revenue to make an addition for cash deposits made during the demonetization period as the entire cash deposits are totally explained by proper sources by the assessee. Accordingly, the ground raised by the assessee is allowed. Disallowance u/s 40(a)(ia) - payment made to non-resident M/s All Farida Worldwide Fze which is a resident of UAE - HELD THAT - The basic purpose of the assessee making payment to the non-resident payee itself is to be examined. Hence, in these circumstances, in our considered opinion, the reliance placed on the decision of this Tribunal would not come to the rescue of the assessee for the year under consideration. Hence, in the interest of justice and fair play, we deem it fit and proper to restore this issue to the file of ld. AO for denovo adjudication in accordance with law. Accordingly, ground No.4 raised by the assessee is allowed for statistical purposes. Disallowance on account of amounts written off - HELD THAT - It is not in dispute that the assessee renders service only to ONGC and earns business income from ONGC. Obviously, the assessee had to raise the bills on ONGC. As and when the bills are raised on ONGC, the assessee has offered income on accrual basis. Subsequently, as and when the bills are deducted on account of certain disputes by ONGC, the same remains outstanding as sundry debtor in the books of the assessee company. Since the said sums are not recoverable from ONGC, the assessee chose to write off the same in its books during he year under consideration. However, we find that the ld. AO, without appreciating these facts, had proceeded to treat the entire written off amount as not an allowable deduction. Similarly, for the remaining sum no findings has been recorded by the lower authorities. Hence, in the interest of justice and fair play, we deem it fit and appropriate to restore this issue to the file of the ld.AO for denovo adjudication in accordance with law, after considering the detailed break-up of the amounts written off submitted by the assessee which are enclosed in the paper book. The assessee is also at liberty to furnish fresh evidences, if any, in support of its contentions. With these directions, raised by the assessee is allowed for statistical purposes.
Issues Involved:
1. Deletion of disallowance of exemption under Tonnage Tax Scheme. 2. Deletion of disallowance of interest on interest-free advances to subsidiary. 3. Disallowance of employees' contribution to PF and ESI. 4. Addition on account of cash deposits during demonetization. 5. Disallowance under section 40(a)(ia) for payment to non-resident. 6. Disallowance of amounts written off. Summary: 1. Deletion of Disallowance of Exemption under Tonnage Tax Scheme: The Revenue challenged the deletion of disallowance of Rs. 133,98,65,442/- and Rs. 189,50,06,805/- under the Tonnage Tax Scheme. The Tribunal upheld the CIT(A)'s decision, referencing the Hon'ble Jurisdictional High Court's decision in the assessee's favor, confirming that the "Deep Sea Matdrill" qualifies as a ship under section 115VD of the Income Tax Act. The Tribunal dismissed the Revenue's grounds, affirming that the income derived from the Tonnage Tax Scheme should be excluded from book profits under section 115JB. 2. Deletion of Disallowance of Interest on Interest-Free Advances to Subsidiary: The Tribunal upheld the CIT(A)'s decision to delete the disallowance of interest of Rs. 1,78,55,887/-, citing previous Tribunal decisions in the assessee's favor. The CIT(A) had found that the advances were for business purposes and no nexus was established between the borrowed funds and the interest-free advances. 3. Disallowance of Employees' Contribution to PF and ESI: The Tribunal dismissed the assessee's ground challenging the disallowance of Rs. 14,96,558/- for late remittance of employees' PF and ESI contributions, referencing the Hon'ble Supreme Court's decision in Checkmate Services Pvt. Ltd vs CIT, which mandates timely deposit as a condition for deduction. 4. Addition on Account of Cash Deposits During Demonetization: The Tribunal allowed the assessee's ground, finding that the cash deposits during the demonetization period were explained by the cash balance as on 08.11.2016. The Tribunal noted that the assessee consistently held significant cash balances and the books of accounts were not rejected by the Revenue. 5. Disallowance under Section 40(a)(ia) for Payment to Non-Resident: The Tribunal restored the issue to the AO for denovo adjudication, noting discrepancies in the nature of payment to the non-resident payee. The assessee claimed the payment was for imported RIG supply, while the invoice indicated charges for service engineers, necessitating further examination. 6. Disallowance of Amounts Written Off: The Tribunal restored the issue to the AO for denovo adjudication. The assessee claimed the write-off was due to disputed bills with ONGC, but the AO treated the entire amount as not allowable without proper examination. The Tribunal directed the AO to consider the detailed break-up of amounts written off. Conclusion: The assessee's appeal was partly allowed for statistical purposes, and the Revenue's appeal was dismissed.
|
