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

ITA 2129/MUM/2025Status: DisposedITAT Mumbai25 June 2025AY 2022-2317 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal decided on the issues as follows: On Ground 3 (GST inclusion in Section 44B income): The Tribunal held that the GST amount cannot be included in the gross revenue for computing deemed business income under Section 44B(1) of the Act. It relied on its own previous decisions in the assessee's own case for multiple assessment years, including AY 2020-2021. The addition of INR 4,49,79,547 made by the AO was deleted. This ground was allowed. On Grounds 1 & 2 (Jurisdiction and Time Bar): In view of a letter filed by the assessee on 09/06/2025, these grounds were dismissed as having been rendered academic, as the assessee accepted the assessment proceedings on merits after allowing Ground 3. On Ground 4 (Section 115JB applicability): The Tribunal held that Section 115JB(1) is not applicable to the assessee for AY 2022-2023, in view of Explanation 4A to Section 115JB(1). This was based on identical facts and circumstances in the assessee's own case for AY 2020-2021, where the Tribunal had allowed the ground. This ground was allowed. On Ground 5 (TDS credit): The AO was directed to verify the records and grant credit of TDS as per law. On Ground 6 (Advance Tax credit): The AO was directed to verify the records and grant credit of Advance Tax as per law. On Ground 7 (Interest levy): This ground was disposed of with directions to the AO to adjudicate the issues raised in the assessee's rectification application and re-compute the interest/fee, if any, as per law after giving effect to the Tribunal's order. This ground was allowed for statistical purposes. On Ground 8 (Penalty proceedings): Penalty proceedings under Section 270A are separate and independent from assessment proceedings. This ground was disposed of as being premature. The operative direction was to allow the appeal in terms of the decisions on grounds 3, 4, 5, 6, and 7.

What were the facts?

The assessee, Orient Overseas Container Line Limited, a foreign company, filed its return for Assessment Year 2022-2023 declaring income from ship operations. The assessee claimed benefits under Article 8 of the India-Hong Kong Tax Treaty read with Sections 90(2) and 44B of the Income Tax Act, 1961. The Assessing Officer (AO) included GST of Rs. 119,94,54,595 in the gross revenue for computing presumptive income under Section 44B. The AO also computed book profits under Section 115JB and made adjustments regarding TDS and advance tax credit. The assessee challenged the final assessment orders passed by the AO under Section 143(3) read with Section 144C(13), pursuant to directions from the Dispute Resolution Panel (DRP). The appeal is before the Income Tax Appellate Tribunal (ITAT), Mumbai Bench.

What were the issues?

1. Whether the assessment proceeding is non-jurisdictional, as the notice under Section 143(2) was issued by an Assistant/Deputy Commissioner of Income-tax (International Taxation), Circle 1(1)(1), Delhi, instead of the jurisdictional AO in Mumbai. 2. Whether the assessment proceeding is time-barred, as the assessment order was passed after the time limit prescribed under Section 153 of the Act. 3. Whether the GST amount of Rs. 119,94,54,595 can be included for computing presumptive income under Section 44B of the Act, and whether the AO/DRP erred in not following the ITAT's own case decisions on this issue. 4. Whether the AO erred in computing book profits under Section 115JB at Rs. 1,25,89,94,787, considering Explanation 4A to Section 115JB(1). 5. Whether there was a short grant of credit for Tax Deducted at Source (TDS) amounting to Rs. 23,62,013. 6. Whether there was a short grant of credit for advance tax amounting to Rs. 3,47,553. 7. Whether the levy of interest of Rs. 20,65,056 was erroneous. 8. Whether penalty proceedings under Section 270A were erroneously initiated. Assessee's Contentions: - Grounds 1 & 2: Procedural defects rendering the assessment non-jurisdictional and time-barred. - Ground 3: GST is not includible in presumptive income under Section 44B, citing ITAT decisions in its own case for multiple AYs. Inclusion breaches consistency and judicial discipline. - Ground 4: Section 115JB is not applicable due to Explanation 4A. - Grounds 5 & 6: Short credit granted for TDS and advance tax. - Ground 7: Interest levy is erroneous; rectification application pending. - Ground 8: No underreporting of income, so penalty under Section 270A is not warranted. Revenue's Contentions: - Not explicitly recorded in the provided text, except for the AO's actions which are challenged by the assessee.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 144C(13),Section 144C(5),Section 153,Section 44B,Section 90(2),Section 115JB,Section 270A,Section 234B,Section 234C,Section 234D,Section 234A,Section 234F

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Income Tax Appellate Tribunal, “I” BENCH, MUMBAI

Per Rahul Chaudhary, Judicial Member:

1.

The present appeal preferred by the Assessee is pertaining to Assessment Year 2022-2023 challenging Final Assessment Orders, dated 30/01/2025, passed by the Assessing Officer under Section 143(3) read with Section 144C(13) of the Income Tax Act, 1961 [hereinafter referred to as 'the Act'], as per the directions issued by Commissioner of Income Tax [Dispute Resolution Panel (2)], Mum

The order continues below.

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