838/CBDT. - Income Tax - 838/CBDT

INSTRUCTION NO. 838/CBDT Dated : May 3, 1975 Section(s) Referred: 172 Statute: Income - Tax Act, 1961 The provisions of section 172 of the Income-tax Act, 1961 which provide a special mode of levy and recovery of tax before any ship, belonging to or chartered by a non-resident, can leave an Indian Port, have been modified in certain respects with effect from 1st June, 1975 (vide section 19 of the Finance Act, 1975). The effect of the amendments is that the provisions of section 172 will now apply even to those non-resident shipping concerns who have an agent in India from whom the tax can be recovered under the other provisions of the Act. Secondly, for the purposes of the assessment under section 172, the income will be computed at 7.5 per cent (in place of one-sixth) of the amount paid or payable to the assessee or any other person on his behalf on account of carriage of passengers. live-stock, mail or goods shipped at any Indian port. 2. The Associated Chambers of Commerce and Industries of India had pointed out certain practical difficulties that are likely to arise out of the amendments made to section 172 of the Income-tax Act by the Finance Act, 1975 in relation to regular liner ships (as distinguished from tramp ships). The matter has since been carefully considered and it has been decided that the procedure regular liner shipping concerns: (a) where it is not possible for the masters of the ships belonging to or chartered by a non-resident regular liner shipping concern to furnish the return required by section 172(3) before the departure of each ship from an Indian port, suitable arrangements will be made to the satisfaction of the Income-tax Officer who is at present having jurisdiction to make regular assessments in the case of the non-resident shipping concern (hereinafter referred to as the assessing Income-tax Officer) in terms of the proviso to section 172(3) for the filing of the return, and the payment of tax on the basis of such return. Within 30days of the departure of such ships from any port in India. These arrangements can be in the form of a suitable Guarantee Bond supplemented, if considered necessary by the Income-tax Officer in any particular case, by a Bank Guarantee. (b) The return of freight, etc., as required by section 172(3) will be filed with the assessing Income-tax Officer and tax paid on the basis of such retain within 30 days of the departure of any ship from a particular port, and complete freight manifest will be filed soon thereafter (but on any case within a period of four weeks). (c) The Master of the ship or his Agent will arrange to send an intimation to the Income-tax Officer (dealing with shipping cases u/s 172) in each poty town, giving the date of entry and the date of departure from the port and a copy of such intimation will also be sent by registered post to the Income-tax Officer assessing the shipping concern. This stipulation should also be incorporated in the guarantee bond. (d) On the aforesaid arrangements being made to the satisfaction of the assessing Income-tax Officer of the shipping concern, he will advise all the port Income-tax Officers in India who would in turn on the basis of such advice, write suitable to the Customs Authorities at the respective ports to grant port clearance to the ships belonging during the financial year in respect of which the guarantee has been furnished. 3. The form of the Guarantee Bond for this purpose is being evolved in consultation with the Ministry of Law. However, till such time that this form becomes available, the Income-tax Officers may be asked to obtain the Guarantee Bond in the from which was earlier in use for the purpose of section 172(3) of the Act, with suitable modifications settled in consultation with your Standing Counsel. Specimen forms of (i) Return u/s 172(3) of the Act, (ii) Intimation of arrival and departure of ship, (iii) Letter from the assessing Income-tax Officer to the port Income-tax Officers and (iv) Letter from the port Income-tax Officer to the Collector of Customs, are set out in Annexures 'A' to 'D' (printed below). 4. It may be particularly noted that Annexure 'D' makes it clear that the letter of authority will remain valid upto a particular date, unless it is withdrawn earlier. If any default is committed by or on behalf of a non-resident regular liner shipping concern in the compliance with the aforesaid procedure in relation to any visit of a ship at an Indian port. not only should the guarantee bond (and the bank guarantee wherever obtained) be enforced immediately but also the letter of authority to the Collector(s) of Customs concerned should be withdrawn. 5. These instructions may please be brought to the notice of the Income-tax Officers in your charge immediately.