ORIENT OVERSEAS CONTAINER LINE LIMITED ,MUMBAI vs. DEPUTY COMMISSIONER OF INCOME TAX (INTERNATIONAL TAXATION) CIRCLE 3(2)(2), MUMBAI

order \n:\n25.06.2025\nORDER\nPer Rahul Chaudhary, Judicial Member:\n1.\nThe present appeal preferred by the Assessee is pertaining to\n Assessment Year 2022-2023 challenging Final Assessment Orders,\ndated 30/01/2025, passed by the Assessing Officer under Section\n143(3) read with Section 144C(13) of the Income Tax Act, 1961\n[hereinafter referred to as 'the Act'], as per the directions issued by\nCommissioner of Income Tax [Dispute Resolution Panel (2)],\nMumbai-1 [for short `DRP'], on 17/12/2024 under Section 144C(5)\nof the Act.\n2.\nThe Assessee has raised following grounds of appeal :\n\"On the facts and circumstances of the case and in law, Orient\nOverseas Container Line Limited (hereinafter referred to as the\n'Appellant') craves leave to prefer appeal against the order dated 30\nJanuary 2025 passed by the Deputy Commissioner of Income tax\n(International taxation) - Circle 3(2)(2), Mumbai (hereinafter referred\nto as the 'Ld. AO') under Section 143(3) read with Section 144C(13)\nof the Income-tax Act, 1961 (hereinafter referred to as 'the Act')\npursuant to the directions dated

17. December 2024 of the Dispute\nResolution Panel ('Ld. DRP') on the following grounds, each of which\nare independent of, and without prejudice to one another:\n1. Ground 1: Assessment proceeding is non-jurisdictional\n1.

1. On the facts and circumstances of the case and in law, notice\nissued under section 143(2) of the Act being issued by\nAssistant Commissioner of Income-tax / Deputy Commissioner\nof Income-tax (International Taxation), Circle 1(1)(1), Delhi\ninstead of Jurisdictional Assessing Officer [i.e. Deputy\nCommissioner of Income-tax (International Taxation)-Circle\n3(2)(2), Mumbai] is devoid of jurisdiction.\n2. Ground 2: Assessment proceeding is time-barred\n2.1.\nOn the facts and circumstances of the case and in law, the\nimpugned assessment order is time barred, being passed after\nthe time limit provided under section 153 of the Act. That it is\nsettled position of law, that section 144C and section 153 of\nthe Act are mutually inclusive and the overall time limit to\ncomplete the assessment is circumscribed by section 153 of\nthe Act.\n3. Ground 3: GST amount cannot be considered for the purpose of\ncomputing presumptive income under section 44B of the Act\n3.

1. On the facts and circumstances of the case and in law, the Ld.\nAO and Ld. DRP has erred in including an amount of Rs.\n119,94,54,595, being the amount of GST charged, to the\ngross revenue for the purpose of computing presumptive\nincome under section 44B of the Act.\n3.2.\nOn the facts and circumstances of the case and in law, the Ld.\nAO and Ld. DRP has erred in not following the order passed by\nthe Mumbai Bench of Hon'ble income-tax Appellant Tribunal\n(ITAT') in Appellant's own case for AYs 2007-08, 2008-09,\n2010-11, 2011-12, 2013-14, 2015-16, 2016-17 and 2020-21,\nwherein it has been held that service tax/GST is not includible\nfor the purpose of computing presumptive income under\nSection 44B of the Act\n3.3.\nOn the facts and circumstances of the case and in law, the Ld.\nAO and Ld. DRP have breached the principle of consistency\nand principle of judicial discipline by not following the\naforesaid decisions and directions.\n4. Ground 4: Incorrect computation of book profits under section\n115JB\n4.

1. On the facts and circumstances of the case and in law, Ld AO\nhas erred in computing book profits under section 115JB at\nRs.1,25,89,94,787 without appreciating that section 115JB is\nnot applicable to the Appellant in view of Explanation 4A to\nsection 115JB(1).\n5. Ground 5: Short grant of credit of Tax deducted at source (TDS')\n5.1.\nOn the facts and circumstances of the case and in law, Ld. AO\nhas erred in restricting the credit of TDS to Rs.6,67,38,636,\nas against TDS of Rs.6,91,00,649 claimed by the Appellant in\nthe return of income, thereby short grant of TDS credit by Rs.\n23,62,013.\n5.2.\nThe Company has identified that the short TDS credit of Rs.\n23,08,839 is in relation to the tax deducted on the interest\nunder Section 244A by the jurisdictional assessing officer at\nthe time of issuing refund for the AY 2015-16.\n6. Ground 6: Short grant of credit of advance tax of Rs.3,47,553\n6.1.\nOn the facts and circumstances of the case and in law, Ld. AO\nerred in restricting the credit of advance tax to Rs.\n71,01,87,811 as against Rs.71,05,35,364 claimed by the\nAppellant in the return of income, thereby short grant of\nadvance tax credit by Rs.3,47,553.\n7. Ground 7: Erroneous levy of interest\n7.1.\nOn the facts and circumstances of the case, Ld. AO has erred\nin levying total interest of Rs.20,65,056 without providing any\nbasis of such levy.\n8. Ground 8: Initiation of penalty proceedings under section 270A\n8.1.\nOn the facts and in the circumstances of the case and in law,\nLd. AO has erred in initiating penalty proceedings under\nsection 270A of the Act without considering the fact that the\nAppellant has not underreported its income for the relevant\nAY.\nThe above grounds of objections are distinct and separate and\nwithout prejudice to each other.”\nThe relevant facts in brief are that the Assessee, a foreign company\ntax resident of Hong Kong, was engaged in the business of operation\nof ships in international traffic and its revenue comprises of freight\nincome and ancillary charges from carriage inward and outward\nduring the relevant previous year. The Assessee filed return of\nincome for the Assessment Year 2022-2023 declaring total income of\nINR.121,40,15,240/- after claiming the benefit of the Article 8 of the\nAgreement for Avoidance of Double Taxation between India and\nHonk Kong SAR (for short `Tax Treaty'] read with Section 90(2) and\nSection 44B of the Act in respect of the income from operation of\nships. Section 44B of the Act contains special provisions for\ncomputation of profits & gains of shipping business in the case of\nnon-residents. Section 44B(1) of the Act provides that\nnotwithstanding anything to the contrary contained in Section 28 to\n43A of the Act, 7.5% of the amount specified in Section 44B(2) shall\nbe deemed to be profits & gains of the business of shipping\nbusiness. Section 44B of the Act reads as under:\n“44B. Special provision for computing profits and gains of shipping\nbusiness in the case of non-residents.\n(1) Notwithstanding anything to the contrary contained in sections\n28 to 43A, in the case of an assessee, being a non-resident,\nengaged in the business of operation of ships, a sum equal to\nseven and a half per cent. of the aggregate of the amounts\nspecified in sub-section (2) shall be deemed to be the profits and\ngains of such business chargeable to tax under the head \"Profits\nand gains of business or profession.\n(2) The amounts referred to in sub-section (1) shall be the following,\nnamely:-\n(i) the amount paid or payable (whether in or out of India)\nto the assessee or to any person on his behalf on\naccount of the carriage of passengers, livestock, mail or\ngoods shipped at any port in India; and\n(ii) the amount received or deemed to be received in India\nby or on behalf of the assessee on account of the\ncarriage of passengers, livestock, mail or goods shipped\nat any port outside India.\n[Explanation.\nFor the purposes of this sub-section, the amount\nreferred to in clause (i) or clause (ii) shall include the amount paid\nor payable or received or deemed to be received, as the case may\nbe, by way of demurrage charges or handling charges or any other\namount of similar nature.” (Emphasis Supplied)\nArticle 8 of the Tax Treaty provides that profits of an enterprise of a\nContracting Party derived in the other Contracting Party from the\noperation of ships in international traffic may also be taxed in the\nother Contracting Party, but the tax imposed in that other\nContracting Party shall be reduced by an amount equal to 50 per\ncent thereof.\nThe Assessing Officer was of the view that the Goods & Services Tax\n(GST) amount formed part of the amount specified in Section 44B(2)\nof the Act and therefore, 7.5% of the same should have been\nbrought to tax as income of the Assessee in terms of the deeming\nprovisions contained in Section 44B(1) of the Act. However, since\nthe Assessee was entitled to claim benefit of Article 8 of the Tax\nTreaty, the Assessing Officer proposed addition of 50% of the\naforesaid amount. Therefore, the Assessing Officer proposed\ndisallowance of INR.4,49,79,547/- in the Draft Assessment Order,\ndated 28/03/2024, under Section 143(3) read with Section\n144(C)(1) of the Act computed as under:\nParticulars\nAmount (INR)\nGST Amount\n1,19,94,54,595/-\nDeemed Business Income as per Section 44B(1) [@ 7.5%]\n8,99,59,095/-\nIncome as per Article 8 of Tax Treaty [@ 50%]\n4,49,79,547/-\nThe Assessee filed objections before the DRP and contended that the\nGST amount was not to be included in the amount specified while\ndetermining the deemed business income under Section 44B of the\nAct. It was submitted that the aforesaid contention of the Assessee\nhad been accepted by the Mumbai Bench of the Tribunal in\nAssessee's own case for the Assessment Years 2007-2008, 2008-\n2009, 2010-2011, 2013-2014, 2015-2016 and 2016-2017 [ITA\nNo.7089/Mum/2010, ITA No.7494/Mum/2013,\nITA No.457/Mum/2015, ITA No.2420/Mum/2017, ITA No.6796/Mum/2018\nand ITA No.6929/Mum/2019]. However, the DRP rejected the\nobjections observing that the aforesaid decisions of the Tribunal\nhave not been accepted by the Revenue as appeal against the same\nhas been preferred before the Hon'ble Bombay High Court. Thus,\nDRP vide Order, dated 17/12/2024, confirmed the action of the\nAssessing Officer in making the addition of INR.4,49,79,547/- giving\nfollowing directions:\n\"The Panel has perused the above decision of the DRP for\n Assessment Year 2020-21, wherein objections of applicant\nassessee were rejected with majority decision of 2:1. It is also\nnoted that although Hon'ble ITAT has ruled in favour of the\napplicant assessee, the department has preferred appeal\nbefore the Hon'ble High Court of Mumbai. Since the facts are\nsimilar to that before the DRP in Assessment Year 2020-21,\nrespectfully following majority decision of DRP in Assessment Year\n2020-21, objections raised in ground of objection and sub\nobjections 3 are rejected with consensus decision.” (Emphasis\nSupplied)\nIn view of the above, the Assessing Officer made addition of\nINR.4,49,79,547/- in the Final Assessment Order, dated 30/01/2025\npassed under Section 143(3) read with Section 144C(13) of the Act\nand determined the assessed income as under:\nParticulars\nAmount (INR.)\nTotal income as per return\n1,21,40,15,240\nAdd: GST of INR.1,19,94,54,595/- x 7.5% presumptive business\nincome x 50% as per Article-8 of India-Hong Kong DTAA\n4,49,79,547\nAssessed Total Income\n1,25,89,94,787\nBeing aggrieved, the Assessee has preferred the present appeal\nbefore the Tribunal on the grounds reproduced at Paragraph 2\nabove.\nWe have heard both the parties and perused the material on record.\nGround No.1 to 3\nWe would first take up Ground No. 3 raised by the Assessee\nchallenging the addition of INR.4,49,79,547/- made by the Assessing\nOfficer on merits.\nOn perusal of the directions issued by the DRP and the Final\nAssessment Order dated, 30/01/2025, passed by the Assessing\nOfficer, it is clear that the issue under consideration stands decided\nin the favour of the Assessee and against the Revenue by the\ndecision of the Tribunal in the case of the Assessee. The DRP had\nwhile rejecting the objections raised by the Assessee recorded that\nthe Revenue had not accepted the decision of the Tribunal in the\ncase of the Assessee wherein the Tribunal had ruled in the favour of\nthe Assessee holding that the GST collections did not form part of\nthe amounts specified under Section 44B(2) of the Act and\ntherefore, the same could not have been included in receipts for the\npurpose of computing deemed business income in terms of Section\n44B(1) of the Act. We have perused the aforesaid decision of the\nCo-ordinate Bench of the Tribunal in the Assessee's own case for\n Assessment Year 2020-2021 [ITA No.3278/Mum/2013, dated\n24/01/2024] wherein it has been held as under:\n“14. In case of presumptive taxation, deduction of expenses is not\nallowed i.e., purchase and inventory elements are to be\nignored for computing deemed income under Section 44B,\nbecause the section starts with no-obstante clause overriding\ncomputation under sections 28 to 43. The deemed income has\nto be computed on specified amounts only and nothing more\ncan be added which is not within the scope of Section 44B of\nthe Act because Section 44B provides that non-resident is\nengaged in the business of operation of ships, then sum equal\nto 7.5% of the amounts referred to Sub-Section (2) has to be\ncomputed for the purpose of deemed profits. These amounts\nare firstly, the amount paid or payable (whether in or out of\nIndia) to the assessee or to any person on his behalf on\naccount of carriage of passengers, livestock, mail or goods\nshipped at any port of India; and secondly, the amount\nreceived or deemed to be received in India by or on behalf of\nthe assessee on account of the carriage of passengers,\nlivestock, mail or goods shipped at any port outside India.\nThus, what is relevant for computing the deemed income\nu/s.44B is the amount paid or payable or amount received or\ndeemed to be received on account of carriage of passengers,\netc.\n15.\nSection 145A of the Act takes into consideration \"valuation of\nsale of purchase of goods/services and of inventory”, whereas\nSection 44B(2) considers specified amount i.e.”amount paid or\npayable on account of the carriage of goods shipping at any\nport in India” and “amount received or deemed to be received\non account of the carriage of goods shipped at any port outside\nIndia”. The terms amount paid or payable and amount received\nor deemed to be received mentioned under Section 44B cannot\nbe replaced with the term 'valuation' in the absence of any\nspecific enabling provisions under Section 44B or Section 145A\nof the Act or any other provisions of the Act. For instance,\nSection 50CA is a deeming provision which enables\nreplacement of consideration with 'fair market value' where the\namount of consideration is less than the fair market value\ndetermined in a prescribed manner.\n16.\nThus, in our view adding GST component to the deemed\nincome which has to be computed directly on specified\namounts i.e. amount paid or payable on account of carriage of\ngoods shipped which is revenue element only. For the earlier\nregime of service tax prior to GST, there were various judicial\nprecedents which upheld exclusion of service tax while\ncomputing the provision u/s 44B or other similar provisions.\nFor instance, following judgments have been brought to our\nnotice before us wherein the Hon'ble Courts has approved the\nexclusion of service tax.\ni.\nCIT v. Deepwater Pacific I Inc (SLP (Civil) Dairy No(S).\n47374 of 2023, dated 13-12-2023)\nii.\nVantage International Management Co. [2023] 156\ntaxmann.com 23/296 Taxman 160 (SC)\niii.\nCIT v. Transocean Offshore International Ventures Ltd.\n[2023] 157 taxmann.com 203/296 Taxman 570/459 ITR\n609 (SC)\niv.\nCIT (International Taxation) v. Schlumberger Asia\nServices Ltd. [2024] 158 taxmann.com 267/297 Taxman\n1 (SC)\nFurther, Hon'ble Bombay High Court in the case of Boskalis\nInternational Dredging International CV (supra) (followed the\ndecision of Delhi High Court and Mitchell Drilling International\nPty Ltd. (supra) and held as under:\nXX\nXX\n17.\nFull Bench of Hon'ble High Court of Uttarakhand in case of\nSchlumberger Asia Services Ltd. (supra) held that service tax\npaid earlier by the assessee to Government of India is not on\naccount of provision of services in connection with exploration\nand production of mineral oil, hence would not form part of\naggregate taxable amount referred to in clauses (a) and (b) of\nsub-section(2) of section 44BB Relevant extract of the ruling is\nas under\nXX\nXX\n18.\nApart from that in the case of the assessee itself the Tribunal\nhave consistently has been holding that service tax being in\nthe nature of statutory payment does not involve any element\nof profit therefore, cannot be included in the gross receipts.\n19.\nThe case of the department before us is that the judgments\nrendered in the context of service tax could not be applicable\nunder the new GST. We find that though GST has replaced by\nerstwhile service tax law to provide a single tax of supply of\ngoods and services right from manufacture to consumer. For\nthe sake of ready reference Section 68 of erstwhile Service Tax\nlaw and Section 49 of CGST Act, the comparison is given herein\nbelow.\nXX\nXX\n20.\nOn perusal of the comparison of the relevant provision of\nservice tax law and GST law it can be seen that both are\nindirect taxes and is recovered by the service provider on\nbehalf of assessee and as an agent of the Government as such\nrates are specified and thus, the provision under the service\ntax law are similar to provision of GST law and therefore, in our\nopinion the judicial precedents delivered in respect of erstwhile\ntax law would apply mutatis mutandis to the GST laws also.\n21.\nOtherwise also it would be quirk of a fate that tax collected on\nbehalf of the customer is again to be held as part of taxable\nincome of the assessee who is collecting GST. The assessee is\ntaxable person under the GST laws and shows GST separately\nin the invoice raised on the customers. We have perused the\ncopy of the sample invoice produced before us at our direction\nwherein, it is seen that service charge is indicated separately\nand CGST is levied on such service charge is also indicated\nseparately. If the GST services have been indicated in the\ninvoice separately then it cannot be included for purpose of\ntaxation while computing the income. For instance there are\nvarious TDS provisions and CBDT has clarified through various\ncirculars that if GST services are indicated separately in the\ninvoice then no tax would be deducted at GST components. By\nway of illustration following circulars have been referred to\nbefore us under various Sections.\nXX\nXX\n22.\nIf we accept the contention of the revenue, then it would lead\nto a situation where calculation of tax of reimbursement of\ntaxes would tantamount to collection of tax on taxes. Section\n44B(2) of the Act provides for deemed taxation on\namount paid or payable/received on account of\n'carriage' of goods, passengers, etc. Further, the\nExplanation thereto clarifies that the amounts in\nconnection with the carriage would include 'demurrage\ncharges', 'handling charges" and other amounts of a\n'similar nature". Thus, what is sought to be included u/s\n44B are the charges' recovered from the consignor of\nthe cargo/customer as a consideration\nfor\ntransportation from a port in India to outside India and\nvice versa.\n23.\nGST being a mandatory 'statutory levy' cannot be said to\nbe in the nature of 'charges' by the shipping Company\ntowards the carriage. The incidence of GST is on account\nof taxability of services under the relevant\nparliamentary statute i.e. GST laws and not on account\nof the business activities as envisaged in Sections\n44B(2)(1) and 44B(2)(ii) of the Act. Otherwise, including\nGST in gross receipts for purpose of section 44B would be akin\nto charging income tax on GST i.e., tax on tax, which would\npromote cascading effect which cannot be the intent of\nlegislation.\n24.\nFurther, a service provider acts in a fiduciary capacity\nout of statutory obligation casted upon it, while\// collecting service tax/GST on the behalf of exchequer\nand the same is ultimately deposited with the\nexchequer, hence there cannot be any iota of doubt that\nthe impugned GST is not in the nature of specified\nincome under Section 44B.\n25.\nThus, reliance placed by the Hon'ble DRP members in the case\nof Sedco Forex International Inc. (supra) to treat 'GST similar\nas 'reimbursement of mobilization charges is misplaced and\nincorrect In the case of Sedco Forex International Inc. (supra)\nfixed mobilization charges were agreed between the parties,\nwhich could be more or less than the actual expenditure. Thus,\n'reimbursement of mobilization charges' cannot be equated\nwith pure reimbursement which has no element of income.\n26.\nThe core argument of the department before us and by the id.\nDRP is that amendment in the provisions of Section 145A of\nthe Act brought by Finance Act 2018, since it includes\n\"services\" within its code therefore, income has to be\ncomputed in accordance with Section 145A and any taxes\nlevied under services is included and for that heavy reliance\nhas been placed on the judgment of Hon'ble High Court of\nBombay in the case of Knight Frank (India) Pvt. Ltd. (supra).\nHowever the Hon'ble Court held that Section 145A restricts its\nambit only to valuation of purchase and sale of goods in\ninventory and would not apply to service tax billed on\nrendering of service as service tax billed has no relation to any\ngoods nor does it have anything to do with bringing goods to a\nparticular location. Section 145A which is for the method of\naccounting which starts with' for the purpose of determining\nthe income chargeable under the head 'Profits and gains of\nbusiness or profession', being a general provision, would not\napply to the special provisions of Section 44B of the Act.\nFurther, the words “For the purpose of determining the income\nchargeable under the head “Profits and gains of business for\nprofession....” in section 145A signifies that the essence of\nsection is to compute income under the head profits and gains\nof business or profession which is computed as per provisions\nof Section 29 of the Act. On the contrary, provisions of Section\n44B (1) starts with a non obstante clause “Notwithstanding\nanything to the contrary contained in sections 28 to 43A....”.\nSince Section 44B overrides the provisions of Section 29 of the\nAct, therefore in our opinion Section 145A is not applicable for\ncomputing deemed income under Section 44B.\n27.\nThus, the decision of the Hon'ble Bombay High Court will not\nbe applicable in this case same was not rendered in the context\nof Section 44B and in any case in so far as the observation of\nthe Hon'ble High Court that any tax or levy cannot be part of\nturnover receipts unless it is not paid, is not applicable in the\ncase of the assessee it has been brought to record that\nassessee discharged its GST liability of Rs.96,51,49,085\nthrough payment of tax to the Government Treasury and input\ntax credit and this has been demonstrated from the copies of\nform GSTR 9 and annual GST re-conciliation statement.\n28.\nFurther, Ld. DRP members also relied on CBDT Circular No.\n10/2017 dated March 23, 2017 which discusses on the\napplicability of ICDS on determination of turnover by non\ncorporate taxpayers covered under presumptive taxation like\nSections 44AD, 44AE, 44ADA, 448, 44BB, 448BA, etc. and\nstated that the service receipts and sales in the instant case\nare to be valued inclusive of taxes, as per ICDS guidelines\nRelevant extract of Circular is hereunder-\n\"Question 3: Does ICDS apply to non-corporate\ntaxpayers who are not required to maintain books of\naccount and/or those who are covered by presumptive\nscheme of taxationlikesections44AD, 44AE, 44ADA 44B,\n44BB, 44BBA, etc. of the Act?\nAnswer: ICDS is applicable to specified persons having\nincome chargeable under the head Profits and gains of\nbusiness or profession' or 'Income from other sources.\nTherefore, the relevant provisions of ICDS shall also\napply to the persons computing income under the\nrelevant presumptive taxation scheme. For example, for\ncomputing presumptive income of a partnership firm\nunder section 44AD of the Act, the provisions of ICDS on\nConstruction Contract or Revenue recognition shall apply\nfor determining he receipts or turnover, as the case may\nbe.\"\n29.\nThus, reliance placed by the DRP on the aforesaid Circular is\nnot valid since Delhi High Court in the case of Chamber of Tax\nConsultants v. Union of India [2017] 87 taxmann.com 92/252\nTaxman 77/400 ITR 178 (Delhi) held that the aforesaid Circular\nwas ultra vires the provisions of the Act and liable to be struck\ndown. Also, the amendment was introduced vide Finance Act\n2018 to bring certainty on the issue of applicability of ICDS and\nnot to validate the circular. Even otherwise, in the aforesaid\nCircular, CBDT has also clarified that where there is a conflict\nbetween ICDS which is a general provision and specific\nprovisions, specific provision shall prevail.\n30.\nBefore us, the plea was taken that if GST is to be added to the\namounts paid on account of taxes then deduction of such GST\nis also required to be given u/s 43B Though the provision of\nSection 44B overrides Section 28-43A of the Act, but other\nsections including Section 43B are not specifically over ridden\nby Section 44B This issue has been decided by the Hon'ble\nUttarakhand High Court in the case of Schlumberger Asia\nServices Ltd. (supra) wherein it has held that the benefit of\ndeduction of tax can be claimed by the assessee in view of\nsection 43B(a), while computing its income under section 28,\nand the provisions of section 43B would prevail\nnotwithstanding anything contained in, among others. Thus, it\nhas been stated that invoking the provisions of Section 43B\nunder Section 44B shall force the assessee to prepare a\nmemorandum account wherein the specified amounts are\ncredited and adjusted by GST due to Section 145A and\ncorrespondingly, GST discharged before the due date of filing\nof tax return specified under Section 139 of the Act is debited\nto such account However, preparation of such memorandum\naccount is neither required under the Act nor can replace the\nexpress provisions of Section 44B of the Act. We therefore, find\nmerits in such contention of the Ld. Counsel that if it is held\nthat Section 145A are applicable for computing deemed income\nu/s.44B and GST is added to the specified amounts and\nprovisions of Section 29 are invoked, then deduction of GST\npaid should be allowed while computing income under the head\n`profit and gains' of business or profession as per Section 43B.\nEven otherwise also Section 44B has to be allowed if it is paid\non or before the due date and similarly it can be disallowed\nonce GST has not been paid within the due date. However, this\nis purely academic, contention which has been raised because\nwe have already held that for the purpose of Section 44B\nonly specified amount mentioned in the sub-Section 2 of\nSection 44B alone is the subject matter of computation\nof profit @ 7.5% and Section 145A has no applicability.\nThus we hold that while computing income u/s.44B, GST\ncannot be included and all the judgments relied upon by the\nassessee by the Hon'ble High Court and Hon'ble Supreme Court\nand the Tribunal will apply in this year also. Thus, in our\nopinion, the minority view of the single member of the DRP is\nto be upheld that GST cannot be included while computing\ndeemed income u/s.44B, accordingly, this issue is decided in\nfavour of the assessee.\"\n11.\nOn perusal of above it can be seen that for the Assessment Year\n2020-2021, the Tribunal had deleted identical addition made by the\nAssessing Officer by including GST amount in the amount specified\nin Section 44B(2) of the Act for the purpose of determining the\ndeemed business income of the Assessee in terms of Section 44B of\nthe Act. We note that for the Assessment Year 2022-2023, the DRP\nhad only followed the directions for Assessment Year 2020-21.\nTherefore, respectfully following the above decision of the Tribunal in\nthe case of the Assessee for the Assessment Year 2020-2021 [ITA\nNo.3278/Mum/2013, dated 24/01/2024], we hold that the GST amount\ncannot be taken in to consideration while determining deemed\nbusiness income of the Assessee as per Section 44B(1) of the Act.\nAccordingly, we delete the addition of INR.4,49,79,547/- made by\nthe Assessing Officer. Thus Ground No.3 raised by the Assessee is\nallowed.\nOur above view draws strength from the following decisions of the\nCo-ordinate Benches of the Tribunal in the Assessee's own case:\n Assessment Year\nITA No. & Order dated\n2007-2008 & 2008-2009\nITA No. 7089/Mum/2010, dated 17/05/2013\n2010-2011\nITA No. 7494/Mum/2013, dated 31/07/2015\n2016-2017\nITA No. 6929/Mum/2019 dated 07/01/2021\n2015-2016\nITA No. 6929/Mum/2019 dated 07/01/2021\n2013-2014\nITA No. 2420/Mum/2017, dated 20/11/2018\n12.\nSince we have allowed Ground No.3 raised by the Assessee on\nmerits, Ground No.1 and 2 raised by the Assessee are dismissed as\nhaving been rendered academic in view of the letter, dated\n09/06/2025, filed by the Assessee.\nGround No.4\n13.\nGround No. 4 raised by the Assessee pertains to applicability of the\nprovisions contained in Section 115JB of the Act and the\ncomputation of 'Book Profits'.\n14.\nIn this regard we note that it is admitted position that the Assessee\nhad offered income from operation of ships to tax under the\ndeeming provisions contained in Section 44B of the Act read with\nSection 90(2) of the Act and Article 8 of the Tax Treaty. The Assesse\nclaimed that in view of Explanation 4A to Section 115JB(1) of the Act\nthe provisions of Section 115JB of the Act were not applicable to the\nAssessee. However, the Assessing Officer, in the computation sheet\nannexed to the Final Assessment Order, applied the provisions\ncontained in Section 115JB of the Act and determined 'Book Profits'\nat INR.1,25,89,94,787/-. The Assessee is now in appeal before the\nTribunal on this issue.\n15.\nThe provisions contained in Explanation 4A to Section 115JB(1) of\nthe Act read as under:\n\"Explanation 4A: For the removal of doubts, it is hereby clarified that\nthe provisions of this section shall not be applicable and shall be\ndeemed never to have been applicable to an assessee, being a\nforeign company, where its total income comprises solely of profits\nand gains from business referred to in section 44B or section 44BB or\nsection 44BBA or section 44BBB and such income has been offered to\ntax at the rates specified in those sections.” (Emphasis Supplied)\n16.\nWe note that in identical facts and circumstances, the Co-ordinate\nBenches of the Tribunal in the Assessee's own case for Assessment\nYear 2020-2021 [ITA No.3278/Mum/2013, dated 24/01/2024] had held\nthat the in view of the above Explanation 4A to Section 115JB(1) of\nthe Act, the provisions of Section 115JB(1) were not applicable to\nthe Assessee. The relevant extract of the decision of the Tribunal\nhead as under:\n\"32. Ground No. 4 relates to computing of book profit u/s 115JB.\nSince assessee has offered income of operation of ships to tax\nunder the deemed provisions of Section 44B r.ws 90(2) and\nArticle 8 of India-Hong Kong Tax Treaty. Thus, in view of the\nExplanation 4A to Section 115JB(1), the provisions of Section\n115JB are not applicable to the assessee. Accordingly, ground\nNo 4 is allowed and the book profit computed by the Id. AO is\ndeleted.\"\n17.\nGiven that there is no change in the facts and circumstances of the\ncase, respectfully following the above decision of the Tribunal in the\ncase of the Assessee we hold that the provisions contained in\nExplanation 4A to Section 115JB(1) of the Act would be applicable to\nthe Assessee, and therefore, the provisions contained in Section\n115JB(1) of the Act would not be applicable to the Assessee for the\n Assessment Year 2022-2023. Hence, Ground No.4 raised by the\nAssessee is allowed.\nGround No.5\n18.\nGround No. 5 raised by the Assessee pertains to short grant of credit\nof Tax Deducted at Source ('TDS') amounting to INR.23,62,013/-.\nThe Assessing Officer is directed to verify the records and grant\ncredit of TDS as per law.\nGround No.6\n19.\nGround No. 6 raised by the Assessee pertains to short grant of credit\nof Advance Tax amounting to INR. 3,47,553/-. The Assessing Officer\nis directed to verify the records and grant credit of Advance Tax as\nper law.\nGround No.7\n20.\nGround No. 7 pertains to levy of interest/Fee. The contention of the\nAssessee is that the Assessee is not liable to pay any interest under\nSection 234B/C/D of the Act of the Act in case correct credit for\nadvance tax and TDS is given to the Assessee, The Assessee shall\nnot be liable no interest under Section 234B/234C/234D of the Act.\nit is further contended that the Assessee will also not be liable to pay\ninterest under Section 234A of the Act and fee under Section 234F of\nthe Act as there is no delay in filing return of income. The Assessee\nhas filed rectification application which is pending adjudication. In\nour view, the issues raised by the Assessee in Ground 7 are\nconsequential in nature. Accordingly, Ground No. 7 is disposed off\nwith the directions to the Assessing Officer to adjudicate the issues\nraised in the rectification application and re-compute the\ninterest/fee, if any, as per law after while giving effect to the present\norder. In terms of the aforesaid, Ground No.7 raised by the Assessee\nis allowed for statistical purposes.\nGround No.8\n21.\nGround No. 8 raised by the Assessee related to initiation of penalty\nproceedings under section 270A of the Act. The penalty proceedings\nare separate and independent from assessment proceedings.\nTherefore, Ground No. 8 is disposed off as being premature.\n22.\nIn result, in terms of paragraph 12 and 17 to 21 above, the present\nappeal preferred by the Assessee is allowed.\nOrder pronounced on 25.06.2025.\nSd/-\n(Omkareshwar Chidara)\nAccountant Member\nमुंबई Mumbai; दिनांक Dated : 25.06.2025\nMilan, LDC\nSd/-\n(Rahul Chaudhary)\nJudicial Member\nआदेश की प्रतिलिपि अग्रेषित/