I-T - Forex fluctuation gains earned by logistic company on aquisition of new ship, cannot be taxed u/s 43A, if company had already offered income under tax tonnage scheme: HC
By TIOL News Service
MUMBAI, JULY 28, 2017: THE ISSUE BEFORE THE COURT IS - Whether forex fluctuation gains earned by a logistic company on aquisition of new ship, can be taxed u/s 43A, if the company had utilized loan amount for purchase of new ship and had already offered the income under tax tonnage scheme. NO is the verdict.
Facts of the case:
The Revenue preferred the present appeal challenging the order, whereby the Tribunal had held that FEFG of Rs.7.53 crores was not taxable in this year u/s 43A. According to the counsel, the Assessee had not purchased the Ship. If the Assessee would have purchased the ship, then the Judgment of the Tribunal could have been appreciated. However, in absence of utilizing the loan for the purpose of purchasing the ship, the Assessee was not entitled for the benefit. The counsel further submitted that specific finding was arrived at by the Commissioner to the effect that no such ship had been purchased so as to utilize amount of loan and there was no addition to the fixed assets schedule towards acquisition of new ship.
On appeal, the HC held that,
++ the Tribunal has accepted that the Assessee has utilized the loan for the purpose of purchase of ship. It is also not disputed by the counsel for Revenue that if the Assessee has utilized the loan for the purpose of purchase of ship, then the benefit given by the Tribunal cannot be disputed. However, contention of the counsel for the Revenue relying on the observations of the Commissioner (Appeals) in the Judgment is that the Assessee has not purchased the ship from the loan which has been advanced, does not appear to be proper. The Commissioner in its Judgment has accepted that the Assessee has acquired Vessel Bulk Prosperity. On perusing the agreement between the Assessee and the party advancing loan, the ship, as is subject matter of the said agreement, means 10500 deadweight tonne motor vessel bulk cargo transhipper known as "Bulk Prosperity". The Commissioner accepts that the Assessee has acquired Bulk Prosperity. In view of this, the finding of the Tribunal that the Assessee has acquired the ship from the loan advanced is not perverse and the same is based on documentary evidence. We do not find any perversity in the same. Even finding of the Tribunal holding that the FEFG of Rs.23.11 lakhs cannot be separately taxed as FEFG as the Assessee offered income under the TTS is concerned, the same is covered by the Order of this Court in IncomeTax Appeal No.2394 of 2009 dated 13th January 2010. In light of above, no substantial question arises.
(See 2017-TIOL-1416-HC-MUM-IT)
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