COMMISSIONER OF INCOME TAX Vs. NIPPON YUSEN KAISHA

JUDGEMENT

(1.) In this reference application, the following questions are referred for our opinion :

(2.) Without prejudice 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, and heard learned counsel for the parties.

(3.) Being aggrieved, the assessee carried the matter in appeal before the Commissioner of Income-tax (Appeals). The Commissioner of Income-tax (Appeals) has taken the receipt against detention/demurrage charges as part and parcel of the carriage of goods within the meaning of Section 44B of the Act. Therefore, the Commissioner of Income-tax (Appeals) directed that the amount received against detention/demurrage charges should be treated at par with freight and only 7.5 per cent, of that amount should be treated as profits of the business from the operation of ships.