9911796707
TMI Blog2012 (5) TMI 73X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the case, learned CIT(A) is wrong and unjustified in holding that the Assessing Officer made no mistake in holding that the appellant did not correctly apply the formula for apportionment of common expenses towards non-shipping business and thereby confirming deduction of proportionate expenses at Rs. 53,02,884 in the place of Rs. 1,01,80,626 as claimed by the appellant. 2. That on the facts and in the circumstances of the case, learned CIT(A) erred in confirming common expenses at Rs. 17,93,62,713 as computed in the assessment order, while admitting that no reasoning has been given in the assessment order for not considering the common expenses allowable under the Act for Rs. 2,10,00,999 as claimed by the appellant. &nbs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eciation claim at Rs. 23,84,13,357, salary wages and other benefits at Rs. 11,71,25,736, and other shipping related business expenses at Rs. 1,75,70,786, aggregating to total expenditure of Rs. 114,12,70,865. It was thus noted that the assessee has shown net profit from shipping business at Rs. 3,70,22,435, i.e. the difference between revenues and expenditure relating to shipping business, and paid tax on income of Rs. 1,18,57,063 as computed under section 115 VG. So far as this computation of income under tonnage scheme is concerned, the Assessing Officer had no issues with the assessee. 3. However, while examining computation income from activities other than shipping business, the Assessing Officer had some reservations on the course ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commission, brokerage and Agency fees 6,90,13,328 Depreciation on vessels Total depreciation 23,84,13,357 Less : Depreciation on Assets other than ships - As per IT Act 13,07,498 23,71,05,859 98,47,18,180 Common expenses which cannot be segregated 17,93,62,713 Allocated in the ratio of gross income from other sources to gross income from business i.e. 17,9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business activity, the CIT(A) expressed the view that gross receipts from shipping business as also non shipping business should be taken into account for this purpose. He was of the opinion that the assessee's insistence on taking into account gross income from non-shipping activity and net income from shipping activity is 'completely misplaced'. He thus approved the action of the Assessing Officer and declined to interfere in the matter. The assessee is aggrieved and is in appeal before us. 5. We have heard the rival contentions, perused the material on record and duly considered factual matrix of the case as also the applicable legal position. 6. We find that, in terms of the provisions of Section 115 VF, when an assessee options for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommon costs attributable to tonnage tax business are concerned are to be determined on a reasonable basis. However, with regard to the depreciation, the allocation of costs have to take into account use of such asset for tonnage tax business and the other business. 8. Ironically, however, the assessee as also the authorities below have proceeded to use the expression 'reasonable basis' as interchangeable with 'proportionate basis'. This approach itself is fallacious inasmuch as proportionate basis is not essentially a reasonable basis in all the situations, particularly in the context of passive incomes like rent and interest. While shipping business is essentially an active business which needs to be monitored and controlled on day to day ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be desired. The fact that the Assessing Officer is said to have accepted the same formulae, as is rejected in this assessment year, for apportionment of expenditure in the immediately succeeding assessment year, in our humble understanding, cannot act as a estoppel against the specific provisions of law. The provisions of law under section 115 VJ have not been taken into account by the authorities below. In this view of the matter, as also bearing in mind entirety of the case, we deem it fit and proper to remit the matter to the file of the Assessing Officer for adjudication de novo in the light of the correct legal position and our observations as above. We have also noted that the assessee is in appeal and the assessee has already been a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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