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DATE: July 5, 2016 (Date of pronouncement)
DATE: July 6, 2016 (Date of publication)
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Entire law on assessment of shipping companies under the "Tonnage Tax" Scheme in Chapter XIIG of the Income-tax Act, 1961 in the context of "slot charters" explained

When the scheme of the aforesaid special provision for computation of income under TTS is exempted, we find the balance tilted in favour of the assessee as that was the precise purpose in introducing TTS in India. It may be stated in brief that in view of the stiff competition faced by the Indian shipping companies vis-a-vis foreign shipping lines, and in order to ensure an easily accessible, fixed rate, low tax regime for shipping companies, the Rakesh Mohan Committee in its report (of January, 2002) recommended the introduction of the TTS in India, which was similar to, and adopted some of the best global practices prevalent. The whole purpose of introduction of the Scheme was to make the Indian shipping industry more competitive in the global space by rationalising its tax cost. For the reason that it is impossible to cater to all shipping routes on owned ships, it is an accepted and widely prevalent practice globally and in India that shipping companies engage in slot charter operations. If such slot charter arrangements are not entered into, then Indian shipping companies will not be able to take up contract of affreightments and these contracts would have fallen to only foreign shipping lines thereby making Indian shipping industry uncompetitive. Such slot charter arrangements being with a shipping company but not in relation to or for a particular ship, it is impossible for the Indian shipping company to identify the cargo ship, which carried the goods

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DATE: June 28, 2016 (Date of pronouncement)
DATE: July 6, 2016 (Date of publication)
AY: -
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CITATION:
Severe strictures passed at the attitude of the Government in creating “hurdles and obstacles in the smooth working and functioning of all the tribunals and courts” and the fact that the “State has yet to adopt a culture of respect and regard for the judiciary”. Directions given that issue of allotment of residential quarters to Tribunal Members should not be kept a “closely guarded secret” but made public

It is these dismal state of affairs which compel us to observe as above. We are still apprehensive for this State has yet to adopt a culture of respect and regard for the judiciary. The judiciary is an important organ of the State. The State has a wider connotation and included in it are the legislature, executive and the judiciary. The executive wing of the State Government continues to show disrespect and disregard to the judiciary in matters which are of above routine nature. We have seen precious time being wasted on the judicial side on such trivial issues. There are ways and means by which the General Administration Department and the Finance Department of the State create hurdles and obstacles in the smooth working and functioning of all the tribunals and courts set up by the State.

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DATE: June 23, 2016 (Date of pronouncement)
DATE: July 4, 2016 (Date of publication)
AY: 2008-09
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CITATION:
S. 37(1): Expenditure on Corporate Social Responsibility (CSR), though voluntary, is allowable as business expenditure. Explanation 2 to s. 37(1) inserted w.e.f. 01.04.2015 is not retrospective. It applies only to CSR expenditure referred to in s. 135 of the Companies Act and not to voluntary CSR expenditure

The amendment in the scheme of Section 37(1), which has been introduced with effect from 1st April 2015, cannot be construed as to disadvantage to the assessee in the period prior to this amendment. This disabling provision, as set out in Explanation 2 to Section 37(1), refers only to such corporate social responsibility expenses as under Section 135 of the Companies Act, 2013, and, as such, it cannot have any application for the period not covered by this statutory provision which itself came into existence in 2013. Explanation 2 to Section 37(1) is, therefore, inherently incapable of retrospective application any further. In any event, as held by Hon’ble Supreme Court’s five judge constitutional bench’s landmark judgment, in the case of CIT Vs Vatika Townships Pvt Ltd [(2014) 367 ITR 466 (SC)], the legal position in this regard has been very succinctly summed up by observing that “Of the various rules guiding how legislation has to be interpreted, one established rule is that unless a contrary intention appears, legislation is presumed not to be intended to have a retrospective operation

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DATE: June 24, 2016 (Date of pronouncement)
DATE: July 4, 2016 (Date of publication)
AY: 2010-11
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CITATION:
S. 40(a)(ia): When there are conflicting judgements of non-jurisdiction High Courts, the Tribunal is not permitted to choose based on its perception of what the correct law is because it will amount to sitting in judgement over the High Courts’ views. Instead, it has to follow the view which is in favour of the assessee even if it believes that this view is not the correct law. Second proviso to s. 40(a)(ia) inserted by FA 2013 should be treated as retrospectively applicable from 1st April 2005

It will be wholly inappropriate for us to choose views of one of the High Courts based on our perceptions about reasonableness of the respective viewpoints, as such an exercise will de facto amount to sitting in judgment over the views of the High Courts something diametrically opposed to the very basic principles of hierarchical judicial system. We have to, with our highest respect of both the Hon’ble High Courts, adopt an objective criterion for deciding as to which of the Hon’ble High Court should be followed by us. We find guidance from the judgment of Hon’ble Supreme Court in the matter of CIT vs. Vegetable Products Ltd. [(1972) 88 ITR 192 (SC)]. Hon’ble Supreme Court has laid down a principle that “if two reasonable constructions of a taxing provisions are possible, that construction which favours the assessee must be adopted”. This principle has been consistently followed by the various authorities as also by the Hon’ble Supreme Court itself

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DATE: May 31, 2016 (Date of pronouncement)
DATE: July 4, 2016 (Date of publication)
AY: 2012-13
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CITATION:
S. 56(2)(vii)/ 145A: Interest awarded on compensation for personal disability does not have the character of "income" and cannot be taxed. CBDT requested to issue instructions to mitigate hardship of accident victims

Clearly, unless a receipt is not an income, there is no occasion for the provisions of Section 56(1) or 56(2) coming into play. Section 56 does not decide what is an income. What it holds is that if there is an income, which is not taxable under any of the heads under Section 14, i.e item A to E, it is taxable under the head ‘income from other sources’. The receipt being in the nature of income is a condition precedent for Section 56 coming into play, and not vice versa. To suggest that since an item is listed under section 56(2), even without there being anything to show that it is of income nature, it can be brought to tax is like putting the cart before the horse. The very approach of the authorities below is devoid of legally sustainable merits. The authorities below were thus completely in error in bringing the interest awarded by Hon’ble Supreme Court to tax

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