Y.R.Meena, J. - (1.) In this reference application, the following questions are referred for our opinion : "1. Whether, on the facts and in the circumstances of the case and keeping in view particularly the provisions of the Sections 5(2) and 9(1) of the Income-tax Act, 1961, the Tribunal was justified in law in holding that the receipt of detention/demurrage charges of Rs. 31,63,688 is not taxable in India and thereby excluding the same from the income of the assessee"
(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. 2. The assesses is a non-resident company engaged in the business of operation of ships. The assessee declared freight earnings at Rs. 18,21,23,117 and total receipts from detention/demurrage on containers at Rs. 31,63,688. The Assessing Officer took 7.6 per cent, of the total freight earnings as taxable profits of the assessee-eompany. To this extent, there is no dispute between the parties. However, the Assessing Officer further took the entire receipts of Rs. 31,63,688 received against detention/demurrage as income of the assessee and therefrom allowed deduction at the rate of 5 per cent, as expenses on estimate basis. Thus, he took out Rs. 30,05,504 as income of the assessee received against detention/demurrage charges.
(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.;