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2019 (3) TMI 266 - HC - Income TaxShipping income assessment - Exchange gain on account of restatement on foreign loan - whether or not covered under the tonnage tax scheme and is taxable as normal business income - categorized as 'Qualifying Company' and “Qualifying ship” - provision for computation of tonnage income - HELD THAT:- If realizing gain on account of foreign exchange fluctuations on account of purchase of ships at Sr No. 2 is to be treated as shippping income, there is so reason as to why notional gain on account of foreign exchange liabilities on account of purchase of ships at Serial No. 1 should also not been given the same treatment. Besides on account of consistency of the treatment of the variation on account of foreign exchange gain / loss arising on loan taken for acquisition of ships would be considered core activity arising out of operating ships. That is so far as gain / loss arising on variation of foreign exchange on purchase of ships is concerned. There is no reason given as to why the gain made as restatement of foreign exchange liability is not a part of shipping business under Section 115VI of the Act. Further the variation in exchange rates on account of loan taken on purchase of ships and which gives rise to profit / loss on account of foreign exchange variation of loan taken would in our view be considered to be a part of core activity of the shipping company entitled the benefit of Chapter XII-G of the Act. Tribunal was justified in deleting the addition made by AO who held that the exchange gain on account of restatement on foreign loan is not covered under the tonnage tax scheme and is taxable as normal business income - Decided against revenue
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