ASST. C.I.T.,RG.5(3), MUMBAI v. M/S. SHIPPING CORPORATION OF INDIA, MUMBAI

ITA 5556/MUM/2007 | 2003-2004
Pronouncement Date: 23-12-2010 | Result: Dismissed

Appeal Details

RSA Number 555619914 RSA 2007
Assessee PAN AAACT1542F
Bench Mumbai
Appeal Number ITA 5556/MUM/2007
Duration Of Justice 3 year(s) 4 month(s)
Appellant ASST. C.I.T.,RG.5(3), MUMBAI
Respondent M/S. SHIPPING CORPORATION OF INDIA, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 23-12-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted E
Tribunal Order Date 23-12-2010
Assessment Year 2003-2004
Appeal Filed On 23-08-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E MUMBAI. BEFORE SHRI J. SUDHAKAR REDDY ACCOUNTANT MEMBER AN D SHRI V. DURGA RAO JUDICIAL MEMBER ITA NO.5556/MUM/2007 (ASSESSMENT YEAR : 2003-04) ASST. COMMISSIONER OF INCOME TAX RANGE 5(3) MUMBAI. VS. SHIPPING CORPORATION OF INDIA SHIPPING HOUSE 245 MADAME CAMA ROAD MUMBAI-400 021 PAN AAACT1542F (APPELLANT) (RESPONDENT) C.O. NO.294/MUM/07 (IN ITA NO.5556/MUM/07) (BY ASSESSEE - ASST. YEAR 2003-04) APPELLANT BY : SHRI SATBIR SINGH. RESPONDENT/C.O. BY : SHRI MUKESH TRIVEDI & SHRI DI NESH VYAS. PER V. DURGA RAO J.M. : THIS APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-V MUMBAI DT.2 2.6.2007. THE ASSESSEE HAS ALSO FILED C.O. AGAINST THE SAID ORDER OF CIT(A). 3. AT THE OUTSET THE LEARNED COUNSEL FOR THE ASSESS EE SUBMITTED THAT THE REVENUE HAS RAISED TWO GROUNDS IN THEIR APPEAL. HOW EVER PERMISSION GRANTED BY COD IS ONLY TO PURSUE THE ISSUE RELATED TO FOREIGN TAX PAYMENTS. THEREFORE THE ISSUE RELATING TO FOREIGN TAX ONLY T O BE CONSIDERED IN THIS APPEAL. 4. ON THE OTHER HAND THE LEARNED DEPARTMENTAL REPR ESENTATIVE CONCEDED THAT THE COD HAS GIVEN APPROVAL TO PURSUE THE ONLY ISSUE WITH REGARD TO FOREIGN TAX PAYMENT. ITA NO.5556/MUM/07 & CO 294/MUM/07 2 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. THE C OD VIDE LETTER DT.12.4.2010 GRANTED APPROVAL TO THE DEPARTMENT TO PURSUE THE ISSUE RELATING TO FOREIGN TAX PAYMENTS THEREFORE WE PROCEED TO HEAR THE APPEAL WITH REGARD TO FOREIGN TAX PAYMENTS CLAIMED AS EXPENSES BY THE ASSESSEE ARE ALLOWABLE OR NOT ?. 6. THE SECOND GROUND OF APPEAL RAISED BY THE REVENU E IS WITH REGARD TO WHETHER THE EXPENSES ON MAINTENANCE OF SHIPS DURING THE ACCOUNTING PERIOD ALLOWABLE OR NOT THERE IS NO APPROVAL FROM COD FIL ED BEFORE US THEREFORE THIS GROUND OF APPEAL RAISED BY THE REVENUE IS DISM ISSED. HOWEVER IT IS OPEN TO THE DEPARTMENT AS AND WHEN COD APPROVAL IS GIVEN THEY ARE AT LIBERTY TO PURSUE THE SAME AS PER LAW. 7. THE BRIEF FACTS RELATING TO FOREIGN TAX PAYMENTS ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF SHIPPING THE ASSESSE E HAS FILED RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WHEREIN THE ASSESSEE HAS CLAIMED FOREIGN TAXES PAID OF ` .81 97 478/- AS BUSINESS EXPENDITURE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFF ICER HAS OBSERVED THAT ON PERUSAL OF THE PROFIT AND LOSS ACCOUNT AND THE A NNEXURE ATTACHED TO THE RETURN OF INCOME (PAGE 17) THE ASSESSEE HAS DEBITE D AN AMOUNT OF ` .81 97 478/- AS ACTUAL FOREIGN TAXES PAID DURING TH E YEAR UNDER CONSIDERATION. THE ASSESSEE WAS ASKED TO EXPLAIN A S TO WHY THIS EXPENDITURE SHOULD NOT BE DISALLOWED. IN REPLY THE ASSESSEE H AS MADE SUBMISSION VIDE LETTER DT.17.3.2006 WHEREIN IT IS STATED THAT THE S AID EXPENDITURE IS ALLOWABLE UNDER SECTION 37 OF THE INCOME TAX ACT 1961 (THE A CT) AS THE SAME HAS BEEN INCURRED FOR THE PURPOSE OF BUSINESS OF THE AS SESSEE. IT IS FURTHER ITA NO.5556/MUM/07 & CO 294/MUM/07 3 SUBMITTED THAT EXPENSES INCURRED IN THE COURSE OF B USINESS. HOWEVER THE ASSESSING OFFICER HAS NOT AGREED WITH THE SUBMISSIO NS OF THE ASSESSEE AND BY FOLLOWING THE ITAT MUMBAI BENCH DECISION IN THE CA SE OF M/S. VARUN SHIPPING LIMITED IN ITA NO.1548/MUM/99 FOR A.Y. 199 4-95 THE CLAIM OF THE ASSESSEE WAS DENIED AND SAME WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 8. THE ASSESSEE CARRIED THE MATTER BEF ORE THE LEARNED CIT(A). BEFORE THE LEARNED CIT(A) IT WAS SUBMITTED THAT I N EARLIER YEAR IN ASSESSEES OWN CASE SIMILAR CLAIM OF THE ASSESSEE WAS ALLOWED BY RELYING UPON THE DECISION OF HON'BLE MUMBAI HIGH COURT IN THE CASE OF GOODLAS NEROLAC REPORTED IN 188 ITR 1 AND ALSO CIT VS. SOUTH EAST ASIA SHIPPING CO. IN ITA NO.123 OF 1976 AND IN ITA NO.89 OF 1989 CIT VS. TA TA SONS IN MARCH 1993. THE LEARNED CIT(A) AFTER CONSIDERING THE SUBMISSION S OF THE ASSESSEE OBSERVED THAT UNDER THE INCOME TAX ACT DISALLOWANC E CAN ONLY BE MADE IF ANY SUM PAID ON ACCOUNT OF ANY RATE OR TAX LEVIED O N THE PROFITS AND GAINS (SECTION 40(II)) AND TAX HAS BEEN DEFINED IN SECTIO N 2(43) TO MEAN INCOME TAX CHARGEABLE UNDER THE PROVISIONS OF INCOME TAX A CT. THESE PROVISIONS THEREFORE DO NOT DIRECTLY COVER FOREIGN TAXES PAID BY THE ASSESSEE ITS ALLOWABILITY OR OTHERWISE HAS TO BE DECIDED THEN UN DER SECTION 37(1) OF THE ACT. THE FOREIGN TAXES HAVE BEEN PAID BY THE ASSES SEE TO EARN INCOME AND ALLOWED THE CLAIM OF THE ASSESSEE. THE DISALLOWANC E MADE BY THE ASSESSING OFFICER WAS DELETED. ITA NO.5556/MUM/07 & CO 294/MUM/07 4 9. ON BEING AGGRIEVED THE REVENUE CARRIED THE MATTE R BEFORE THE TRIBUNAL. 10. AT THE TIME OF HEARING THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE INVOLVED IN THIS APPEAL IS COVERED BY ASSESSEES OWN CASE FOR THE A.Y.S 1981-82 1982-83 IN ITA NOS.3846 & 3847/MUM/84 AND IT IS ALSO COVERED BY THE DECISION OF CIT VS. TATA SON S IN APPEAL NO.2009 OF 2001. 11. WE HAVE HEARD BOTH THE SIDES AND GONE THROUGH T HE MATERIAL AVAILABLE ON RECORD AND ORDERS OF AUTHORITIES BELOW. WE FIND THAT THE ASSESSEE HAS PAID TAXES IN FOREIGN PORTS IN THE OTHER COUNTRIES AND CLAIMED SOME OF THE EXPENDITURE UNDER SECTION 37(1) OF THE ACT. THE IT AT IN ASSESSEES OWN CASE FOR THE A.YS 1981-82 AND 1982-83 ALLOWED THE CLAIM OF THE ASSESSEE AND EVEN SIMILAR ISSUE TRAVELED TO THE BOMBAY HIGH COURT IN THE CASE OF TATA SONS (SUPRA). THE HON'BLE MUMBAI HIGH COURT DISMISS ED THE APPEAL OF THE REVENUE AND DECIDED THE ISSUE IN FAVOUR OF THE ASS ESSEE. THEREFORE RESPECTFULLY FOLLOWING THE JUDGMENT OF HONBLE JURIS DICTIONAL HIGH COURT VIDE INCOME TAX APPEAL NO.209 OF 2001 FOR A.Y. 1985-86 DT.2.4.2004 AND TRIBUNAL ORDER IN ASSESSEES OWN CASE FOR A.YS 1981 -82 AND 1982-83 IN ITA NOS.3846 & 3847/MUM/84 WE DISMISS THIS GROUND OF A PPEAL RAISED BY THE REVENUE. 13. IN SO FAR AS C.O FILED BY THE ASSESSEE IS CO NCERNED IT IS SIMILAR TO THE GROUND NO.1 RAISED BY THE REVENUE SINCE WE HAV E ALREADY CONSIDERED THE ITA NO.5556/MUM/07 & CO 294/MUM/07 5 ISSUE AND DISMISSED THE REVENUES APPEAL THERE IS NO SEPARATE ADJUDICATION IS REQUIRED WITH REGARD TO THE C.O. 14. IN THE RESULT THE APPEAL FILED BY THE REVENUE IS DISMISSED AND THE C.O. FILED BY THE ASSESSEE IS REJECTED. PRONOUNCED IN THE OPEN COURT ON 23 RD DECEMBER 2010. SD/- SD/- (J. SUDHAKAR REDDY) (V. DURGA RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DT. 23 RD DEC. 2010. *GPR COPIES OF THE ORDER FORWARDED TO : (1) THE APPELLANT (2) THE RESPONDENT (3) CIT MUMBAI (4) CIT(A) MUMBAI (5) DR (6) GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES ITA NO.5556/MUM/07 & CO 294/MUM/07 6 S.NO. DESCRIPTION DATE INTLS 1. DRAFT DICTATED ON 20/12/10 SR.P.S./P.S 2. DRAFT PLACED BEFORE AUTHOR 21/12/10 SR.P.S/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.P.S./PS SR.P.S./P.S 6. KEPT FOR PRONOUNCEMENT ON SR. P.S./P.S. 7. FILE SENT TO THE BENCH CLERK SR.P.S./P.S 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER