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TMI Blog5106/1992.X X X X Extracts X X X X X X X X Extracts X X X X ..... for carrying goods from Indian ports to the intermediate ports can be allowed as a "deduction" in computing the income of the mother ships u/s. 172(2) of the Act. 4. There appears to have been a change in the pattern of shipping goods from and to Indian ports in the last few years when large bulk carriers are being employed by the International Shipping Companies who find it uneconomical to move the entire large ship to an Indian port to deliver or to take in a considerably small quantity of cargo. These large ships call on either at Singapore or at Colombo and smaller feeder ships operating between Singapore/Colombo and the Indian ports like Madras, carry the goods from such large ships to India or from India to such large ships calling ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the transhipment between Madras and Singapore/Colombo. 5. If the freight paid to the feeder ship is seen as a payment made or expenditure incurred by the mother ship, then as has been rightly pointed out in the assessment order in the case of M/s. Evergreen Marine Corporation enclosed to the petition, the income charged to tax u/s.172(2) of the Act is a deemed income, estimated at 7.5% of the freight charges received or receivable in India by the Non-resident ship owner. As the section stands today, there is no scope for allowing any deductions for any expenditure or outgoing from such an estimated income. Unless the Act is suitably amended, no such deduction can be made, since it has to be presumed that while prescribing the rate at 7. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n other freight charges, the total of which is shown in the combined Bill of Lading, then the tax liability u/s.172, can be cast only on the apportioned amounts. For transporting say 1000 tons of iron ore from Madras to Tokyo, involving total freight charges of say Rs. 100 lakhs, the tax leviable in India cannot be Rs. 7.5 lakhs if one ship carries all through from Madras to Tokyo and about Rs. 10 lakhs, if two ships carry, one upto Singapore earning 1/3 and another from Singapore to Tokyo earning 2/3 of the total freight charges of Rs. 100 lakhs. If the issue is viewed as only one of apportionment of single freight charges and not as deduction, then the Board can issue a classificatory circular that taxes be levied u/s.172(2) only on the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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