Liquidated damages not fall under the purview of Tonnage Tax

Dredging Corporation of India Ltd. Vs ACIT (ITAT Visakhapatnam)

Liquidated damages not part tonnage tax as cannot be held to be received from core activity

ITAT Visakhapatnam held that liquidated damages are incidental business income but cannot be said to be profit from core or incidental activity. As there are not directly received from the core activity, they doesn’t form part of computation in tonnage tax.

Facts-

The case was selected for limited scrutiny under CASS and a notice u/s 143(2) was issued to the assessee on 07.04.2016. Assessment order u/s 143(3) of the Income Tax Act, 1961 (in short ‘Act’) was passed on 18.12.2017 with the addition of other operating revenue of Rs.9,43,65,403/-.

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