INCOME TAX ACT, 1961

Section 147 Section 148 Section 115-VI

Reassessment - Validity of notice under section 148 - Reason to believe - Excess allowance of tonnage tax income in original assessment

The nature of business of the appellant was charter hiring of ship and offshore services. Assessee had furnished its return of income declaring Rs. 30,19,62,010 as its total income excluding the income from qualifying ships. It also offered Rs. 2,01,480 as tonnage income computed in accordance with section 115VG. As it had opted to offer for tax its tonnage income under Chapter XIIG of the Act, it claimed exemption of Rs. 21,57,22,468 being its relevant shipping income. The income from qualifying ships forms 36.44% of the total income of the assessee for the impugned assessment year. While computing the non-taxable shipping income under section 115VI(1), the assessee had taken into consideration an amount of Rs. 1,83,32,362 which represents a portion (0.364403 x 5,03,07,943) of the other income amounting to Rs. 5,03,07,943 credited to the P&L account as shown in 'Schedule J', thereto The AO held that the relevant shipping income means profit from the core activities referred to in sub-sections (2) & (5) respectively of section 115VI read with Rule 11R of the IT Rules, 1962. Observing that the above other income was not derived either from the core activities or from the incidental activities, the AO made a disallowance of Rs. 1,83,32,362. CIT(A) vide Order, dated 25-2-2016 dismissed the appeal. The assessee challenged notice under section 148. The DR explains that as the amount of Rs. 1,83,32,362 had escaped assessment within the meaning of section 147, the AO had rightly issued notice under section 148. Held: AO had rightly issued notice under section 148 as the assessee, while computing the non taxable relevant shipping income under section 115VI(1), had taken into consideration an amount of Rs. 1,83,32,362 which represents a portion of the other income amounting to Rs. 5,03,07,943 credited to the P&L account. The notice under section 148 has been issued by the AO in the instant case, within a period of four years from the end of the relevant assessment year. As the AO formed an opinion that the certain income was not derived either from the core or from the incidental activities as envisaged under section 115VI, he had rightly issued notice under section 148. Thus, the grounds of appeal raised by the assessee against the reopening made by the AO was therefore, dismissed.

REFERRED :

FAVOUR : Against the assessee.

A.Y. : 2009-10

INCOME TAX ACT, 1961

Section 115-VI Section 143(3) Section 147

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