DCIT-5(3)(1), MUMBAI V. TAG OFFSHORE LTD. C/O DUFF & PHELPS INDIA PVT LTD. (SUDIP BHATTACHARYA LIQUIDATOR- ), MUMBAI

ITA 764/MUM/2023

AI Insights

The case involves Tag Offshore Ltd., a company engaged in the business of operating and chartering ships, which is eligible for the Tonnage tax scheme under Section 115VP of the Income-tax Act, 1961. The dispute arose when the CPC processed the company's return for A.Y. 2018-19, significantly increasing the assessed income by not applying the Tonnage tax scheme. The company appealed this decision, and the CIT (A) ruled in its favor, reinstating the Tonnage tax computation. The Dy. Commissioner of Income Tax challenged this decision before the Income Tax Appellate Tribunal, which upheld the CIT (A)'s decision.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 113408 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-06-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 21-05-2023
• Assessment Year: 2018-2019
• Appeal Filed On: 12-03-2023
• Other Referred Cases: Van Ord India Pvt. Ltd.
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Liquidation
• Section: 32; 28

Judgement Text

IN TH E INCOME TAX APPELLATE TRIBUNAL “G” BENCH, MUMBAI BEFORE SHRI PRASHANT MAHARISHI, AM AND SHRI KULDIP SINGH, JM I T A N o . 7 6 4 /M UM /2 0 2 3 ( A s s es s m e n t Ye a r 2 0 1 8-19) D C IT 5 ( 3 ) ( 1 ) R o om N o . 5 7 3 , 5 th F l o o r , A a ya k a r B h a v a n , Mu m b a i 4 0 0 0 2 0 V s . T AG O F F S H O RE L T D . S u d ip B h a t ta c h a r ya L iq u i d a to r – T a g O f f s h o r e L td C /o D u f f & P h e lp s In d ia P v t. L t d . 14 th F lo o r , R a h e j a T o we r , B K C , B a n d r a ( E ) , Mu m b a i 4 0 0 0 5 1 (Appellant) (Respondent) PAN No. AABCT8019L ‘ Assessee by : N o n e Revenue by : S h r i K is h o r D h u le , D R D a t e o f h e a r in g : 2 2 . 0 5 .2 0 2 3 Date of pronouncement : 2 7 .0 6. 2 0 2 3 O R D E R PER PRASHANT MAHARISHI, AM: 01. ITA No. 7624/Mum/2023 is filed by the Dy. Commissioner of Income Tax, 5(3)(1), Mumbai (the learned Assessing Officer) for A.Y. 2018-19 against the appellate order passed by National Faceless Appeal Centre, Delhi [the learned CIT (A)] dated 11 th January, 2023, raising the following solitary grounds of appeal:- “1. On the facts and circumstances of the case and in law, the Ld. CIT(A)/NFAC erred in allowing the appeal of the assessee without appreciating the fact that the facts and circumstances of both the cases are entirely different and even ration of judgment of Van Ord India Pvt. Ltd. is not applicable to the case the assessee. Page | 2 ITA No. 764/Mum/2023 Tag Offshore Ltd.; A.Y. 18-19 2. On the fact and circumstances of the case and in law, the Ld. CIT(A)/NFAC erred in deleting the disallowance made by the CPC without appreciating the fact that the CPC relied on the ITR filed by the assessee in the course of disallowing the claim of the assessee while processing the Return of Income.” 02. The brief facts of the case shows that assessee is a company engaged in the business of operating and chartering of ships and vessels and providing services to ONGC and various Sea Port authorities. As the assessee is qualifying tonnage tax company under Section 115VC and such scheme is approved in case of the assessee under Section 115VP of the Income-tax Act, 1961 (the Act) as per order dated 30 th May, 2014 for ten years up to 2024-25. Therefore, the assessee filed its return of income for A.Y. 2018-19 on 31 st October, 2018 at the total income of ₹ 75,02,850/-. 03. The central processing centre Bangalore passed an intimation under Section 143(1) of the Act on 9 th March, 2020, wherein the total income of the assessee was determined at ₹134,87,73,250/-. The city) that the central processing Centre did not consider the taxability of the income of the assessee under the tonnage tax scheme. 04. Against this, assessee preferred the appeal before the learned CIT (A). Assessee was aggrieved where the income of the assessee was computed under the normal provisions disallowing depreciation allowance and disallowing expenses and thereafter, computed the income of the assessee as per normal computation mechanism. It was the claim that assessee is an eligible Tonnage tax company and its computation of total income is required to be computed on the basis of qualifying ship income. It was also submitted that when communication was received about the proposed adjustment, assessee submitted that CIRP proceedings has been initiated against the company with effect from 24 th April, 2019 and liquidation has been ordered by NCLT as per order dated 26 th September, 2019. Therefore, no information could be provided, however, assessee submitted complete detail stating that assessee is a Tonnage tax company and income is chargeable to tax as per chapter XII-G and no disallowance can be made under Section 28 to 43C of the Act. 05. The learned CIT (A) following the decision of the co-ordinate Bench in ITA No. 7228/Mum/2012 dated 22 nd May, 2019, held that assessee company is a Page | 3 ITA No. 764/Mum/2023 Tag Offshore Ltd.; A.Y. 18-19 qualifying Tonnage tax company and its income has been computed as per chapter XII-G and Assessing Officer was directed to delete the disallowance made by the CPC of various expenses and depreciation. He further held that assessee has not claimed any additional deduction of depreciation under Section 32 of the Act. Accordingly, appeal of the assessee was allowed. 06. The learned Assessing Officer aggrieved with appellate order preferred the appeal before us. 07. We have heard the learned Departmental Representative. None appeared on behalf of the assessee. Therefore, the appeal is decided on the merits of the case. 08. The learned CIT (A) has categorically noted that assessee is a qualifying Tonnage tax company and its claim is also approved as per order dated 30 th May, 2014. To the Tonnage tax company, special provision are applicable and the profits are computed from operating qualifying ships on the Tonnage income of the assessee under Section 115VP of the Act. The provisions of Section 28 to 43C of the Act are not applicable while computing the Tonnage tax income. The claim of the depreciation is also not separately allowed. It is not the case of the learned Assessing Officer that the certificate for Tonnage tax scheme originally granted to the assessee on 17 th February, 2005 and subsequently, renewed on 30 th May, 2014 is not applicable to the assessee. In view of the above facts, the disallowance made by the Central Processing Centre (CPC) of depreciation and various expenditure are correctly deleted. In view of this, we do not find any infirmity in the order of the learned CIT (A) in deleting the disallowance of expenditure as well as the depreciation made by CPC. We confirm the order of the learned CIT (A) and ground no.1 and 2 of appeal of learned Assessing Officer are dismissed. 09. In the order, the appeal filed by the learned Assessing Officer is dismissed. Order pronounced in the open court on 27.06.2023. S d /- S d /- (K U L D IP S IN G H) ( P RA SH AN T MA H A RIS H I) ( J UD IC IA L ME MB E R ) ( A CC O UNT AN T ME MB E R ) Mumbai, Dated: 27.06.2023 Sudip Sarkar, Sr.PS Page | 4 ITA No. 764/Mum/2023 Tag Offshore Ltd.; A.Y. 18-19 Copy of the Order forwarded to: 1. The Appellant 2. The Respondent. 3. The CIT(A) 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. BY ORDER, True Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Mumbai