SHAPOORJI PALLONJI FORBES SHIPPING LIMITED , MUMBAI V. INCOME TAX OFFICER 5(3)(2), MUMBAI

MA 229/MUM/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 5266 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 4 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 01-11-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: I
• Assessment Year: 2011-2012
• Appeal Filed On: 27-03-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: CHAUDHARY ARUN KUMAR SINGH
• Section: 201; 254(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHR I N.K. PRADHAN, ACCOUNTANT MEMBER M.A NO. 229/MUM./2018 ( ARISING OUT OF ITA NO .230/ MUM . / 2015 ) ( ASSESSMENT YEAR : 2011 12 ) SHAPOORJI PALLONJI FORBES SHIPPING LTD. (FORMERLY KNOWN AS SCI FORBES LTD.) C/O KALYANIWALLA & MISTRY LLP ESPLANADE HOUSE, 2 ND FLOOR 29, HAZARIMAL SOMANI MARG FORT, MUMBAI 400 001 PAN AAKCS0662F . APPELLANT V/S INCOME TAX OFFICER WARD 5 ( 3 )( 2 ), MUMBAI . RESPONDENT A SSESSEE BY : SHRI NITESH JOSHI REVENUE BY : SHRI CHAUDHARY ARUNKUMAR SINGH DATE OF HEARING 06.09.2019 DATE OF ORDER 01.11.2019 O R D E R PER SAKTIJIT DEY, J.M. BY WAY OF THE AFORESAID APPLICATION , PURPORTEDLY FILED UNDER SECTION 254(2) OF THE INCOME - TAX ACT, 1961 (FOR SHORT 'THE ACT' ), THE ASSESSEE SEEKS RECALL /RECTIFICATION OF THE APPEAL ORDER DATED 15 TH SEPTEMBER 201 7 , PASSED BY THE TRIBUNAL IN ITA NO.230/MUM./2015. 2 SHAPOORJI PALLONJI FORBES SHIPPING LTD. 2. WE HAVE HEARD SHRI NITESH JOSHI, LEARNED COUNSEL FOR THE ASSESSEE AND SHRI CHAUDHARY ARUNKUMAR SINGH, THE LEARNED DEPARTMENTAL REPRESENTATIVE. 3. THE GRIEVANCE OF THE ASSESSEE IN THE PRESENT APPLICATION IS, THE TRIBUNAL WHILE DISPOSING OFF ASSESSEES APPEAL HAS NOT DECIDED GROUNDS NO .1 AND 3 PROPERLY. AS COULD BE SEEN FROM THE GROUNDS RAISED IN THE MEMORANDUM OF APPEAL, IN GROUND NO.1 THE ASSESSEE HAD CHALLENGED THE DECISION OF THE DEPARTMENTAL AUTHORITIES IN TREATING THE INTEREST INCOME AS INCOME FROM OTHER SOURCES. WHEREAS, IN GROUN D NO.2, THE ASSESSEE HAD CHALLENGED THE DECISION OF THE DEPARTMENTAL AUTHORITIES IN NOT TREATING THE INTEREST INCOME TO BE FORMING PART OF TONNAGE INCOME OF THE ASSESSEE. PERTINENTLY, WHILE DECIDING THE AFORESAID ISSUE, THE TRIBUNAL IN A WELL REASONED ORDE R HAS HELD THAT THE INTEREST INCOME EARNED BY THE ASSESSEE WOULD NOT FORM PART OF THE RELEVANT SHIPPING BUSINESS AS THE INTEREST EARNING ACTIVITY IS A COMPLETELY DISTINCT AND SEPARATE ACTIVITY NOT CONNECTED TO THE SHIPPING BUSINESS OF THE ASSESSEE. THE TRI BUNAL HAD ALSO OBSERVED THAT INTEREST INCOME EARNING ACTIVITY CANNOT ALSO BE CONSIDERED AS INCIDENTAL TO ITS CORE ACTIVITY IN THE CONTEXT OF RULE 11R. THUS, THE TRIBUNAL CONCLUDED THAT THE TONNAGE TAX SCHEME PROVIDED UNDER CHAPTER XII G WOULD NOT BE APPLIC ABLE TO THE INTEREST INCOME EARNED BY THE ASSESSEE. IT IS RELEVANT TO OBSERVE , 3 SHAPOORJI PALLONJI FORBES SHIPPING LTD. HAVING C OME TO THE AFORESAID CONCLUSION THE TRIBUNAL IN PARA 12 OF THE ORDER WHILE NEGATING THE CONTENTION OF THE LEARNED AUTHORISED REPRESENTATIVE HAD SPECIFICALLY REFERRED TO THE ORDER PASSED FOR THE ASSESSMENT YEAR 2010 11 , WHEREIN , SIMILAR INTEREST INCOME EARNED BY THE ASSESSEE WAS TAXED AS INCOME FROM OTHER SOURCES. THUS, IN THE AFORESAID PREMISES, THE TRIBUNAL CONCLUDED THAT NEITHER TONNAGE TAX SCHEME W OULD APPLY TO THE INT EREST INCOME NOR THE INTEREST INCOME COULD BE TREATED AS INCOME UNDER THE HEAD BUSINESS. ACCORDINGLY , GROUNDS NO.1 AND 2 WERE DISMISSED. THUS, FROM THE AFORESAID FACTS, IT IS CLEAR THAT THE TRIBUNAL HAD DECIDED BOTH THE ISSUES RELATING TO THE APPLICABILITY OF TONNAGE TAX SCHEME TO THE INTEREST INCOME AS WELL AS THE HEAD OF INCOME UNDER WHICH INTEREST INCOME IS TO BE ASSESSED. THAT BEING THE CASE, THE CONTENTION OF THE ASSESSEE THAT GROUND NO.1 , HA S NOT BE E N DECIDED IS UN ACCEPTABLE AND CONTRARY TO THE FACTS ON RECORD. 4. INSOFAR AS THE CONTENTION OF THE ASSESSEE THAT GROUND NO.3, HAS NOT BEEN DECIDED, WE MUST OBSERVE THAT IN THE SAID GROUND, THE ASSESSEE HAS SOUGHT NETTING OF F OF INTEREST EXPENDITURE AGAINST THE INTEREST INCOME FOR THE PURPOSE OF COMPUTING THE RELEVANT SHIPPING INCOME UNDER SECTION 115V I OF THE ACT. WHILE DECIDING THE ISSUE IN THE APPEAL ORDER, THE TRIBUNAL CONSIDERED IT AS OTIOSE , SINCE , IT HAS ALREADY HELD THAT INTEREST INCOME IS NOT PART OF RELEVANT SHIPPING 4 SHAPOORJI PALLONJI FORBES SHIPPING LTD. INCOME, THEREFORE, THE CLAIM OF SET OFF OF INTEREST EXPENDITURE CANNOT BE ALLOWED. WE FIND NO MISTAKE , MUCH LESS , MISTAKE APPARENT ON THE FACE OF RECORD IN THE AFORESAID DECISION OF THE TRIBUNAL. UNDISPUTEDLY, WHILE DECIDING GROUND NO.2, THE TRIBUNAL HAS CLEARLY AND CATEGORICALLY RENDERE D A FINDING THAT INTEREST EARNING ACTIVITY OF THE ASSESSEE IS COMPLETELY A DISTINCT AND INDEPENDENT ACTIVITY AND IS IN NO WAY RELATED TO ITS SHIPPING BUSINESS. THEREFORE, TONNAGE TAX SCHEME PROVIDED UNDER CHAPTER XII G WOULD NOT BE APPLICABLE TO THE INTERE ST INCOME EARNED BY THE ASSESSEE. THAT BEING THE CASE, ASSESSEES CLAIM OF NETTING OFF OF INTEREST EXPENDITURE AGAINST INTEREST INCOME WHILE COMPUTING RELEVANT SHIPPING INCOME UNDER SECTION 115V I OF THE ACT AS RAISED IN GROUND NO.3, WOULD NOT ARISE AT ALL . THAT BEING THE CASE, THE GROUND WAS APPROPRIATELY DEALT WITH IN THE MANNER IT WAS DEALT WITH BY THE TRIBUNAL. IN OUR CONSIDERED OPINION, THE PRESENT APPLICATION FILED BY THE ASSESSEE IS ONLY AN ATTEMPT TO SEEK REVIEW OF THE APPEAL ORDER PASSED BY THE TRI BUNAL IN THE GARB OF RECTIFICATION, HENCE, NOT PERMISSIBLE. SUFFICE TO SAY, THE ISSUE S ON THE BASIS OF WHICH THE ASSESSEE HAS FILED THE PRESENT APPLICATION DOES NOT FIT STRICTLY INTO THE EXPRESSION MISTAKE APPARENT ON THE FACE OF RECORD . HENCE, THE PRE SENT APPLICATION FILED BY THE ASSESSEE IS OUTSIDE THE PURVIEW SECTION 254(2) OF THE ACT. THEREFORE, THE APPLICATION BEING DE VOID OF MERIT DESERVES TO BE DISMISSED. ACCORDINGLY, WE DO SO . 5 SHAPOORJI PALLONJI FORBES SHIPPING LTD. 5. IN THE RESULT, MISC. APPLICATION IS DISMISSED. OR DER PRONOUNCED IN THE OPEN C OURT ON 01.11.2019 SD/ - N.K. PRADHAN ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 01.11.2019 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, ITAT, MUMBAI; (6) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY ASSISTANT REGISTRAR ITAT, MUMBAI