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2016 (8) TMI 1442 - AT - Income TaxAddition u/s.14A r.w.r. 8 - not claiming any expenditure against the non-shipping business income by the assessee and opting for TTS for shipping business - HELD THAT:- Assessee had not claimed any expenditure against the income arising out of non-shipping business that it had opted for TTS for the shipping business that it had sufficient own funds to make investments. Disallowance made by the AO was not justifiable. If no expenditure was claimed against the exempt income arising out of non-shipping business the basic ingredient for invoking the provisions of section 14A was absent. Tonnage Tax Scheme(TTS) - Section 115VA is unique in the sense that it deals with the computation of income from the business of operating qualifying ships which opt for Tonnage Tax Scheme(TTS).The method of computation of income under the scheme as provided by the section stipulates that income has to be assessed in a particular manner. In other words no expenditure can be allowed or disallowance can be made while computing the income under TTS. The income of the assessee is computed at a fixed rate and all other provisions of the Act are not to be applied once an assessee opts for the scheme. In short if the assessee cannot claim any expenditure after opting out of the scheme then the AO is also barred by making any disallowance for incurring of expenditure. Legislature in its wisdom has allowed the assessees for opting for the said scheme and with a specific purpose. Therefore while comupting the income of the assessee u/s. 115VP the AO has to put on blinkers and assess the income as suggested by the Parliament. There is no scope for tinkering with the provisions of section 115 VP of the Act. He has to follow the simple rule that no deduction is to be allowed or no disallowance is to be made under any of the normal provisions of the Act, once it is found that an assessee is to be assessed as per the provisions of chapter XIIG of the Act. Section 14A is not an exception to the TTS. Rather the scheme is an exception to the normal computation provisions including the section 14A.Therefore,it cannot be said that when the income of the assessee from the business of operating ships was computed under the special provisions of Chapter XII-G expenditure other than the expenditure incurred for the purpose of the business had been allowed. Considering the twin factors i.e. not claiming any expenditure against the non-shipping business income by the assessee and opting for TTS for shipping business, we are of the opinion that the order of the FAA does not suffer from any legal or factual infirmity. - Decided in favour of assessee.
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