2022 (5) TMI 836 - AT - Income Tax

Assessment under Tonnage Tax Scheme - Excess provision written back and allowed - excluding receipts comprising of overheads for managed vessel and excess provision written back while calculating total turnover from core activities - HELD THAT - The issue-in-dispute before us, being identical to issue in AY 2005-06 2006-07, respectfully following the finding of the Tribunal (supra), the Assessing Officer is directed to include the amount of excess provision written back for the purpose of the turnover of the core activity and the issue of inclusion of reimbursement from managed vessels for the purpose of the turnover of core activity is restored back to the file of the Assessing Officer for verifying the claim of the assessee and decide in view of the Tribunal for AY 2005-06 2006-07 2015 (3) TMI 751 - ITAT MUMBAI - The ground No. 1 of the appeal is accordingly allowed to the extent of excess provision written back and allowed for statistical purpose in respect of reimbursement of overhead expenses for managed vessels. Disallowance of deduction of administrative expenses against the income from other sources - HELD THAT - We find that identical issue of disallowance of administrative expenses against interest income under the head income from other sources has been held against the assessee in 2015 (3) TMI 751 - ITAT MUMBAI . Granting credit u/s 115JAA for the taxes paid in earlier years - HELD THAT - Before us, the parties agreed that payment of the taxes and allowing of credit thereon is matter for verification by the Assessing Officer and therefore, accordingly the issue is retored back to the file of the Assessing Officer for verification and if the assessee is eligible for credit of taxes in year under consideration for the taxes paid under MAT in earlier years, the claim of the assessee shall be considered in accordance with law. The ground No. 3 is accordingly allowed for statistical purposes.

Summary

Issues:
1. Exclusion of receipts for managed vessel and excess provision from turnover calculation.
2. Disallowance of administrative expenses against income from other sources.
3. Granting credit for taxes paid in earlier years.

Issue 1: Exclusion of receipts for managed vessel and excess provision from turnover calculation:
The appellant, a Public Sector Undertaking engaged in Merchant shipping, appealed against the final assessment order for the assessment year 2014-15. The dispute centered around the exclusion of receipts totaling Rs.69,67,71,459, comprising overheads for managed vessels and excess provision written back, from the turnover calculation of core activities. The Assessing Officer recalculated the turnover of core activities based on these exclusions, leading to adjustments in the profit from incidental activities. The appellant contended that the issue had been previously addressed by the Tribunal for assessment years 2005-06, 2006-07, 2007-08, and 2009-10. Following the Tribunal's precedent, the Assessing Officer was directed to include the excess provision written back in the turnover of core activities and reevaluate the inclusion of reimbursement from managed vessels. Consequently, the ground related to excess provision written back was allowed, while the issue regarding reimbursement for managed vessels was remanded to the Assessing Officer for further examination.

Issue 2: Disallowance of administrative expenses against income from other sources:
The second ground of appeal concerned the disallowance of administrative expenses amounting to Rs.10,60,21,624 against income from other sources. The appellant argued that this issue was previously decided against them by the Tribunal. Citing the Tribunal's earlier ruling for assessment years 2005-06 and 2006-07, the disallowance of administrative expenses against interest income under 'income from other sources' was upheld. The Tribunal found no infirmity in the disallowance, emphasizing that common costs attributable to the tonnage tax business needed to be determined reasonably. As the issue mirrored past cases, the ground of appeal was dismissed in line with the Tribunal's previous decision.

Issue 3: Granting credit for taxes paid in earlier years:
The final issue pertained to the appellant's plea for a credit of Rs.2,25,00,000 under section 115JAA for taxes paid in earlier years. Both parties agreed that the verification of tax payment and credit eligibility fell under the Assessing Officer's purview. Consequently, the issue was remanded back to the Assessing Officer for verification. If the appellant was deemed eligible for the credit, it would be granted in accordance with the law. Therefore, the ground was allowed for statistical purposes.

In conclusion, the appeal of the appellant was partly allowed for statistical purposes, with specific directions given for each issue raised in the appeal.