TMI Blog2023 (4) TMI 1100X X X X Extracts X X X X X X X X Extracts X X X X ..... ion cess and secondary and higher secondary education cess for the purpose of computing profits and gains from business or profession - HELD THAT:- In terms of explanation 3 as inserted by Finance Act ,2022 to section 40(ii) of the Act, it has been provided tax shall include and shall be deemed to have always included any surcharge or cess by whatever name called on such tax. Considering the above position we are of the considered view that education cess and Secondary and higher Secondary Education cess are also part of the tax and not deduction is available to the assessee. Accordingly the ground raised by the assessee is dismissed. - I.T.A. No. 101/Kol/2022 - - - Dated:- 29-3-2023 - Shri Rajesh Kumar , Accountant Member And Shri Sonjoy Sarma , Judicial Member For the Appellant : Arati Agarwal, A.R Rosy Banjerjee, A.R For the Respondent : Shri G.Hukugha Sema, CIT ORDER Per Rajesh Kumar, AM: This is the appeal preferred by the assessee against the order of the Ld. Assistant Commissioner of Income Tax, Central Circle-1(1), Kolkata (hereinafter referred to as the Ld. AO ] dated 25.01.2022 for the AY 2017-18. 2. Issue raised in ground nos. 1 to 5 is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me derived from the business of chartering of vessel named MV Jal Vaibhav and paid income tax thereon The assessee stated that under the Scheme, the income tax payable by the taxpayer has to be computed on the basis of tonnage capacity of the qualifying ship and the number of days for which it was held, irrespective of the revenue realization and the expenditure incurred for the purpose of the business. The assessee stated that as the Scheme provides for a presumptive basis of taxation, the determination of income / expense having regard to arm s length price under Chapter-X has no relevance for computing income chargeable to tax as per Chapter XII-G of the Act. Reliance was placed upon the decisions in Van Oord India Private Limited [TS-440-ITAT- 2019(Mum)-TP] - 22 May 2019; Essar Ports Ltd [TS-666-ITAT-2019(Mum)-TP] - 26 June 2019, wherein it was held that TP-provisions [Chapter X] do not apply to income taxed under TTS as detailed under Chapter XII-G of the Act: 3.3 The submissions have been perused along with the materials available on record. On the above issue, in the TP order, the TPO stated that his role in this context was limited to determine the arm s length price ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ides for inclusion of income arising from related party transactions as under- (8) Where it appears to the Assessing Officer that, owing to the close connection 'between the tonnage tax company and any other person, or for any other reason, the course of business between them is so arranged that the business transacted between them produces to the tonnage tax company more than the ordinary profits which might be expected to arise in the tonnage tax business, the Assessing Officer shall, in computing the relevant shipping income of the tonnage tax company for the purposes of this Chapter, take the amount of income as may reasonably be deemed to have been derived therefrom. 3.5 The above provision is pari materia to the transfer pricing provisions contained in Chapter -X of the Act. Accordingly, the TPO/AO is not precluded from taking the amount of transfer pricing adjustment into consideration while computing the relevant shipping income of the tonnage tax company, which is the assessee in this case. As regards the decisions upon by the assessee, it has not been confirmed whether the said decisions have seen accepted by Revenue and have attained finality. The assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hority, even then the provisions of transfer pricing would be applicable. Therefore the appeal of the assessee may kindly be dismissed on this legal issue. 7. After perusing the material on record and hearing the rival contentions, we observe that the assessee has opted for tonnage tax scheme in respect of its income from operating the ships in terms of approval granted to it by the Addl. CIT, range-1, Kolkata vide letter dated 29.03.2017 for a period of 10 years. We have also perused the presumptive scheme as envisaged by the provisions of Section 115BB of the Act and also the decision cited by the assessee in the case of Van Oord India Pvt. Ltd. (supra). Considering the facts in the light of above decisions of the coordinate bench we are of the considred view that where the assessee has opted for tonnage tax scheme and has offered the income on presumptive basis, no TP adjustments are required to be made. The operative part of the decision is reproduced as under: 25. Our findings on this issue are summed up a savoir: (a) Section 115VA of the Income Tax Act, forming part of the TTS (for which, the assessee has made option) contained in Chapter XII-G of the Act, exclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 (SC) dated 12.10.2022. Accordingly ground nos. 7 8 are dismissed. 9. Issue raised in ground no. 9 is against the order of DRP not allowing the deduction in respect of education cess and secondary and higher secondary education cess for the purpose of computing profits and gains from business or profession. 10. We have heard the ld. authorized representatives for both the parties, perused the orders of the lower authorities and the material available on record, and have also considered the judicial pronouncements that have been relied upon by them in context of the issue in hand and also explanation 3 as inserted by Finance Act ,2022 to section 40(ii) of the Act. In terms of the said explanation , it has been provided tax shall include and shall be deemed to have always included any surcharge or cess by whatever name called on such tax. Considering the above position we are of the considered view that education cess and Secondary and higher Secondary Education cess are also part of the tax and not deduction is available to the assesse. Accordingly the ground raised by the assesse is dismissed. 11. In the result, the appeal of the assessee is partly allowed. Order is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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