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2015 (3) TMI 751 - AT - Income TaxDetermination of income - whether appellant-company is covered under Chapter XII-G of the Act for determination of its taxable income? - whether appellant-company s various incomes viz. core ship ping incidental shipping interest and dividend are from business of operation of qualified ships? - treatment of reasonable allocation of common costs as per provisions of section 115VJ of Act - Held that - The issues involved in grounds of the assessee s appeal for the assessment year 2006-07 are similar to the issues involved in assessee s appeal for the assessment year 2005-06 except that the claim of the assessee for allocation of administrative expenses against incidental activities is also not allowed in the assessment year 2006-07 whereas the same was allowed by the Assessing Officer himself in the assessment year 2005-06. Learned counsel for the assessee has submitted that only this aspect of the matter may be restored to the file of the Assessing Officer for deciding the same afresh after taking into consideration the assessment made for the assessment year 2005-06 on similar issue and after verifying of the relevant facts. As the learned Departmental representative has also not raised any objection in this regard we restore this limited issue to the file of the Assessing Officer for deciding the same afresh. As regards the claim of the assessee for allocation of common costs towards interest and dividend income we follow our conclusion drawn in the assessment year 2005-06 and decide this issue against the assessee - Decided partly in favour of assessee for statistical purposes. Re-adjusting the turnover by reducing 73.52 crores from core shipping - Held that - Respectfully following the Tribunal s order dated July 29 2011 (Shipping Corporation of India Ltd. v. Addl. CIT 2011 (7) TMI 588 - ITAT Mumbai ) in the assessee s own case for the assessment year 2007-08 we uphold the action of the authorities below in reducing the profit on sale of ships and fixed ships from the turnover of core shipping. The action of the authorities below in reducing the excess provision written back and sundry credit balances written back however is set aside and the Assessing Officer is directed to include the said income in the turnover of core shipping. As regards item No. 3 (sundry receipts from core shipping) and item No. 6 (reimbursement from managed vessels) learned counsel for the assessee has submitted that neither the Assessing Officer nor the learned Commissioner of Income-tax (Appeals) has examined the relevant details placed and urged that the matter may be sent back to the Assessing Officer for deciding the same afresh after verifying the said detail. As the learned Departmental representative has no objection in this regard the issue relating to inclusion or exclusion of item Nos. 3 and 6 is restored to the file of the Assessing Officer for deciding the same afresh after verifying the said details.- Decided partly in favour of assessee. Readjustment in turnover of core shipping - Assessing Officer has committed the arithmetic totalling errors of 41.62 lakhs in the assessment order - Held that - assessee has submitted that certain factual mistakes committed by the Assessing Officer in computing the turnover of the core shipping activities were pointed out by the assessee before the learned Commissioner of Income-tax (Appeals) and the direction was given by the learned Commissioner of Income-tax (Appeals) vide his impugned order to the Assessing Officer to verify and correct the said mistakes. He has submitted that the Assessing Officer however has not complied with the direction of the learned Commissioner of Income-tax (Appeals) and a fresh direction may therefore be given to the Assessing Officer to correct the mistakes pointed out by the assessee after verification. We accordingly direct the Assessing Officer to rectify the mistakes if any as pointed out by the assessee in working of turnover of core shopping activities after verification - Decided in favour of assessee.
Issues Involved:
1. Allocation of common costs under Section 115VJ of the Income-tax Act. 2. Credit of foreign taxes under Sections 90 and 91 of the Income-tax Act. 3. Re-adjustment of turnover by reducing specific incomes from core shipping. 4. Arithmetic errors in the assessment order. 5. Interest charged under Sections 244A and 234D of the Income-tax Act. Detailed Analysis: 1. Allocation of Common Costs under Section 115VJ: The assessee, a merchant shipping company, declared its income under the tonnage tax scheme per Section 115V of the Income-tax Act. The Assessing Officer (AO) observed that the assessee allocated administrative expenses against interest and dividend income on a pro-rata basis as per Section 115VJ. However, the AO held that such income should be taxed under "Income from other sources," allowing deductions only for expenses wholly and exclusively incurred to earn such income under Section 57(iii). The Commissioner of Income-tax (Appeals) [CIT(A)] upheld this view, stating that the interest and dividend income derived from surplus funds were not related to any business exigency. The Tribunal supported this decision, referencing a similar ruling in the assessee's case for the assessment year 2007-08, which concluded that the expenses claimed were not wholly and exclusively for earning the income in question. 2. Credit of Foreign Taxes under Sections 90 and 91: The assessee claimed relief for foreign taxes paid in various countries, which was disallowed by the AO and CIT(A) because the claim was not made in the original return of income. They relied on the Supreme Court's decision in Goetze (India) Ltd. v. CIT. The Tribunal, however, highlighted the Bombay High Court's ruling in CIT v. Pruthvi Brokers and Shareholders P. Ltd., which allowed additional claims to be raised before appellate authorities. The Tribunal directed the AO to verify and decide the claim afresh. 3. Re-adjustment of Turnover by Reducing Specific Incomes from Core Shipping: The AO and CIT(A) reduced certain incomes from the turnover of core shipping while computing incidental shipping income. These included profits from the sale of ships, excess provisions written back, sundry receipts, and reimbursements from managed vessels. The Tribunal referred to its order for the assessment year 2007-08, which upheld the reduction of profits from the sale of ships but included excess provisions written back and sundry credit balances in core shipping turnover. The Tribunal directed the AO to verify details for sundry receipts and reimbursements. 4. Arithmetic Errors in the Assessment Order: The assessee pointed out arithmetic errors in the computation of turnover for core shipping activities. The CIT(A) directed the AO to verify and correct these errors. The Tribunal reiterated this direction, instructing the AO to rectify any mistakes after verification. 5. Interest Charged under Sections 244A and 234D: The issues related to interest under Sections 244A and 234D were deemed consequential. The Tribunal directed the AO to provide consequential relief to the assessee based on the final assessment. Conclusion: The Tribunal's decisions addressed various issues, including the allocation of common costs, credit for foreign taxes, adjustments in turnover, and rectification of arithmetic errors, providing a comprehensive analysis and directions for each matter. The appeals were partly allowed, with specific issues remanded for further verification and decision by the AO.
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