Special provision for computing profits and gains of shipping business other than cruise shipping in case of non-residents. – Section 44B - International Taxation - Income Tax

Special provision for computing profits and gains of shipping business other than cruise shipping in case of non-residents Section 44B Applicable to Non-resident in shipping operations business Income Taxable under the head of PGBP Section 44B and read with section 172(2) 7.5% of the aggregate of the following amount: Freight received in India or outside India for carriage of goods etc. shipped at port in India . Freight received or deemed to be received in India for carriage of goods etc. shipped at port outside India. Other than cruise shipping business in case of non-residents specified u/s 44BBC.[ w.e.f. 01.04.2025 Inserted vide Finance (No.2 ) Act, 2024 ] The amount referred above would include demurrage or handling charges or any other amount of similar nature. [ CIT Vs. Japan Line Ltd. 2002 (9) TMI 68 - MADRAS HC ] [ Section 172(8) ] Income lower than presumptive rate Assessee cannot show. Recovery Mechanism Recovery mechanism in Section 172 for amount received in India or outside India for carriage of goods etc. shipped at any port in India. Provisions of Section 28 to 43A Not applicable Set-off of current year depreciation and b/f depreciation of other business against such income. Not Possible Set-off of current year losses and b/f losses of other business against such income. Possible Chapter VI-A deduction Available Other Provisions Shipping Business of Non-Resident [ Section 172 ] Where a ship carries passengers, livestock, mail or goods shipped at a port in India, 7.5% of the amount paid or payable on account of such carriage to the owner or the charterer or any other person on his behalf, whether that sum is payable in India or outside India, shall be deemed to be the income arising to the owner/ charterer. Amount paid or payable or the amount received or deemed to be received will also include amount paid or payable by way of demurrage or handling charges or any other amount of similar nature. [ CIT Vs. Japan Line Ltd. 2002 (9) TMI 68 - MADRAS HC ] [ Section 172(8) ] Furnishing a return of the amount to the owner [ Section 172(3) ] Such return is ordinarily, to be furnished by the master of the ship before the departure from that port in India of the ship The master of the ship shall prepare and furnish to the Assessing Officer a return of the full amount paid or payable to the owner or charterer or any person on his behalf, on account of the carriage of all passengers, livestock, mail or goods shipped at that port since the last arrival of the ship thereat: A Return may be filed by the person authorised by the master of the ship within 30 days of the departure of the ship from the port if:- Assessing Officer is satisfied that it is not possible for the master of the ship to furnish the return required by section 172(3) before the departure of the ship from the port and The master of the ship has made satisfactory arrangements for the filing of the return and payment of the tax by any other person on his behalf. Assessment [ Section 172(4) ] On re ceipt of a return, the Assessing Officer shall assess the income and determine the sum payable as tax thereon. The rate of tax shall be as applicable to a foreign company. Time limit for passing the assessment order [ Section 172(4A)/(5) ] No order assessing the income and determining the sum of tax payable thereon shall be made under this section after the expiry of nine months from the end of the financial year in which the return under section 172(3) is furnished. Grant of port of Clearance to the ship [ Section 172(6) ] A port clearance certificate shall not be granted to the ship until the collector of Customs is satisfied that the tax assessable under this section has been duly paid or satisfactory arrangements have been made. Comparison of Section 44B and Section 172 U/s 44B, assessee is under control of Indian Government (i.e., taxation department), whereas u/s 172 assessee is not under control. U/s 44B, assessee has regular business activities in India, whereas u/s 172 assessee has irregular business activities in India. Section 44B, normal assessing of income charging section, whereas section 172 is for advance recovery of tax, however assessee may opt for 44B if he feels that 44B is more beneficial to him.