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2022 (9) TMI 550 - Income Tax
Exemption under Tonnage Tax Scheme - disallowance of ‘other operating revenue’ claimed by the assessee as exempt income - Scope of core activity or incidental activity of shipping - AO observed that the assessee company had clubbed the ‘other operating revenue’ earned with the revenue from Core Dredging Services and claimed exemption as per the provisions of Tonnage Tax Scheme - HELD THAT:- The income received and claimed by the assessee as exempt income, do not fall under the purview of Tonnage Tax either in core activity or incidental activity of shipping as per the provisions of Chapter XII-G and the same is to be added as income from non-core activity of dredging operations.
As regards the liquidated damages the source of such income is payment for failure to execute the contract works within the stipulated time and not the shipping activity either core or incidental. Though the liquidated damages may be incidental business income but the same is not the profit from core activities or incidental activities which have been defined in the Act. They are not directly received from the shipping activity but are compensatory in nature collected from the contractors for failure to execute contract. Therefore, liquidated damages cannot be held to be from the core activity of the shipping and does not form part for computation in tonnage tax.
No infirmity in the orders passed by the lower authorities and respectfully following the decision laid down by the Hon’ble Tribunal in assessee’s own case for the previous relevant assessment years [2018 (10) TMI 497 - ITAT VISAKHAPATNAM] we uphold the order of the lower authorities and dismiss the appeal of the assessee on this ground.
Nature of receipts - receipts on account of sale of scrap, sale of empties, sale of waste oil, exchange difference and machinery scrap sales - AO treated the receipts from the above activities as non core receipts and accordingly brought to tax - HELD THAT:- It is evident that the Tribunal in assessee’s own case [2018 (10) TMI 497 - ITAT VISAKHAPATNAM] decided the issue against the revenue on the same issue stating that D.R did not controvert or bring any other order to support that the income was from non core activity. Therefore we uphold the order of the Ld.CIT(A) and dismiss the appeal of the revenue.