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TMI Blog2005 (7) TMI 383X X X X Extracts X X X X X X X X Extracts X X X X ..... ch carries any goods shipped at a port in India. None of the requirements of the section are fulfilled - If section 172(1) of the Act is not applicable there is no question of computing and levying tax in terms of section 172(2) of the Act - Decided in favour of assessee. - 253 of 1993 - - - Dated:- 8-7-2005 - MEHTA D. A., DEVANI H. N. MS. JJ JUDGMENT D. A. Mehta J.- 1. The following question has been referred by the Income-tax Appellate Tribunal, Ahmedabad Bench "B" under section 256(1) of the Income-tax Act, 1961 (the Act) at the instance of the Commissioner of Income-tax. "Whether, the Appellate Tribunal is right in law in holding that the provisions of section 172 were not applicable and hence tax was not leviable u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Assessing Officer instead of replying to the query raised by the assessee called upon the assessee to furnish a return of income and pay income-tax on the towing charges. The assessee resisted the said attempt, but after prolonged correspondence furnished the necessary details in terms of section 172 of the Act and paid a sum of Rs. 63,725, (rupees sixty-three thousand seven hundred twenty-five only) as tax under protest. The said amount was taxed on protective basis by the Assessing Officer since the assessee had offered the same, while maintaining that the assessee was liable to be taxed on a total income of Rs. 9,80,392 (rupees nine lakhs eighty thousand three hundred ninety-two only). 5. The assessee carried the matter in appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich belongs to or is chartered by a non-resident, and such cargo, i.e., passengers etc., is shipped at a port in India. That admittedly M. V. Kranj having been towed away from Navlakhi port by the tug and the tug being a ship, requisite conditions of goods being carried by a ship are fulfilled and the Tribunal was in error in giving a restricted meaning to the term "goods". That the word "goods" means all movable articles of whatsoever nature and thereby a ship which cannot sail on its own would be goods when it is towed away by another ship. He, therefore, urged that the Tribunal's order was required to be reversed and the order made by the Commissioner of Income-tax (Appeals) restored. 9. As controversy turns on the interpretation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he wide definition of a "ship", can it be stated that the "goods" are shipped at a port in India ? Therefore, the terms "carries", "goods" and "shipped" shall have to be analysed in the context and purpose of the provision. The object of the provision is to levy and recover tax in relation to shipping business of non-residents. 12. When one talks of carrying of passengers, livestock, mail or goods in a ship can the concept of carrying be equated with towing ? In this context the word "tow" as per the plain dictionary meaning would mean "to pull a car or boat behind another vehicle using a rope or chain". This is the meaning ascribed to "tow" when it is used as a verb. The word "tow" when used as an idiom, i.e., "in tow" means in the con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not propel itself on its own, does not become "goods" for the purpose of being carried by a ship for the purpose of trade. In fact it is an admitted position that M. V. Kranj was being towed away only because it had developed engine trouble and not for the purpose of being traded as "goods". This meaning, namely, that the goods should be meant for the purpose of trade becomes abundantly clear when the term "shipped" following the term "goods" is taken into consideration. 16. The term "shipped" is used in the past tense of the term "ship" as a verb, considering the setting in which it is used namely passengers, live-stock, mail or goods shipped at a port in India. The plain meaning of the term "ship" means "to send or transport something ..... X X X X Extracts X X X X X X X X Extracts X X X X
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