TMI Blog1998 (4) TMI 121X X X X Extracts X X X X X X X X Extracts X X X X ..... rejudice to question No. 1 whether, on the facts and in the circumstances of the case particularly in view of the finding of facts recorded by the Commissioner of Income-tax (Appeals) in his order the Tribunal was justified in law in holding that the detention/demurrage charges received by the assessee are not covered by the provisions of the section 44B of the Income-tax Act, 1961, and thereby reversing the order of the Commissioner of Income-tax (Appeals)?" Though we had taken a tentative view in court on March 16, 1998, but on re-thinking we thought it proper to hear the parties again on the question whether the income of the non-resident which accrued outside India can be taxed in India. We re-fixed the case for fresh hearing today, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g that the entire receipt against detention/demurrage charges should be treated as profits and gains of the assessee as has been taken by the Assessing Officer. The assessee raised a cross-objection and the claim that demurrage charges cannot be taxed at all under the Act, as that income does not accrue in India. The Tribunal has accepted the grounds raised in the cross-objection by the assessee and held that the amount of demurrage charges cannot be taxed as no income does accrue in India. At the outset, counsel for the assessee, Dr. Pal, brought to our notice that by virtue of the insertion of the Explanation in sub-section (2) of section 44B of the Act, question No. 2 can be answered against the assessee and in favour of the Revenue an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... though inserted by virtue of the Finance Act, 1997, has come into force with effect from April 1, 1976. Thus, it covers the assessment years of the assessee which is before us. Dr. Pal fairly admitted that after this Explanation, the demurrage charges or handling charges or any other amount of similar nature shall be taxed in the same way as the amount in clause (i) or clause (ii) of sub-section (2) of section 44B of the Act. Accordingly, question No. 2 we answer against the assessee and in favour of the Revenue holding that demurrage charges or freight charges should be taxed in the same way as freight taxable under section 44B of the Act. So far as question No. 1 is concerned, Dr. Pal submits that in the absence of necessary findings of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me will be computed or not what will be the rate of that income. Sub-section (2) of section 44B provides as under : "(2) The amounts referred to in sub-section (1) shall be the following, namely :--- (i) the amount paid or payable (whether in or out of India) to the assessee or to any person on his behalf on account of the carriage of passengers, livestock, mail or goods shipped at any port in India; and (ii) the amount received or deemed to be received in India by or on behalf of the assessee on account of the carriage of passengers, livestock, mail or goods shipped at any port outside India." Dr. Pal also laid emphasis in his argument that when the income which accrued outside India is not taxable under the provisions of sections ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... j Cotton Mills Ltd. v. CIT [1979] 116 ITR 1, their Lordships of the apex court observed as under : "The question whether the loss suffered by the assessee was a trading loss or a capital loss cannot, therefore, be answered unless it is first determined whether these two amounts were held by the assessee on capital account or on revenue account or, to put it differently, as part of fixed capital or of circulating capital. We would have ordinarily, in these circumstances, called for a supplementary statement of case from the Tribunal giving its finding on this question, but both the parties agreed before us that their attention was not directed to this aspect of the matter when the case was heard before the Revenue authorities and the Tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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