Case Law Details
Case Name : CIT Vs V.S. Dempo & Co. Pvt. Ltd. (Bombay High Court)
Appeal Number : Income Tax Appeal Nos. 989, 991, 948, 957,978 of 2015
Date of Judgement/Order : 05/02/2016
Related Assessment Year :
Courts :
All High Courts Bombay High Court
Become a Premium member to Download.
If you are already a Premium member, Login here to access.
Sponsored
Brief of the Case
Bombay High Court held In the case of CIT vs. V.S. Dempo & Co. Pvt. Ltd. that section 44B enacts special provisions for computing profits and gains of shipping business in case of non-residents and section 172 is enacted for the purpose of levy and recovery of tax in the case of any ship belonging to or chartered by a non-resident operated from India. Further the sub-sections of section 44B denote as to how the amounts paid to or payable would include demurrage charges or ha
Please become a Premium member. If you are already a Premium member, login here to access the full content.
Sponsored
Kindly Refer to
Privacy Policy &
Complete Terms of Use and Disclaimer.
if we are doing payment to shipping line , what requirement should be ask from shipping line for confirmation that the shipping line is exempted with section 172
The Act is divided into different chapters dealing with different aspects. Section 172 falls in Chapter XV dealing with Liability in Special Cases. Truly, the liability in case of a foreign ship has been put on the Master instead of the Company. That has necessitated section 172 vis a vis section 139 falling under Chapter XIV “Procedure for Assessment”. Section 196 falls under Chapter XVII “Collection and Recovery of Tax”. No doubt section 172 provides a certificate of tax clearance before leaving port yet it does not substitute other methods of recovery. Assuming in an extreme case the master of the ship does not furnish certificate envisaged under section 172, would the Revenue simply wait indefinitely as appears the result of the judgment, or would resort to other provisions for recovery. With all due respects the judgement appears to be debatable.
AP Agrawal
ILS Retd.
there is some gap in decision as section 44B cover two situtions whereby it deems the income and nature of such income is profit & gains from Business. (1) freight on export of goods & passanger fare and (2) amount received in India by or on behalf of non resident (i.e. import freight). You may be knowing that as per section 5 of Income tax Act, receipt of income in India irrespective of its place of accrual also tiggers the tax liability and so sub section (2) also provide for the same in that line.
whereas section 172 covers only one situtation (i.e the taxability of first part of section 44B (i.e. 7.50% of freight on export of goods and passenger fare from Indian port). In this circumstances, though section 172 provide for levy, filing of returns, recovery and assessment, as per the present express provision, its coverage is limited to fright and fare collected on goods and passanger shipped at port in India. so it is silent about amount of import freight which is taxable in India on reciept basis. In the shipping business, it is a business practice that local agent of non resident recieve the money on behalf of non resident towards import freight. considering express provision of section 172, there is a question mark about tds liability on sum received by agent of non resident (i.e. receipt towards freight on import of goods).
According to my personal view, unless section 172 is amended to cover the both situtations as mentioned in section 44B, TDS is to be deducted on import freight received in India by the agent or non -resident himself unless non-resident or agent therof provide the certificate from AO to be issued u/s. 197 of the Act.