TMI Blog2017 (10) TMI 1604X X X X Extracts X X X X X X X X Extracts X X X X ..... td. to operate the ship still was in force and that the ship was on lease with M/s. Poompuhar Shipping Corporation to operate the same - As per assessee stress was on owning a qualifying ship and that it does not envisage to be a owner of fully owning a qualifying ship - HELD THAT:- By following the above order of the Tribuna lin the assessee s own case for the assessment year 2005-06 [ 2011 (5) TMI 250 - ITAT, CHENNAI] . ld. CIT(A) directed the Assessing Officer to grant renewal of tonnage tax scheme as applied by the assessee. The above order of the Tribunal has not been reverted or reversed by any higher Court. Accordingly, we confirm the order passed by the ld. CIT(A), subject to the final verdict of the Hon ble Madras High Court as has been contended by the ld. DR that the Department has filed further appeal against the order of the Tribunal. - Decided against revenue. - I.T.A. Nos.3195 and 3196/Mds/2016 - - - Dated:- 13-10-2017 - SHRI SANJAY ARORA, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY, JUDICIAL MEMBER For the Appellant : Smt. Veni S. Raj, JCIT For the Respondent : Shri N.C. Prabhakar, Advocate ORDER PER DUVVURU RL REDDY, JUDICIAL MEMBER: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fy the provisions of section 115VC(c) of the Act. In this case, the Assessing Officer has observed that the assessee has admitted shipping income of ₹.9,28,94,473/- and claimed shipping expenses of ₹.4,70,05,424/- and paid tonnage tax of ₹.1,94,730 under section 115VG of the Act. After examining the claim of the assessee, the Assessing Officer held that the assessee does not qualify for Tonnage Tax Scheme under section 115VP(3) of the Act. On appeal, by following the decision of the Coordinate Bench of the Tribunal in assessee s own case for earlier assessment years, the ld. CIT(A) directed the Assessing Officer to allow the benefit of tonnage tax scheme under section 115VG of the Act. We have also gone through the orders of the Tribunal for earlier assessment years 2006-07 to 2008-09 and 2010-11 in I.T.A. Nos. 2145 to 2148/Mds/2013, wherein the Tribunal has held as under: 9. After giving our thoughtful consideration to the grounds raised in the appeal, findings of the CIT(A) and arguments of both parties, we find that in assessment year 2009-10, the 'tribunal' (supra) has decided the very issue in favour of the assessee. The Revenue submits as per gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g various provisions, the Assessing Officer held that the assessee is not eligible for opting for Tonnage tax scheme as per the provisions of section 115VC and 115VD of the Act and accordingly, the petition for renewal under Tonnage Tax Scheme under section 115VR of the Act was rejected. 8.2 On appeal, by following the decision of the Tribunal I assessee s own case for the assessment year 2005-06 dated 13.05.2011, the ld. CIT(A) directed the Assessing Officer to grant renewal of tonnage tax scheme applied for by the assessee. 8.3 Aggrieved, the Revenue is in appeal before the Tribunal. The ld. DR has submitted that the decision of the Tribunal in assessee s own case for the assessment 2005-06 in I.T.A. No. 356/Mds/2010 dated 13.05.2011 has not been accepted by the Department and the appeal filed before the Hon ble Madras High Court is pending for adjudication. 8.4 On the other hand, the ld. Counsel for the assessee has submitted the issue is squarely covered in favour of the assessee by the order of the Tribunal and prayed that the order of the ld. CIT(A) should be sustained. 8.5 We have heard both sides, perused the materials available on record and gone through the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f an option. The order has to be passed by the Additional Commissioner within 30 days of the application. It was intended to be a preliminary enquiry. The Additional Commissioner in his order dated 28.01.2005 has clearly stated as follows: On the basis of details filed and undertaking given with regard to qualifications required for tonnage tax scheme the assessee is granted approval for tonnage tax scheme option with effect from assessment year 2005-06. However, it must be noted that the above approval is subject to compliance of various conditions as prescribed in Chapter XIIG of the Income Tax Act dealing with special provisions relating to Income of shipping companies . The approval given by the Additional Commissioner is a qualified one and it is not intended that he should go into the details of eligibility at the initial stage. (ii) Secondly the assessee has stated in the application in Form No.65 under rule 11P filed before the Additional CIT that the company owns 1 qualifying ship without stating that the assessee is only part owner of the ship and also that the management and operation of the ship is done by West Asis Martime Pvt. Ltd., (iii) Similar issue on the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer even though on the very same issue the appeals are pending before the CIT(A), in certain other cases. Though the issues are debatable, the CIT is not precluded from exercising his powers under section 263 to direct the Learned Assessing Officer to consider the same in accordance with law. In this regard I rely on the decision of the Madras High Court in the case of CIT v. Seshashayee paper Boards 217 ITR 258 which has been approved by the Supreme - 15 - Court in the case of CIT v. G.M.Mittal Stainless Steel P. Ltd 263 ITR 255. 8. To adjudicate the issue under consideration it is considered useful to extract some of the relevant provisions of the Act as under:- 115VA. Computation of profits and gains from the business of operating qualifying ships.--Notwithstanding anything to the contrary contained in sections 28 to 43C, in the case of a company, the income from the business of operating qualifying ships, may, at its option, be computed in accordance with the provisions of this Chapter and such income shall be deemed to be the profits and gains of such business chargeable to tax under the head Profits and gains of business or profession . *115VB. Operatin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (3) On receipt of an application for option for tonnage tax scheme under sub-section (1), the Joint Commissioner may call for such information or documents from the company as he thinks necessary in order to satisfy himself about the eligibility of the company and after satisfying himself about such eligibility of the company to make such option for tonnage tax scheme, he- (i) shall pass an order in writing approving the option for tonnage tax scheme; or (ii) shall, if he is not so satisfied, pass an order in writing refusing to approve the option for tonnage tax scheme, and a copy of such order shall be sent to the applicant : Provided that no order under clause (ii) shall be passed unless the applicant has been given a reasonable opportunity of being heard. (4) Every order granting or refusing the approval of the option for tonnage tax scheme under clause (i) or clause (ii), as the case may be, of sub-section (3) shall be passed before the expiry of one month from the end of the month in which the application was received under subsection (1). (5) Where an order granting approval is passed under sub-section (3), the provisions of this Chapter shall apply from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roval granted u/s.115VP(3) is merely a preliminary order and the Additional Commissioner of Income Tax can grant the approval even without satisfying himself completely about the eligibility of the applicant company for tonnage tax scheme. 12. Once it has been provided in statute by the Parliament that the Joint Commissioner of Income Tax shall approve the option for Tonnage Tax Scheme after satisfying himself about the eligibility of the company for the said scheme and in pursuance to which the competent authority has granted the approval then it cannot be held that such approval was granted by making only a preliminary enquiry without satisfying as was the competent authority duty bound to do , without any relevant material. As the said order of the Additional Commissioner of Income Tax is still in force, not set aside by any higher authority in our considered opinion it cannot be disputed by the Revenue that the assessee company was not a qualifying company or the company which was not eligible for tonnage tax scheme. 13. We find that the Learned Commissioner of Income Tax has brought no material on record after going through the agreement dated 25.09.2001 referred in show ..... 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