DEPUTY COMMISSIONER OF INCOME TAX RANGE 2 Vs. SOUTH INDIA CORPORATION LTD
INCOME TAX APPELLATE TRIBUNAL
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N. Vijayakumaran, Judicial Member -
(1.) THIS appeal by the revenue relates to the assessment year 2004-05. It is directed against the order of the CIT(A)-II, Kochi, dated 26-2-2007.
(2.) The first issue is on the allowance of deduction under Section 33AC of the Income-tax Act.
The brief facts relevant for considering this issue is: The assessee claimed deduction under Section 33AC. The assessee claim is that it has earned profit from shipping business. This profit includes the income on account of sale of ships. But in the computation of income, the assessee has reduced his profit on sale of ships from the net income. The Assessing Officer was of the view that the profit on sale of ship is not profits derived from the business of operation of ships, the Assessing Officer denied the deduction claim to that extent of income out of sale of ship.
(3.) THE Assessing Officer further found that there is no separate books for the shipping business. THE assessee has not accounted for any interest expenditure. THEre is no proof that the loan taken was for the shipping business. THE Assessing Officer further went to deny the claim of the assessee on the ground that the main object of the assessee is not specific about with the object of carrying on the business of operation of ships and on going through the Memorandum and Articles of Association of the assessee company, the assessee company's object contains 1 to 73 types of business and from the Memorandum and Articles of Association, the assessee company is not a company formed with the main object of carrying on the business of operation of ships. On further investigation of accounts, the Assessing Officer came to the finding that shipping is not the main business of the assessee company which made the Assessing Officer to reject the claim of the assessee under Section 33AC.;
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