ACIT, CHENNAI V. M/s. Sanmar Shipping Ltd., CHENNAI

ITA 1658/CHNY/2009

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61138 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 6 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-05-2012
• Appeal Filed By: Department
• Bench Allotted: C
• Next Hearing Date: 09-05-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 22-10-2009
• Court: TRIBUNAL
• Keywords: Opportunity of being heard
• Section: 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI V. DURGA RAO, JUDICIAL MEMBER I.T.A. NO. 1658/MDS/2009 [ASSESSMENT YEAR 2006-07] A . C.I.T COMPANY CIRCLE VI(1) CHENNAI. (APPELLANT) VS. M/S SANMAR SHIPPING LTD. NO. 9, CATHEDRAL ROAD CHENNAI 600 086. PAN : AABCS 0545 C (RESPONDENT) REVENUE BY : SHRI YOGESH KAMAT, SR. D.R ASSESSEE BY : SHRI VI KRAM VIJAYARAGHAVAN, ADVOCATE DATE OF HEARING : 09.05.2012 DATE OF PRONOUNCEMENT : 09.05.2012 O R D E R PER V. DURGA RAO, JM : THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A)-V, CHENNAI DATED 25.03.2009 FOR THE ASSESSMENT YEAR 2006-07. 2 ITA NO. 1658/MDS/2009 2. FACTS IN BRIEF ARE THAT THE ASSESSEE IS A PUBLIC LIMITED COMPANY CARRYING ON THE BUSINESS OF SHIPPING. DURIN G THE YEAR UNDER CONSIDERATION, THE ASSESSEE FILED RETURN OF INCOME ON 30.10.2006 ADMITTING TOTAL INCOME OF RS. 58,05,295/-. RETURN WAS PROCESSED U/S 143(1) OF THE ACT. SUBSEQUENTLY, THE CASE OF TH E ASSESSEE WAS SELECTED FOR SCRUTINY. NOTICES WERE ISSUED U/S 143 (2) AND 142(1) OF THE ACT CALLING FOR EXPLANATION OF THE ASSESSEE AND AFTER DUE PROCESS, ASSESSMENT WAS COMPLETED. 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, TH E ASSESSING OFFICER OBSERVED THAT THE ASSESSEE COMPANY COMPUTED THE ASSESSEES INCOME OF RS. 58,05,295/- UNDER TONNAGE TAX SCHEME AND OBTAINED APPROVAL OF THE ADDITIONAL COMMISSIONE R, COMPANY RANGE-VI, CHENNAI U/S 115VP OF THE ACT. THE ASSESS EE COMPUTED TOTAL INCOME AT RS. 58,05,295/- UNDER THE TONNAGE T AX SCHEME AND COMPUTED TAX PAYABLE AT RS. 19,54,062/- AS PER PROV ISIONS OF SEC 115VF OF THE ACT. FURTHER, TAXABLE INCOME IN ACCOR DANCE WITH OTHER PROVISIONS OF THE ACT WAS COMPUTED AT RS. 5,8 6,394/- AND THE TAX THEREON WAS COMPUTED AT RS.1,97,380/-. DURING THE COURSE OF 3 ITA NO. 1658/MDS/2009 SCRUTINY PROCEEDINGS, THE ASSESSEE WAS ASKED TO FUR NISH DETAILS OF MISCELLANEOUS INCOME OF RS. 47.51 LAKHS AND DIFFERE NCE IN EXCHANGE OF RS. 57.66 LAKHS AND THE REASONS FOR COMPUTING TH E ABOVE INCOMES U/S 115VF OF THE ACT. IN REPLY THE ASSESSEE FURNIS HED A NOTE VIDE ITS LETTER DATED 10.12.2008 AS UNDER: MISCELLANEOUS INCOME RS. 47.51 LAKHS 1. CREDITORS WRITTEN BACK RS. 28,48,178/- 2. PROVISION FOR EXPENSES WRITTEN BACK RS. 31,18,869/ - 3. CHARGES RECEIVED FOR STORE ITEMS RS. 1,05,395/- 4. INCOME RECEIVED FROM POOL MANAGERS RS. 13,97,365/- TOTAL RS. 47,51,292/- THE REPRESENTS WRITE BACK OF SUNDRY CREDITORS, PROV ISION FOR EXPENSES WRITTEN BACK RELATING TO SHIPPING ACTIVITI ES. INCOME RECEIVED FROM POOL MANAGERS REPRESENTS INCOME RECEI VED FROM THEM FOR AMOUNT RETAINED BY THEM FOR WORKING C APITAL PURPOSES FOR OPERATING THE SHIPS. CHARGES RECEIVED FOR STORE ITEMS REPRESENT ADMINISTRATIVE CHARGES RECEIVED SHI PPING CREW WITH RESPECT TO STORE ITEMS PROVIDED TO THEM. IT IS ALSO SUBMITTED THAT THE SAME IS RELATED TO SHIPPING ACTI VITIES AS PER SECTION 115VI OF THE ACT AND THE SAME SHALL NOT BE CHARGED TO TAX AS PER SEC 115VF OF THE ACT. 4 ITA NO. 1658/MDS/2009 DIFFERENCE IN EXCHANGE OF RS. 57.66 LAKHS DIFFERENCE IN EXCHANGE RELATES TO EXCHANGE DIFFEREN CE ARISING ON ACCOUNT OF FREIGHT EARNING FROM SHIPS/PAYMENT TO SUPPLIERS. WE SUBMIT THAT THIS EXCHANGE DIFFERENCE IS INCOME GENERATED FROM SHIPPING ACTIVITIES AS PER SECTION 1 15VI OF THE ACT AND THE SAME SHALL NOT BE CHARGED TO TAX AS PER SECTION 115VF OF THE ACT. THE ASSESSING OFFICER, AFTER CONSIDERING THE ABOVE NOTE SUBMITTED BY THE ASSESSEE CAME TO A CONCLUSION THAT THE DETAI LS SUBMITTED BY THE ASSESSEE ARE NOT RELATING TO SHIPPING INCOME. THEREFORE, THE ASSESSING OFFICER CONSIDERED THE MISCELLANEOUS INCO ME OF RS. 47,51,029/- AND DIFFERENCE IN FOREIGN EXCHANGE RS. 57,65,719/- AS REGULAR INCOME IN ACCORDANCE WITH THE PROVISIONS OF THE ACT. AS AGAINST THE ORDER PASSED BY THE ASSESSING OFFICER, THE ASSESSEE WENT IN APPEAL BEFORE THE LD. CIT(A). 5. THE LD. CIT(A), BASED ON THE SUBMISSIONS MADE BY THE ASSESSEE AND WITHOUT CONSIDERING THE DETAILS, ALLOWED THE AP PEAL OF THE ASSESSEE BY OBSERVING THAT THE MISCELLANEOUS INCOME AND DIFFERENCE 5 ITA NO. 1658/MDS/2009 IN FOREIGN EXCHANGE COME UNDER SHIPPING INCOME AND DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. AGGRIEVED, THE REVENUE CARRIED THE MATTER IN APPEAL BEFORE THE TRIBUNAL 5. IT WAS SUBMITTED BY THE LD. A.R. OF THE ASSESSEE THAT DETAILS OF ALL EXPENDITURE AND NOTE WAS FILED BEFORE THE ASSES SING OFFICER. THE ASSESSING OFFICER HAS NOT CONSIDERED THE NOTE S UBMITTED BY THE ASSESSEE PROPERLY. HE STRONGLY SUPPORTED THE ORDER PASSED BY THE LD. CIT(A). 6. ON THE OTHER HAND, THE LD. D.R. SUBMITTED THAT N O DETAILS IN RESPECT OF MISCELLANEOUS INCOME RELATING TO FLUCTUA TION IN FOREIGN EXCHANGE HAVE BEEN FILED NEITHER BEFORE THE ASSESSI NG OFFICER NOR BEFORE THE LD. CIT(A). THEREFORE, HE SUBMITTED THA T THE ADDITION MADE BY THE ASSESSING OFFICER HAS TO BE SUSTAINED A ND THE ORDER OF THE LD. CIT(A) REVERSED. 6 ITA NO. 1658/MDS/2009 7. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE RELEVANT MATER IAL AVAILABLE ON RECORD. BOTH THE PARTIES AGREED THAT THE ISSUE MAY BE REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER FOR FRESH CONSIDERATION. IN THE INTEREST OF JUSTICE, WE ARE OF THE CONSIDERED O PINION THAT THIS ISSUE NEEDS TO BE RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION IN ACCORDANCE WITH LAW AFTER CONSIDERING ALL DETAILS FILED BY THE ASSESSEE, OF COURSE, AFTER PRO VIDING SUFFICIENT OPPORTUNITY OF BEING HEARD TO BOTH THE PARTIES. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLO WED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ON 9 TH OF MAY, 2012, AT CHENNAI. SD/- SD/-/- (N.S. SAINI) (V. DURGA RAO) ACCOUNTANT MEMBER JU DICIAL MEMBER CHENNAI, DATED THE 9 TH MAY, 2012. VL/- 7 ITA NO. 1658/MDS/2009 COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT(A), CHENNAI (4) CIT, CHENNAI (5) D.R. (6) GUARD FILE