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2023 (4) TMI 1100 - AT - Income TaxTP provisions applicability on assessee s income as chargeable to tax as per Tonnage Tax Scheme - HELD THAT - We observe that the assessee has opted for tonnage tax scheme in respect of its income from operating the ships in terms of approval granted to it by the Addl. CIT, range-1, Kolkata vide letter dated 29.03.2017 for a period of 10 years. We have also perused the presumptive scheme as envisaged by the provisions of Section 115BB of the Act and also the decision cited by the assessee in the case of Van Oord India Pvt. Ltd. 2019 (6) TMI 1176 - ITAT MUMBAI Thus where the assessee has opted for tonnage tax scheme and has offered the income on presumptive basis, no TP adjustments are required to be made. Late payment of employees contributions beyond the time as prescribed under the Provident Fund - HELD THAT - We are of the views that the issue is covered against the assessee by the decision of Chekmate Services Pvt. Ltd. 2022 (10) TMI 617 - SUPREME COURT Accordingly ground of assessee dismissed. Dis-allowing the deduction in respect of education cess and secondary and higher secondary education cess for the purpose of computing profits and gains from business or profession - HELD THAT - In terms of explanation 3 as inserted by Finance Act ,2022 to section 40(ii) of the Act, it has been provided tax shall include and shall be deemed to have always included any surcharge or cess by whatever name called on such tax. Considering the above position we are of the considered view that education cess and Secondary and higher Secondary Education cess are also part of the tax and not deduction is available to the assessee. Accordingly the ground raised by the assessee is dismissed.
Issues Involved:
1. Applicability of Transfer Pricing (TP) provisions under the Tonnage Tax Scheme (TTS). 2. Addition on account of late payment of employees' contributions to Provident Fund. 3. Deduction of education cess and secondary and higher secondary education cess. Summary: 1. Applicability of Transfer Pricing (TP) Provisions under Tonnage Tax Scheme (TTS): The primary issue raised in grounds 1 to 5 was the confirmation of an addition of Rs. 84,76,769/- by the Dispute Resolution Panel (DRP) as made by the Assessing Officer (AO)/Transfer Pricing Officer (TPO) on account of TP adjustment concerning international transactions. The assessee argued that TP provisions are not applicable as its income is chargeable to tax under the Tonnage Tax Scheme. The assessee filed a return of income declaring Rs. 17,07,17,340/-, which was selected for scrutiny due to significant international and specified domestic transactions. The TPO proposed a TP adjustment of Rs. 84,76,769/-, which was added to the income. The DRP upheld the AO's action, stating that Chapter XII-G does not preclude the operation of Chapter X, and TP adjustments are necessary to prevent profit shifting. However, the Tribunal held that when an assessee opts for the Tonnage Tax Scheme and offers income on a presumptive basis, no TP adjustments are required, referencing the decision in Van Oord India Pvt. Ltd. Accordingly, grounds 1 to 5 were allowed. 2. Addition on Account of Late Payment of Employees' Contributions to Provident Fund: Grounds 7 and 8 involved the confirmation of an addition of Rs. 10,39,487/- due to late payment of employees' contributions beyond the prescribed time under the Provident Fund. The Tribunal, referencing the Supreme Court decision in Chekmate Services Pvt. Ltd. vs. CIT, held that the issue is covered against the assessee. Consequently, grounds 7 and 8 were dismissed. 3. Deduction of Education Cess and Secondary and Higher Secondary Education Cess: Ground 9 addressed the disallowance of a deduction for education cess and secondary and higher secondary education cess in computing profits and gains from business or profession. The Tribunal, considering the explanation inserted by the Finance Act, 2022 to section 40(ii) of the Act, concluded that education cess and secondary and higher secondary education cess are part of the tax and not deductible. Therefore, the ground raised by the assessee was dismissed. Conclusion: The appeal of the assessee was partly allowed. The Tribunal allowed grounds related to the applicability of TP provisions under the Tonnage Tax Scheme but dismissed grounds concerning the late payment of Provident Fund contributions and the deduction of education cess. The order was pronounced in the open court on 29th March 2023.
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