Income Tax Appellate Tribunal - Chennai
West Asia Maritime Ltd., Chennai vs Department Of Income Tax on 8 November, 2010
IN THE INCOMETAX APPELLATE TRIBUNAL: B-BENCHL;CHENNAI
(Before Shri U.B.S. Bedi, Judicial Member and
Shri Abraham P. George. Accountant Member)
ITA No. 1195 / Mds/10
Asst. year 2006-07
The ACIT, Vs M/s West Asia Maritime Ltd.,
Co.Cir.II(3), Chennai Buhari Towers, 6th floor,
No.4 Moores Rd,
Chennai-600006
PANAAACW1023E
(Appellant) (Respondent)
Appellant by: Shri P.B.Sekaran, CIT-DR
Respondent by: None
ORDER
PER SHRI ABRAHAM P.GEORGE, ACCOUNTANT MEMBER:
This is an appeal by the Revenue against the order of the CIT(A)-III, Chennai for assessment year 2006-07.
2. Grievance of the Revenue is that the CIT(A) directed the AO to treat ship named "M.V. Gem of Ennore" as one qualifying for Tonnage Tax Scheme under Chapter XII-G of the Income-tax Act, 1961 ('the Act" for short). According to the Revenue, the main activity of this ship was to transport thermal coal from one location to another location within the country itself and the ports from which the coal was shipped as also the ports to which it was shipped were connected by roads/rail. Hence, as per the Revenue, such ship was transporting goods ITA NO.1195/Mds//2010. 2 normally routed through land, by road or rail, and would not come within the ambit of a "qualifying ship" for availing of the Tonnage Tax Sceme.
3. Notice of hearing of the case was sent to the assessee and in its' reply letter dated 08-11-2010, assessee has requested for rescheduling of the hearing to 26-11-2010. Since 26-11-2010 is a Friday, on which day this Tribunal is taking up only Misc. Petitions, it was intimated to the assessee by letter dated 01-11- 2010 that such rescheduling was not possible. Assessee was also intimated that the appeal would be heard on 23-11-2010 itself. On 22-11-2010 assessee has filed an adjournment petition stating that Shri Percy Pardiwala, who was to appear for it, was attending a matter at Bangalore High Court and requesting for an adjournment. However, we find from record that no authorization has been filed by the assessee authorizing Shri Percy Pardiwala to appear on its behalf. When the case was called upon for hearing today, nobody appeared on behalf of the assessee. Hence, we are not inclined to accept the adjournment petition filed and therefore, we are proceeding to dispose of the appeal of the Revenue on merits.
4. Short facts apropos are that assessee, a company, engaged in the business of shipping and port services, had filed its return declaring tonnage income of `76,85,246/- under sec.115VG of the Act. During the course of assessment proceedings, it was noted by the AO that out of the ten ships operated by the assessee one ship called "M.V.Gem of Ennore" was transporting thermal coal from one location to another location within the country. He came to ITA NO.1195/Mds//2010. 3 this conclusion based on a letter dated 22-12-2008 submitted by the assessee, wherein it was submitted as under:
"The ship M.V.Gem of Ennore is employed with M/s Poompuhar Shipping Corporation, Chennai on long term charter for a period of ten years from February 2002 for moving thermal coal, for Tamilnadu Electricity Board from Haldia, Paradip and Vizag to Ennore and Tuticorin."
A.O was of the opinion that definition of "qualifying ship" given in sec.115VD of the Act specifically excluded a sea going ship or vessel used mainly for provision of goods or services of a kind normally provided on land. According to the AO, coal was moved within the ports in India, and such ports were connected by rail as well as road. AO also noted that movement of coal between such ports could normally be routed through land and hence the ship 'M.V.Gem of Ennore' was not eligible for tonnage tax scheme. He, therefore, apportioned the total shipping income declared by the assessee under the Tonnage Tax Scheme and 1/10th thereof was attributed by the ship M.V.Gem of Ennore and denied the Tonnage Tax benefit.
5. In its appeal before the CIT(A), argument of the assessee was that the Tonnage Tax Scheme was drafted by a Core Committee of which one Shri D.P. Sengupta, IRS, Chief Commissioner of Income-tax (Rtd.) was a Member. Relying on the opinion given by the said Shri D.P.Sengupta, assessee argued that the AO grossly erred in considering 'M.V.Gem of Ennore' to be not a qualifying ship. According to the assessee, carrying of cargo from one Indian port to another would not disentitle the assessee from returning the income of a ship under the Tonnage Tax Scheme, especially since, there was no disabling provision in ITA NO.1195/Mds//2010. 4 Chapter XIIG of the Act. Contention of the assessee was that goods and services normally provided on land, mentioned in Sec. 115VD, was those like retail selling, restaurants, hotels, prisons, radio stations, casinos, financial services and offices. Therefore, it was argued that the activity which was normally provided on land and which could be easily be shifted to a ship, just for taking advantage of the preferential tax treatment provided under Chapter XIIG of the Act, could alone be excluded. CIT(A) was appreciative of this contention. According to him, as pointed out by the assessee, Chapter XIIG of the Act was based on U.K. model to allow the benefit of Tonnage Tax Scheme and that the statement of practice issued by the HMRC in respect of Tonnage Tax clearly substantiated the argument of the assessee. He held that 'M.V.Gem of Ennore' was a ship which was qualified under sec. 115VD of the Act and directed the AO to allow such ship benefit of Tonnage Tax Scheme under Chapter XIIG of the Act.
6. Now before us, the ld. DR strongly assailing the order of the CIT(A) submitted that transportation of coal from one port to another was normally by lorries or trains which operated on land. According to him, goods which could be moved on such modes of land transport, if transported by ocean, the ships transporting such goods automatically stood excluded from the benefit of Tonnage Tax Scheme under Chapter XIIG of the Act. As already mentioned by us, nobody appeared on behalf of the assessee.
7. We have perused the orders and heard the ld. D.R. There is no dispute that in respect of the ship 'M.V. Gem of Ennore' as also other ships owned by the assessee, all the conditions stipulated under Chapter XIIG pf the Act for availing ITA NO.1195/Mds//2010. 5 TonnageTax Scheme were satisfied, except in the case of the above named ship, which as per the AO, was not a qualified one under sec.115VD of the Act. For availing of the beneficial provision of Chapter XIIG of the Act, which gives a fixed method of computing income based on tonnage , one of the necessary condition is that the related ship should be a qualified one. Section 115VD of the Act is reproduced hereunder:
"115VD. For the purposes of this Chapter, a ship is a qualifying ship if -
(a) it is a sea going ship or vessel of fifteen net tonnage or more;
(b) it is a ship registered under the Merchant Shipping Act, 1958 (44 of 1958), or a ship reg istrered outside India in respect of which a licence has been issued by the Director-General of Shipping under sec.406 or sec.407 of the Merchant Shipping Act, 1958(44 of 1958); and
(c) a valid certificate in respect of such ship indicating its net tonnage is in force, but does not include-
(i) a sea going ship or vessel if the main purpose for which it is used is the provision opf goods or service of a king normally provided on land;
(ii) fishing vessels;
(iii) factory ships;
(iv) pleasure crafts;
(v) harbour and river ferries;
(vi) offshore installations;
(vii) Dredgers (omitted w.e.f. 01-04-2006);
(viii) qualifying ship which is used as a fishing vessel for a period of more than thirty days during a previous year." ITA NO.1195/Mds//2010. 6
8. AO had relied on clause (i) above for coming to a conclusion that the ship 'M.V.Gem of Ennore' was not eligible for returning income based on tonnage. There is no dispute that the said ship was transporting coal from ports within India, to be more specific, from ports Haldia, Paradip and Vizag to the ports at Ennore and Tuticorin. There is also no dispute that these places were connected by both rail/road. There cannot also be any doubt that coal can be transported by road as well as rail and transportation by rail is a method adopted for movement of coal. But the question here is whether cl. (i) of sec. 115VD is meant for taking out of the ambit of Chapter XIIG, those sea going ships or vessels which were transporting goods which could also be transported through land. Let us take an example of petroleum products. The situation is similar. Petroleum products can also be moved by land or sea. It is at this juncture that it becomes necessary to very carefully analyze cl.(i) of sec.115VD. The ship which is excluded by this clause is one which is used for the provision of goods or services of a kind normally provided on land. Providing goods or services on land and transporting goods on land are entirely different. Goods or services have been used together with the interjection 'or'. It can in the normal commercial sense only mean goods or services which are provided from a specific place in land. It could not be stretched to include transportation of goods between different places on land. Even if we presume that it would include transportion of goods, it would not be possible to say that transportation of goods like coal or petroleum are though a kind of transport method which is normally provided on land only. The mode of transport that is to be used is a commercial decision to be taken by a ITA NO.1195/Mds//2010. 7 businessman based on the cost factors involved. If transportation by land is cheaper no body would transport the goods by ship. If transport by ship is cheaper, then we cannot say that such goods which are cheaper to be transported on sea, has to be treated as goods normally transported by land. If we look at the Budget Speech dated 3rd February, 2004 of the Finance Minister, on the scheme of tonnage tax it was mentioned as under:
"More than 90 per cent of world shipping tonnage is subject to very low levels of taxation. To provide a level playing field so that Indian shipping becomes internationally competitive, a tonnage tax scheme with notional income at a fixed rate, on the basis of net registered tonnage, should be considered."
9. Before introduction of Chapter XIIG of the Act, shipping companies were taxed at a rate of 35 per cent with a surcharge of 2.5 per cent on the tax determined. An Indian public limited company or a Government company, engaged in the business of operation of ships, could claim deduction under sec. 33AC upto 100 per cent of profit derived from the business of operation of ships for the asst. years 2001-02 to 2005-06 by crediting the amount to a reserve account. However, the deduction ceased when the aggregate of the amounts carried to reserve account from time-to-time exceeded twice the aggregate of the amounts of paid-up share capital, the general reserve and the amount credited to share premium account. The amount in reserve account was to be utilized before the expirty of eight years for the purpose of acquisition of new ships. Sanctions were provided for not complying with this condition. However, where the taxable profits fall below the 'book profits', tax was to be paid on 'book profit' at the rate of 7.5 per cent under the MAT Scheme. In contrast to these provisions under the ITA NO.1195/Mds//2010. 8 tonnage tax scheme, introduced through Chapter XIIG of the Act, the liability of a shipping company towards taxation has to be determined on the basis of the tonnage of the vessel or a fleet of vessels owned, operated or charted (time charter or bare boat charter) by it instead of profit generated by commercial operations, which generally varied from year-to-year. Generally, this tax is levied on the basis of Net Registered Tonnage (NRT). Various countries, following this system, have prescribed a rate structure, which multiplied by the tonnage of the vessel, give the amount of tax payable. Some countries levy tax on Gross Registered Tonnage (GRT) and some follow a mixture of GRT and NRT. There are other variations in the tonnage tax scheme also such as modified tonnage tax system, optional tonnage tax system, a parallel tonnage tax system with corporation tax system. Various countries have incorporated several typical features in their tax legislations by way of incentives to achieve specific national objections. But the biggest merit of tonnage tax is its simplicity and the type of interpretation that is to be given for the various provisions under Chapter XIIG of the Act should be to accentuate the purposes of introduction of tonnage tax scheme, and not to complicate it. Thus, in our opinion, just because a sea going ship was used to transport coal between the ports which were connected by rail/road, would not be sufficient enough a reason to say that it was not qualified under sec. 115VD of the Act. Cl. (i) of sec.115VD was not intended for that purpose but only to ensure that profits from services and sale of goods which could be effected on land did not get any unintended benefits by shifting the business to a sea going ship, just to get the benefit of tonnage tax scheme. We ITA NO.1195/Mds//2010. 9 are therefore of the opinion that the CIT(A) was very well justified in directing the AO to give the benefit of tonnage tax scheme under sec. 115VD of the Act to the assessee. No interference is called for.
11. In the result, appeal of the Revenue is dismissed.
Order pronounced in the Open Court on -11-2010.
(U.B.S.BEDI) (ABRAHAM P. GEORGE)
Judicial Member Accountant Member
Chennai: November, 2010
Nbr"
Cc: Assessee /Assessing Officer/ CIT(A)/ CIT/ D.R/ Guard File.
Separate order from pages 10 to 21.
Sd/-
(U.B.S. Bedi)
Judicial Member
ITA NO.1195/Mds//2010. 10
Per U.B.S. Bedi, Judicial Member
12. Despite best persuasion of myself, I have not been able to agree with the findings and conclusion as drawn by the ld. Accountant Member even after reading his proposed order time and again, I proceed to write my separate order as under:
13. In this case, the Department has challenged the action of the ld. CIT(A) in directing the Assessing Officer to treat the ship named "M.V. Gem of Ennore" as one qualifying for Tonnage Tax Scheme under Chapter XII-G of the Income Tax Act, 1961. According to the Department, the main activity of the ship was to transport thermal coal from one location to another location situated within the country itself and the ports from where the coal was shipped has also a port to which it was shipped are connected by road/rail i.e. by land. Therefore, as per the Department, such ship was transporting goods which could normally be routed through land, by road or rail, as such, would not come within the purview of a qualifying ship as defined under section 115VD(i) for availing of tonnage tax scheme.
14. Facts as emerging from the record indicate that the assessee is engaged in the business of shipping and port services, had filed its return declaring tonnage income of `.76,85,246/- under section 115VG of the Act. During the assessment proceeding, the Assessing Officer noted that out of ten ships operated by the assessee, one ship called "M.V. Gem of Ennore" has transported thermal coal from one location to another location within the country and by ITA NO.1195/Mds//2010. 11 placing reliance, on the letter of the assessee dated 22.12.2008 filed by the assessee wherein it was submitted as follows:
"The ship "M.V. Gem of Ennore" is employed with M/s. Poompuhar Shipping Corporation, Chennai on long term charter for a period of ten years from February, 2002 for moving thermal coal, for Tamilnadu Electricity Board from Haldia, Paradip and Vizag to Ennore and Tuticorin,"
the Assessing Officer, in view of the facts, circumstances and other relevant material, formed the opinion that the definition of "qualifying ship", as given in section 115VD of the Act, specifically excludes a sea going ship or vessel mainly used for the provisions of goods or services of a kind normally provided on land. According to him the coal was moved within the ports in India, such ports were connected by rail as well as road and he further noted that movement of coal between such ports could be routed through land normally and as such, ship "M.V. Gem of Ennore" was not liable for tonnage tax scheme. Therefore, he apportioned the total shipping income declared by the assessee under tonnage tax scheme and he treated 1/10th thereof as attributed by the ship "M.V. Gem of Ennore", in the absence of any bifurcation of accounts for individual ship concerned having been furnished by the assessee, denied the tonnage tax benefit to this extent.
15. The assessee took up the matter in appeal and challenged the action of the Assessing Officer by raising various grounds, before the ld. CIT(A)and also relied upon the opinion of one Mr. D.P. Sen Gupta, IRS, Ex-Chief Commissioner of Income Tax, who is stated to be a member of Core Committee which drafted the Tonnage Tax Scheme, the assessee further argued that the Assessing ITA NO.1195/Mds//2010. 12 Officer grossly erred in treating the "M.V. Gem of Ennore" as not qualifying ship when, according to the assessee, carrying of cargo from one Indian port to another would not disentitle the assessee from getting such benefit, especially when there is no disabling provision in the Chapter XII-G of the Income Tax Act and giving some examples of retailers, it was argued that the activity which was normally provided on land could not easily be shifted to the ship just for taking advantage of the preferential tax treatment. By mentioning about this provision being based on U.K. model and this case not falling in that exclusion category, requested CIT(A) to allow the benefit of tonnage tax scheme . Considering and accepting all the pleas as raised by the assessee, the ld. CIT(A) has held that "M.V. Gem of Ennore" was a qualifying ship under section 115VD of the Act and directed the Assessing Officer to allow the benefit of tonnage tax scheme under Chapter XII-G with regard to this ship of the assessee. The Department has come up in appeal against the order of the ld. CIT(A).
16. The ld. DR while relying upon the order of the Assessing Officer has pleaded for setting aside the order of the ld. CIT(A) and restoring that of the Assessing Officer. It was further submitted that transportation of coal from one port to another port in India, could normally be done through lorries or trains which operate on land. According to him, the coals which could be moved on such modes of land transport, if transported by sea, such ships are excluded from the benefit of tonnage tax scheme under relevant provision as contained in the said Chapter of the Act and the Assessing Officer while considering and giving relevant details has came to a proper conclusion that ship transporting ITA NO.1195/Mds//2010. 13 goods which could be transported by lorries or train are excluded from the benefit of tonnage tax scheme. The ld. DR has also submitted that there is a clear and unambiguous stipulation in the relevant provision and neither there is any ambiguity nor any flaw in the language employed in the relevant provision of the statute, therefore, there was no scope for the ld. CIT(A) to interpret the clear words of the statute to give any other meaning than in the words used. It was, thus pleaded for restoring the order of the Assessing Officer after setting aside the impugned order.
16.1 However, there was no representation on behalf of the assessee before the Tribunal and request of the assessee for adjournment has appropriately been discussed and adjudicated to decline such request as dealt with by the ld. A.M. in detail and I have nothing to add but to concur with him in regard to dealing with the request for adjournment of the assessee, which came to be rejected.
17. Arguments of ld. DR in the light of facts and circumstances of the case and provisions of sections 115VD and 115VG have been considered. It is found that during the assessment proceedings, the assessee explained to the Assessing Officer that the assessee is the co-owner of the ship M.V. Gem of Ennore which was engaged on a long-term charter for moving thermal coal for Tamilnadu Electricity Board from Haldia, Paradip and Vizag ports to Ennore and Tuticorin ports in Tamil Nadu. The Assessing Officer observed that all the ports stated above are located within the country and are well connected by road and rail. Therefore, movement of coal between these ports can be routed through land by road or rail transport. Accordingly, he concluded that "M.V. Gem of ITA NO.1195/Mds//2010. 14 Ennore" is not a "qualifying ship" in terms of 115VD, if "any sea going ship or vessel transports any goods or services of a kind normally provided on land is not a qualified ship". The Assessing Officer, thereafter, invoked provisions of 115VI(6) and taxed the income of "M.V. Gem of Ennore" under the normal provisions of the Act. The assessee took up the matter in appeal and while relying upon the opinion of Shri D.P. Sengupta, IRS & Ex-Chief Commissioner of Income Tax, who is stated to be one of the Members of the Core Committee, which drafted the Tonnage Tax Scheme has pleaded for allowing the relief with regard to tonnage tax scheme on the ship "M.V. Gem of Ennore" and the ld. CIT(A) allowed the benefit to the assessee against which the Department has come up in appeal against such action of Ld CIT(A) before this Bench. 17.1 After considering the arguments of ld DR, Material on record as well as orders of authorities below, it is found that there is no dispute about the said ship "M.V. Gem of Ennore" has transported coal from the ports in Haldia, Paradip and Vizag to the ports at Ennore and Tuticorin. There is also no dispute that these places are situated in India and connected both by rail and roads and there is also no doubt that coal can be transported by road and also by rail from one port to another as mentioned above.
17.2 For computation of profits and gains from the business of operating qualifying ships as provided under section 115VA, section 115VD defines qualifying ship and relevant provision defining "qualifying ship" is as under:
"115VD. For the purposes of this Chapter, a ship is a qualifying ship if--
(a) it is a sea going ship or vessel of fifteen net tonnage or more; ITA NO.1195/Mds//2010. 15
(b) it is a ship registered under the Merchant Shipping Act, 1958 (44 of 1958), or a ship registered outside India in respect of which a licence has been issued by the Director-General of Shipping under section 406 or section 407 of the Merchant Shipping Act, 1958 (44 of 1958); and
(c) a valid certificate in respect of such ship indicating its net tonnage is in force, but does not include--
(i) a seagoing ship or vessel if the main purpose for which it is used is the provision of goods or services of a kind normally provided on land;
(ii) fishing vessels;
(iii) factory ships;
(iv) pleasure crafts;
(v) harbour and river ferries;
(vi) offshore installations;
(vii) dredgers;
(viii) a qualifying ship which is used as a fishing vessel for a period of more than thirty days during a previous year."
17.3 From the words contained in the relevant provisions of clause (i) in section 115VD, as reproduced above, it becomes clear that the sea going ship or vessel, if the main purpose for which it is used is the provision of goods or services of a kind normally provided on land is categorically excluded from being qualified ship in terms of the wording used. So far as interpretation of statute is concerned, various High Courts and Hon'ble Supreme Court have opined in the following decisions as under:
ITA NO.1195/Mds//2010. 16
17.3.1 The Hon'ble Supreme Court in the case of (1) Orissa State Warehousing Corporation and (2) Rajasthan State Warehousing Corporation v.
CIT 237 ITR 589 has held as under:
"Interpretation of taxing statutes - Literal interpretation - Natural and ordinary meaning must be ascribed to words."
17.3.2 The Hon'ble Supreme Court in the case of Padmasundara Rao (Decd.) and Others v. State of Tamil Nadu and Others [2002] 255 ITR 147 has held as under:
"The court cannot read anything into a statutory provision which is plain and unambiguous. A statute is the edict of the Legislature. The language employed in a statute is the determinative factor of legislative intent. The first and primary rule of construction is that the intention of the legislation must be found in the words used by the Legislature itself."
17.3.3 Further, the Hon'ble Supreme Court in the case of CIT v. Madurai Mills Co. Ltd. 89 ITR 49 has held as under:
"It is well-settled that considerations stemming from legislative history must not be allowed to override the plain words of a statute."
And in the case of Controller of Estate Duty v. R. Kanakasabai and Others 89 ITR 251, it was held by the Hon'ble Supreme Court as under:
"......... It is not permissible for the court to read into a taxing provision any words which are not there or exclude words which are there. The words found in the provision must be given their natural meaning."
17.3.4 Similarly in the case of Mohammad Ali Khan and Others v. CWT [1997] 224 ITR 672, the Hon'ble Supreme Court has held as under: ITA NO.1195/Mds//2010. 17
"Intention of the legislature is primarily to be gathered from the language used. Just as it is not permissible to add words or to fill in a gap or lacuna, similarly it is of universal application that effort should be made to give meaning to each and every word used by the legislature."
17.3.5 The cardinal principle of statutory interpretation is that if the meaning of the statutory interpretation is that if the meaning of the statutory interpretation is plain, then the court must apply it regardless of the results. It is well settled law that if the language of a statute is clear and unambiguous and if two interpretations are not reasonably possible, it would be wrong to discard the plain meaning of the words used in order to meet a possible injustice - CIT v. T.V. Sundram Iyengar & Sons (P) Ltd. (1975) 101 ITR 764(SC). 17.3.6 The Hon'ble Madras High Court (Full Bench) in the case of CIT v. Smt. Muthu Zulaikha 245 ITR 800 has held as under:
"The cardinal law of interpretation is that if the language is simple and unambiguous, it is to be read keeping in mind the clear intention of the legislation. Any addition or subtraction of words is not permissible. It is also not proper to use a sense which is different from what it ordinarily conveys."
17.3.7 The Hon'ble Karnataka High Court in the case of Patil Vijaykumar and Others etc. v. CIT 151 ITR 48 has held as under:
"When the meaning of words is clear and unambiguous, the court has to give effect to it whatever be the consequence, as the court has no jurisdiction to mitigate harsh consequences of the statute, if any."
17.3.8 The Hon'ble Kerala High Court in the case of CBDT v. Cochin Goods Transport Association 236 ITR 993 has held as under: ITA NO.1195/Mds//2010. 18
"So long as the language employed in the statutory provision and more so in the fiscal statute is clear, the court should interpret it on the face value and there is no warrant to go behind it. Nothing should be added or subtracted to interpret the plain language and the semantic view alone should be taken.
In fiscal matters there is no res judicata and no estoppels."
17.3.9 The Hon'ble Delhi High Court in the case of M.P. Poddar (HUF) and Another vs. Appropriate Authority and Another 240 ITR 372 has held as under:
"........This is a clear mandate of the Legislature and there is no reason to depart from applying the fundamental rule of construction of a taxing statute that the meaning and intention of a statute must be gathered from the plain and unambiguous expression used therein rather than to find out what is just or expedient......."
17.3.10 The Hon'ble Gujarat High Court in the case of CIT v. Gautam Sarabhai Trust [1988] 173 ITR 216 has opined in the context of interpretation of taxing statutes " Words to be given plain grammatical meaning."
17.3.11 Further the Hon'ble Kerala High Court in the case of R. GAO Electrodes Ltd. v. CIT [1987] 173 ITR 351 has opined as under:
"Words to be assigned their ordinary meaning - No room for intendment".
17.3.12 From the above decisions of Courts including those of Hon'ble Supreme Court and Jurisdictional High Court, it becomes amply clear that natural and ordinary meaning must be ascribed to the words, Courts cannot read into a statutory provision, which is plain and unambiguous, the language employed is determinative factor of legislative intent, the consideration stemming from ITA NO.1195/Mds//2010. 19 legislative history must not be allowed to override the plain words of the statute, it is not permissible for the Courts to read into a taxing provision any words, which are not there or exclude words which are there and words must be given their natural meaning, if language employed in the statutory provision and more so in fiscal statute is clear than it should be interpreted on the face value and there is no warrant to go behind it without adding or subtracting anything to interpret the plain language and semantic view alone should be taken - there is no room for intendment and words are to be given plain grammatical meaning.
18. If clause (i) of section 115VD is gone into, it would be found that there is no ambiguity in the language employed, which is simple, clear and unambiguous, so,in view of precedents, the Courts/Tribunals have to give effect to it, whatever be the consequence, because there is no jurisdiction to mitigate harsh consequences of the statute, if any, also.
18.1 So far as an opinion of one Mr. D.P. Sengupta IRS and Ex-Chief Commissioner of Income Tax., stated to be one of the members of Core Committee which drafted the Tonnage Tax Scheme for Indian Income Tax, (who has also represented the assessee before the ld. CIT(A) in first appeal proceedings), portion of which has been reproduced and has mainly been relied upon by the ld. CIT(A) is concerned, it could, at the most, be a submissions on behalf of the assessee, which has been given to the assessee by the A.R. and the same cannot be termed or treated as provisions of law in the absence of having been based on any specific provision of statute or precedent in this regard. Moreover, reference of some U.K. model provisions, as mentioned by ld ITA NO.1195/Mds//2010. 20 CIT(A), when those are not part of provisions in relation to Tonnage Tax Scheme in India cannot be held to be applicable. Further, the Indian Tonnage Tax scheme has been stated to be largely adopted from UK law by the ld.CIT(A) without defining/explaining further as to how it has been adopted here especially when the language employed here under Income Tax Law is not same as in that contrary. Moreover the British model on the Tonnage Tax regime, which itself is based on the Tonnage Tax scheme in the Netherland and the language used in such legislation is not similar to the language used under the Income Tax Law in as much as in their restrictive provision, they have incorporated various examples of businesses named therein, which would exclude qualifying ship for the purpose of Tonnage Tax Scheme and the list given is not exhaustive, whereas in clause (i) of section 115VD, no such clause for exclusion naming even one business is there. And otherwise, nowhere in the statute, either the language adopted is same or entire provision as contained in UK or the Netherland law is lifted and incorporated in the Tonnage Tax scheme in India under the Income Tax Law. So placing reliance on those provisions of law of the foreign countries or taking aid there from in order to interpret the relevant provision, as done by the ld. CIT(A) , is unwarranted and uncalled for, as such cannot be justified. Since the language employed in the relevant provision here is plain and simple, without any ambiguity or flaw, natural grammatical meaning has to be given, therefore, in my considered view, if a ship, the main purpose of which it is used is the provision of goods or service of a kind normally provided in ITA NO.1195/Mds//2010. 21 land would disqualify that ship for the purpose of Tonnage Tax Scheme as specifically mentioned in clause (i) of section 115VD. 18.2 Therefore, it is held that the action of the Assessing Officer is proper and justified to hold that the ship "M.V. Gem of Ennore" is not a qualified ship for the benefit of Tonnage Tax scheme as envisaged under relevant provisions of law, whereas the action of the ld. CIT(A), who has interpreted the relevant provisions to hold that the said ship is a qualified ship for the purposes of Tax Tonnage Scheme, is neither proper nor justified in view of facts, circumstances and precedents. As such order of the ld. CIT(A) in this regard is set aside and that of the Assessing officer is restored.
19. As a result appeal of the department is allowed.
Sd/-
(U.B.S. Bedi) Judicial Member Dated the 15.03.2011 Vm/-
ITA NO.1195/Mds//2010. 22
IN THE INCOME TAX APPELLATE TRIBUNAL BENCH 'B', CHENNAI BEFORE Dr. O.K.NARAYANAN, VICE PRESIDENT THIRD MEMBER .....
I.T.A. No.1195(Mds)/2010
Assessment Year: 2006-07
The Assistant Commissioner M/s.West Asia Maritime Ltd.,
Of Income-tax, Vs. Buhari Towers (6th Floor),
Company Circle II(3), 4, Moores Road,
Chennai. Chennai-600 006.
PAN AAACW1023E.
(Appellant) (Respondent)
Appellant by : Shri P.B.Sekaran, C.I.T.
Respondent by: S/Shri Arvind Sonde & Niraj Sheth, Advocates ORDER PER Dr.O.K.NARAYANAN, VICE-PRESIDENT:
This appeal is filed by the Revenue. The relevant assessment year is 2006-07. The appeal is directed against the order passed by the Commissioner of Income-tax(Appeals)-III, at ITA NO.1195/Mds//2010. 23 Chennai, dated 21-4-2010. The appeal arises out of the assessment completed under section 143(3) of the Income-tax Act, 1961.
2. The assessee company is engaged in the business of shipping/port services. The company filed its return of income for the assessment year 2006-07 on a tonnage income of `76,85,246/-.
3. Chapter XII-G of the Income-tax Act, 1961 provides for special provisions relating to income of shipping companies. This chapter comprises of sections 115V to 115VZC. Section 115VA provides an option to an assessee carrying on the business of operating qualifying ships to compute its shipping income on a tonnage basis, instead of computing the income under the conventional method provided in sections 28 to 43C. Tax is levied under the tonnage scheme on the basis of the net tonnage of every qualifying ship. In the case of a qualifying ship having net tonnage upto 1,000, the daily income presumed is ` 46/- for each 100 tons. In the case of a qualifying ship having net tonnage in excess of 1000 tons but less than 10,000, the daily income will be ` 460/- plus ` 35/- for each 100 tons exceeding 1,000 tons. In the case of a qualifying ship having net tonnage exceeding 10,000 but not more than 25,000, the rate of income is ` 3,610/- plus ` 28/- for each 100 tons ITA NO.1195/Mds//2010. 24 exceeding 10,000 tons. In the case of qualifying ships having net tonnage exceeding 25,000 tons, the daily rate of income is `7,810/- plus ` 19/- for each 100 tons exceeding 25,000 tons.
4. As already stated, an assessee engaged in the business of operating qualifying ships has to opt for payment of taxes under the tonnage tax scheme as provided under section 115VP. In the present case the assessee has opted for tonnage tax scheme and has worked out the shipping income on tonnage basis as provided in section 115VG. The tonnage income for a previous year shall be the aggregate of the tonnage income of each qualifying ship. It is on the basis of the above provisions of law that the assessee has returned a tonnage income of ` 76,85,246/-.
5. The return was initially processed under section 143(1). Later on the case was selected for scrutiny and the assessment was completed under section 143(3) through the order dated 31-12-2008.
6. The assessee is a co-owner of the ship "M.V.Gem of Ennore", engaged on a long term charter for transporting thermal coal for Tamil Nadu Electricity Board. The coal is transported from Haldia, Paradip and Vizag ports to Ennore and Tuticorin ports in Tamil Nadu. ITA NO.1195/Mds//2010. 25 The assessee has exercised its option for tonnage tax scheme for the above ship "M.V.Gem of Ennore".
7. In order to claim the benefit of tonnage tax scheme, it is necessary that the operating ship of an assessee must be qualified under section 115VD. The conditions stated therein are that the ship is a sea going ship or vessel of fifteen net tonnage or more; that the ship is registered under the Merchant Shipping Act, 1958 or a ship registered outside India in respect of which a licence has been issued by the Director-General of Shipping under section 406 or section 407 of the Merchant Shipping Act,1958; holding a valid certificate in respect of such ship indicating its net tonnage . The law has also provided certain exclusions under the same section 115VD. Accordingly a ship cannot be treated as a qualifying ship if the main purpose for which it is used is the provision of goods or services of a kind normally provided on land; as fishing vessels; factory ships; pleasure crafts; harbour and river ferries; offshore installations and a qualifying ship which is used as a fishing vessel for a period of more than thirty days during a previous year.
8. In the course of the assessment proceedings, the Assessing Officer held that the assessee's ship cannot be treated as ITA NO.1195/Mds//2010. 26 a qualifying ship for the reason that the case of the assessee is hit by clause(i) of section 115VD. The said sub clause describes the first item of disqualification, which has already been mentioned. The statutory expression is reproduced below:-
"115VD. For the purpose of this Chapter, a ship is a qualifying ship if--
(a) ...... ......
(b) ...... ......
(c) ...... .......
but does not include
(i) a sea going ship or vessel if the main purpose
for which it is used is the provision of goods or
services of a kind normally provided on land."
9. The assessing authority denied the benefit of tonnage tax scheme to the assessee in respect of its operating ship "M.V.Gem of Ennore" by holding that the ship is not a qualifying ship under section 115VD. The basis of such a finding is the observation of the assessing authority that the ship operated by the assessee is transporting thermal coal from Haldia, Paradip and Vizag ports to ITA NO.1195/Mds//2010. 27 Ennore and Tuticorin ports in Tamil Nadu, where all the ports are located within the country and well connected by road and rail on land. Therefore, the Assessing Officer held that the transport of coal between these ports can be routed through land either by road or rail transport. As it is possible to transport the coal through land by road or rail transport, the Assessing Officer held that the operating vessel of the assessee company is used for the provision of goods or services normally provided on land. As the transportation of coal between the above ports is possible by land routes, the assessee cannot claim the benefit of tonnage tax scheme.
10. In first appeal the Commissioner of Income Tax (Appeals) considered the matter in detail. The Commissioner of Income Tax (Appeals) after considering the facts of the case and submissions placed before him, held that the core shipping activity of carrying goods from port to port is carried on by the ship operated by the assessee and only for the reason that it is possible to transport the coal between the places by means of land routes, the assessee cannot be denied the benefit of tonnage tax scheme. The Commissioner of Income Tax (Appeals) examined the restriction given in the statute under clause(i) of section 115VD, i.e. provision of ITA NO.1195/Mds//2010. 28 goods or services of a kind normally provided on land. On the basis of the details and explanations and opinion placed before him, the Commissioner of Income Tax (Appeals) found that the tonnage tax legislation in India is based on the British model, which itself is based on the tonnage tax regime in Netherlands. He further observed that the language used in the Indian legislation for the restrictive provision provided in clause(i) of section 115VD is exactly the same as provided in the United Kingdom legislation. In the United Kingdom legislation also a vessel is not a qualifying ship for the purposes of the scheme if the main purpose for which it is used is the provision of goods or services of a kind normally provided on land. The United Kingdom law has provided examples of such provision of goods or services normally provided on land. Those examples are as follows:-
• Retailers(including shops and supermarkets) • Restaurants • Hotels • Prisons • Radio Stations • Casinos ITA NO.1195/Mds//2010. 29 • Financial service providers • Offices.
It is also stated that the list is not exhaustive.
11. The Commissioner of Income Tax (Appeals) found that the purpose of the legislation being the same and the language employed also the same, those items in the nature of the examples provided under the United Kingdom law alone could be construed as provision of goods or services of a kind normally provided on land.
He held that those examples equally apply to Indian context as well. He held that there is nothing in the enabling provision of law to state that a ship operating in coastal waters of India cannot opt for the benefit of tonnage tax scheme. Finally he held that the ship operated by the assessee as "M.V.Gem of Ennore" is a qualifying ship under section 115VD and the assessee is entitled for the benefit of tonnage tax claimed under section 115VG of the Income-tax Act, 1961. The Commissioner of Income-tax(Appeals) accepted the contention of the assessee on this point.
12. Aggrieved by the above decision of the Commissioner of Income Tax (Appeals) the Revenue has come in appeal before the Tribunal, as already stated in ITA No.1195(Mds)/2010. When the ITA NO.1195/Mds//2010. 30 matter was heard by the B-Bench of this Tribunal, there arose a difference of opinion between the two Members constituting the Bench. The learned Accountant Member, who authored the order for the Bench, upheld the order of the Commissioner(Appeals) holding that the ship operated by the assessee company is a qualified ship and, therefore, the assessee is entitled for the benefit of tonnage tax scheme under section 115VG of the Income-tax Act, 1961.
13. On the other hand, the learned Judicial Member held that the assessing Officer is justified in holding that the ship "M.V.Gem of Ennore" is not a qualified ship for the benefit of tonnage tax scheme as envisaged under the relevant provisions of law. He held that the United Kingdom law and the Indian law on the subject cannot be considered as analogous for the purpose of interpreting the statutory provisions involved in the present appeal. The learned Judicial Member agreed with the view of the assessing Officer that coal can be transported between the concerned ports by land routes and, therefore, what for the assessee's ship is used is for the provision of goods or services of a kind normally provided on land and therefore it is not qualified under section 115VD of the Act in the light of sub- ITA NO.1195/Mds//2010. 31 clause(i) of section 115VD. He opted to allow the appeal filed by the Revenue.
14. As there was difference of opinion, the Hon'ble Members formulated and referred the question in respect of the said difference of opinion to the Hon'ble President of the Tribunal as provided under section 255(4) of the Act. The following is the question referred by the Hon'ble Members:-
"Whether, in view of facts and circumstances of the case, ship named 'M.V.Gem of Ennore' transporting thermal coal from one location to another location within the country, when such ports are connected by rail/road, can be excluded as 'qualifying ship' in terms of the exclusion clause(i) of section 115VD for the benefit of Tonnage Tax Scheme OR it can be treated as 'qualifying ship'"?
15. The Hon'ble President nominated me as the Third Member and it is how the issue has been placed before me.
16. I heard Shri P.B.Sekaran, the learned Commissioner of Income-tax, appearing for the Revenue and Shri Arvind Sonde, the ITA NO.1195/Mds//2010. 32 learned counsel alongwith Shri Niraj Sheth, appearing for the respondent-assessee.
17. The learned commissioner of Income-tax contended that the benefit of tonnage tax scheme is available only to the qualifying ships as provided in section 115VD and the conditions to be satisfied to become a qualifying ship have to be construed strictly and there is no room to enlarge the scope of the provisions contained therein. He stated that the exclusion clause(i) of section 115VD specifically provides that a sea going ship or vessel cannot be treated as a qualifying ship if the main purpose for which it is used is providing of goods or services of a kind normally provided on land. He explained that in the present case thermal coal is transported for Tamil Nadu Electricity Board from ports like Haldia, Paradip and Vizag so as to unload it at Ennore or Tuticorin ports in Tamil Nadu. All these ports are dotted in the coromandel line of India and well connected by roads and rail. Transportation of thermal coal from the loading ports is very much possible either by means of road transport or rail transport to reach at the destination ports and the sea route is only an alternate route. He argued that the option given to the assessee is only to choose the method of computing the income, either the ITA NO.1195/Mds//2010. 33 normal method or the tonnage tax scheme and there is no option to choose the alternatives available for operating the ships. If land routes are available, the assessee cannot claim the benefit of tonnage scheme. The ship is voyaging through Indian coastal waters. The service rendered by operating the ship could equally be provided on land and therefore the restrictive clause(i) provided in section 115VD makes out a clear case that the assessee is not entitled for the benefit of tonnage tax scheme.
18. The learned commissioner of Income-tax further argued that the Commissioner of Income Tax (Appeals) has heavily relied on similar legislation in Netherlands and United Kingdom. He explained that such comparative study is appreciated in academics, but as far as interpretation of law is concerned, the law must be interpreted strictly according to the statutory expression provided therein and cannot draw analogies from legislations of other countries. He further argued that in English law examples have been provided to highlight the real intent of the restriction relating to goods or services that could be provided on land such as retailers, restaurants, hotels, etc. But in clause(i) of section 115VD the Indian law has not provided ITA NO.1195/Mds//2010. 34 any such examples. It clearly shows that the Indian law was not exactly following the English law on the subject.
19. The learned counsel appearing for the assessee company, on the other hand, argued that there is nothing in the law to presume that a ship operating in the coastal waters of India is not entitled for the benefit of tonnage tax scheme. A ship can be operated both in coastal waters and in international waters. The core activity of a ship is to carry passengers and goods from destination to destination. As far as a ship is concerned, it is immaterial whether it is operating between two domestic ports or between two international ports. The crucial aspect to be looked into is whether the ship is being operated to carry on the cardinal function inferred from the operation of a ship voyaging through sea waters. The learned counsel explained that it is for the assessee to decide which mode of transportation should be selected for carrying on its business. The assessee is engaged in the contract of transporting thermal coal from North-Eastern ports to South-eastern ports. It is possible to transport the thermal coal by land routes using road and rail carriages and also by sea routes using ships. The assessee got the contract of transportation because the assessee is owning ship and is in a ITA NO.1195/Mds//2010. 35 position to transport thermal coal by sea route, probably at a better economy of cost. The operating character of the ship is not at all changed only for the reason that the ship is navigating only through Indian coastal waters.
20. The learned counsel for the assessee argued that land routes are available to our neighbouring countries like Bangla Desh, Myanmar, Pakisthan and even Thailand and theoretically to all Asian countries and even beyond that. If the interpretation made by the assessing authority is to be accepted, the tonnage tax benefit will not be available to any shipping company transporting goods from India to such countries for the simple erratic reason that land routes are available between India and those countries. The learned counsel argued that this line of argument is perverse and the interpretation is quite ridiculous. If the interpretation given by the assessing authority is accepted, no shipping company in India will be able to avail the benefit of tonnage tax scheme except where the ships are sailing through coastal waters. That could never be the intention of the legislature in enacting the law provided in Chapter XII-G of the Income-tax Act, 1961.
ITA NO.1195/Mds//2010. 36
21. It is in this context, the learned counsel argued that a comparative study on similar lines available in other countries becomes relevant. The intention of the legislature to introduce the tonnage tax scheme was to give incentives to shipping companies by way of low tax incidence. The scheme is available not only in India but also in other countries. The United Kingdom has legislated on this subject following the legislation made in Netherlands. India has drafted the same phraseology in its legislation. Therefore there is nothing wrong in comparing the analogous legislations to examine the real intent and purpose of the restrictive clauses provided under section 115VD, wherein the qualifications of a ship are explained. The learned counsel explained that the intention of the legislature to put such a restriction is to prevent misuse of this beneficial section so that the benefit is enjoyed only by those shipping companies who are operating the ships to perform the functions expected from the shipping industry like bulk carriage of goods and transporting of passengers. That is why the British legislation has given certain examples to show as to what are those items which do not come under the purview of the benefit. By anchoring a ship in coastal waters an assessee can run a retail business, restaurant, hotel, radio ITA NO.1195/Mds//2010. 37 station, casino, etc. It may try to get the benefit of tonnage tax scheme. Such facilities are easily provided on land. Those services may be shifted aboard a ship anchored in coastal waters only for the purpose of getting tax benefit. It is to exclude such misuse of the provision of law that the restrictive clause(i) has been provided under section 115VD. It is not meant for denying the benefit to an assessee who is operating a ship to perform the core function of a ship like mass transportation of goods and passengers. The assessee is operating the ship to transport tons and tons of thermal coal from ports like Haldia, Paradip and Vizag to ports like Ennore and Tuticorin.
22. Therefore, the learned counsel contended that the Commissioner of Income Tax (Appeals) has rightly understood the intent and purpose of the legislation on the subject matter and has rightly held that the assessee is entitled for the benefit of tonnage tax scheme.
23. I heard both sides in detail and perused the relevant materials available on record.
24. Shipping companies are given option to pay tax as per normal provisions of computation or on the basis of presumptive tax ITA NO.1195/Mds//2010. 38 regime described as 'Tonnage Tax Scheme'. The income arising from operation of qualifying ship is determined based on the tonnage tax scheme. Normally a shipping company is to be assessed at the normal corporate tax rate. If the assessee chooses for tonnage tax scheme, it pays tax at a prescribed rate with reference to the tonnage of the ship. The actual loss or profit of the shipping company is not taken into consideration. Irrespective of the other factors, income is always computed but at a tonnage rate, de facto much lower to normal corporate tax rate. The accounting or actual income is replaced by a notional income. The business of operating a qualifying ship is treated as a separate business and income is also computed on stand-alone basis.
25. The conditions are that it must be a sea going ship; it must have a net tonnage of 15 tons or more; it must be a ship registered under the Merchant Chipping Act and it must possess a valid certificate from the Director-General of Shipping. The assessee must be a company engaged in the business of operating qualifying ship and income from the business of operating of qualifying ship would be deemed to be chargeable to tax under the head profits and ITA NO.1195/Mds//2010. 39 gains of business or profession. The assessee has complied with the above conditions.
26. The contention of the assessing authority that the ship was excluded from the ambit of tonnage tax scheme mainly for the reason that the ship is rendering services only between Indian ports, which would have also been rendered on land by road or rail, is too far-fetched. There is no such stipulation anywhere in law. The tonnage tax scheme does not distinguish ships operating in coastal waters ad ships operating in international waters. There is no bar on the coastal shipping for the tonnage tax scheme. If the contention of the assessing authority is accepted, the income from coastal shipping would be outside the purview of tonnage tax scheme.
27. The normal activities of operating a sea going ship is to carry passengers, carry cargo, to do towage, salvage or other marine assistance or transport in connection with other services of kind necessarily provided at sea. The restriction has to be looked into in the above background. The restriction is that the vessel is not a qualifying ship for the purpose of section 115VD if the main purpose for which it is used is the provision of goods or services of a kind normally provided on land. It is to be seen that no services can be ITA NO.1195/Mds//2010. 40 rendered by ships on land. If that is the case wherever land routes are available one has to presume that an assessee cannot opt for sea routes and cannot claim the benefit of tonnage tax scheme. The law is not making any reference to any other alternative method available for transportation of goods and cargo from destination to destination. The law only says that an assessee company is entitled for opting for tonnage tax scheme if it is operating qualifying ship and satisfies other conditions provided therein. The law does not say that the ship should always do its voyage between international ports. The law does not say anything about the distance to be covered by ship in a single voyage. The law presumes that the benefit of tonnage tax scheme is available to all sea going ships satisfying the condition where it is operated between Indian ports or between Indian ports and foreign ports. The operation of a sea going ship does not assume any different character only for the reason that the ship is operateing between two Indian ports. The character of operating a ship does not assume any other dimension only for the reason that the ship is operated between one Indian port and another foreign port. These are all matters never construed in the scheme of the Act ITA NO.1195/Mds//2010. 41 providing the benefit of tonnage tax scheme to the assessees who are in the shipping industry and operating qualifying ships.
28. This is not an issue particular to India. World over countries are providing such incentives to shipping industry for their own economic advantage. The policy of giving such incentives to shipping industry is a matter of larger policies relating to economic priorities. If the intent of the law is interpreted in such a manner to arrive at an erratic conclusion, that interpretation must always be avoided.
29. The only provocation for the Assessing Officer to hold that the ship operated by the assessee company is not a qualifying ship is that the ship operated by the assessee is doing the same services that could be provided on land also. It is in that context that the Commissioner of Income-tax(Appeals) has made a reference to the English law on the subject. The United Kingdom law while using the same phraseology in drafting the law in the matter of tonnage tax scheme has provided certain examples. It says what could be those items coming under the provisions provided to restrict the abuse of the tax incentive. The examples given in the English law states the examples such as business that could be provided on land or ITA NO.1195/Mds//2010. 42 retailers, restaurants, hotels, radio stations, casinos, etc. Only for the reason that examples have been taken from English law it does not mean that it is not relevant to Indian law. The normal interpretation of the provision makes it clear that the restriction provided in sub- section(i) applies only to those provision of goods or services unrelated to the core activities of operating ship. Even though the ship operated by the assessee is transporting thermal coal from Indian ports to Indian ports, the ship is performing exactly the core function of a ship of carrying bulk cargo from port to port. There may be alternative means available for transportation of thermal coal on land route by truck or train. Theoretically speaking, even transport planes can carry coal from one destination to another destination. These kinds of extreme views are not at all called for in interpreting a beneficial provision couched in simple language. The assessing Officer is trying to bring in additional conditions which have never been contemplated in drafting the law.
30. On the facts and circumstances of the case I agree with the view of the learned Accountant Member to hold that the ship operated by the assessee "M.V.Gem of Ennore" transporting thermal coal from one location to another location within the country, is a ITA NO.1195/Mds//2010. 43 qualifying ship under section 115VD of the Income-tax Act, 1961 and the assessee is entitled for the benefit of tonnage tax scheme provided under Chapter XII-C of the Income-tax Act, 1961. I agree with the view of the learned Accountant Member that the appeal of the Revenue is liable to be dismissed.
31. Now the matter will be placed before the regular Bench for passing orders, to finally dispose of the appeal on majority view.
Sd/-
(Dr. O.K.Narayanan) Vice-President THIRD MEMBER Chennai, Dated the 17th June, 2011.
V.A.P.
Copy to: (1) Appellant
(2) Respondent
(3) CIT
(4) CIT(A)
(5) D.R.
(6) G.F.
ITA NO.1195/Mds//2010. 44
IN THE INCOME TAX APPELLATE TRIBUNAL
BENCH "B" CHENNAI
(Before Shri U.B.S. Bedi, Judicial Member and
Shri Abraham P. George, Accountant Member)
.....
I.T.A. No. 1195/Mds/2010
Assessment Year : 2006-07
The Assistant Commissioner M/s West Asia Maritime Ltd.,
of Income Tax, Buhari Towers, 6th floor,
Company Circle II(3), v. 4, Moores Road,
Chennai - 600 034. Chennai - 600 034
PAN : AAACW1023E
(Appellant) (Respondent)
Appellant by : Shri Clemond
Respondent by : Shri R. Vijayaraghavan
ORDER GIVING EFFECT
PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER :
In the above appeal, there was a difference of opinion between the Members comprising the Bench. Hon'ble President, ITAT, referred the following question before Hon'ble Vice President, ITAT, Chennai, as Third Member:-
"Whether, in view of facts and circumstances of the case, ship named 'M.V. Gem of Ennore' transporting thermal coal from one location to another location within the country, when such ports are connected by rail/road, ITA NO.1195/Mds//2010. 45 can be excluded as "qualifying ship" in terms of the exclusion clause (i) of section 115VD for the benefit of Tonnage Tax Scheme OR it can be treated as "qualifying ship"."
2. Now, Hon'ble Third Member, vide his order dated 17th June, 2011, has agreed with the view taken by the Accountant Member. Thus, based on majority opinion, the appeal of the Revenue is dismissed.
Order pronounced in the open court after conclusion of hearing on the First Day of July, 2011.
sd/- sd/-
(U.B.S. Bedi) (Abraham P. George)
Judicial Member Accountant Member
Chennai,
Dated the 1st July, 2011.
Kri.
Copy to: (1) Appellant
(2) Respondent
(3) CIT(A)
(4) CIT
(5) D.R.
(6) Guard file