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TMI Blog2008 (7) TMI 619X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. According to the Assessing Officer, the assessee has given the ship EPSOM-I on bare boat charter hire basis to M/s. AVS Marine Services (P.) Ltd., which has given the same on charter hire basis for a period of six months to M/s. Cairm Energy India (P.) Ltd., which is not an Indian company. The Assessing Officer therefore rejected the claim of eligibility of the assessee for option of tonnage scheme. The learned CIT(A) was however, of the view that for the claim for option of tonnage tax scheme, a valid application was made in time under section 115VP of the Act and the delay in enclosing the tonnage certificate was only due to the circumstances beyond the control of the assessee. According to him, there was a substantial compliance by the assessee while filing Form 65 and it was clear from the certificate issued by Indian Registry that the ship EPSOM-I is a qualifying ship. Since such certificate included the details of gross and net tonnage of the ship, the requisites for a qualifying ship have been met within the meaning of tonnage tax provisions. The certificate was filed during the appellate proceedings as additional evidence which was admitted and the CIT(A) gave an oppor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Form 65 issued by the Indian Registry for the said ship. The application in Form 65 itself was filed within the time prescribed along with the certificate of Indian Registry having the name of the ship and tonnage details have also been mentioned even at the time of filing Form 65. There is a clear indication that the assessee has applied for tonnage tax certifi-cate, which could not be obtained in time for want of certain clarifications. The learned Counsel for the assessee relied upon various authorities in the context of filing of tax certificate for the purpose of claiming deduction under section 80J, wherein the Courts have consistently taken a view that delay in filing the audit report in support, a mandatory condition and time for filing the same is only a procedural in nature and the same can be filed even before the completion of the assessment. Reference was made to the decision in the case of CIT v. A.N. Arunachalam [1994] 208 ITR 481 (Mad.) and the decision of the Kolkata High Court in the case of CIT v. Magnum Export (P.) Ltd. [2003] 262 ITR 10 and the decision of the jurisdictional High Court in the case of Mahindra Mahindra Ltd. v. CIT [2005] 278 ITR 13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s chargeable to tax under the head Profits and gains of business or profession. " The above provision is like a charging provision in relation to the computation of income of shipping companies. This provision starts with non obstante clause ruling out application of sections 28 to 43C, since the Chapter provides for its own rules of computation. 7. The term qualifying ship is defined under section 115VD, which is as under: "Section 115VD: Qualifying Ship - For the purposes of this Chapter, a ship is a qualifying ship if- ( a )it is a sea going ship or vessel of fifteen net tonnage or more; ( b )it is a ship registered under the Merchant Shipping Act, 1958 (44 of 1958), or a ship registered outside India in respect of which a licence has been issued by the Director General of Shipping under section 406 or section 407 of the Merchant Shipping Act, 1958 (44 of 1958); and ( c )valid certificate in respect of such ship indicating its net tonnage is in force." Qualifying ship has reference to the net tonnage. As long as the net tonnage exceeds 15 tonnes and a sea-going ship, it is treated as qualifying ship, but it has to be registered under the Merchant Shi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting approving the option for tonnage tax scheme; or ( ii )shall, if he is not so satisfied, pass an order in writing refusing to approve the option for tonnage tax scheme, and a copy of such order shall be sent to the applicant. Provided that no order under clause ( ii ) shall be passed unless the applicant has been given a reasonable opportunity of being heard. (4) Every order granting or refusing the approval of the option for tonnage tax scheme under clause ( i ) or clause ( ii ), as the case may be, of sub-section (3) shall be passed before the expiry of one month, from the end of the month in which the application was received under sub-section (1). (5) Where an order granting approval is passed under sub-section (3) the provisions of this Chapter shall apply from the assessment year relevant to the previous year in which the option for tonnage tax scheme is exercised." 10. First of all, for making an application under section 115VP, the assessee has to be a qualifying company and only qualifying company may opt for tonnage tax scheme. In our mind, having regard to the facts of this case, the assessee is clearly a qualifying company and it is an Indian company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it report is a mandatory requirement. In the case of Magnum Export (P.) Ltd. ( supra ), the Calcutta High Court was concerned with the situation where the audit report which was mandatory requirement under section 80HHC was not filed before the Assessing Officer. When the audit report was furnished at the appellate stage, the Calcutta High Court accepted the claim of the assessee by holding that although furnishing of audit report is mandatory, time for furnishing is not mandatory. The deduction cannot be disallowed simply because the audit report was not furnished along with the return. To the same effect, the decision of the Madras High Court in the case of Valli Cotton Traders (P.) Ltd. ( supra ), wherein the audit report which is required for the purpose of claiming deduction under section 80HHC was filed at the reassessment stage and their Lordships held that the deduction was not to be denied on technical ground and the assessee has to be permitted to file the form and the Assessing Officer was directed to consider the same even at the time of reassessment. In the light of the principles laid down by these decisions, the impugned order of the learned CIT(A) cannot be foun ..... X X X X Extracts X X X X X X X X Extracts X X X X
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