IN THE HIGH COURT OF JUDICATURE AT MADRAS Dated : 15.12.2009 Coram : THE HONOURABLE MR.JUSTICE K.RAVIRAJA PANDIAN and THE HONOURABLE MR.JUSTICE M.M.SUNDRESH Tax Case (Appeal) No.526 of 2004 Commissioner of Income-tax, Chennai. Appellant v. M/s. Navix Lines, Chennai. Respondent Tax Case Appeal filed under section 260A of the Income Tax Act against the order of the Income Tax Appellate Tribunal, Madras 'B' Bench dated 17.07.2003 made in ITA No.872/Mds/1996, as against the order passed by the Commissioner of Income Tax (Appeals)-V, Madras-34, dated 12.1.96 and made in ITA No.351/94-95 for the assessment year 1993-1994 as against the order passed by the Deputy Commissioner of Income Tax, Special Range VI, Madras-34, dated 22.12.94 and made in PAN.GIR NO.11-000-CX-6094 for the assessment year 1993-94. For appellant : Mr.K.Subramanian, Standing Counsel for Income Tax Department For respondent : Mr.J.Balakrishnan, for Mr.S.Sridhar JUDGMENT (Judgment of the Court was delivered by K.RAVIRAJA PANDIAN, J.) The revenue is on appeal against the order of the Income Tax Appellate Tribunal dated 17.07.2003 made in ITA No.872/Mds/1996 relating to the assessment year 1993-94. 2. The appeal was admitted on the following substantial question of law : "Whether on the facts and circumstances of the case, the Tribunal was right in holding that the demurrage charges received by the assessee does not form part of its income?" https://hcservices.ecourts.gov.in/hcservices/ 3. The facts are : The assessee, a non resident company filed its return of income relating to the assessment year 1993-94 on 31.12.1993 admitting an income of Rs.4,74,83,480/-. The return has been processed under section 143(1)(a) of the Act and intimation to that effect was sent to the assessee on 31.01.1994. Consequently notice under section 143(2) of the Act was issued to the assessee posting the case for hearing. The assessee has claimed that demurrage earned is not taxable as has been decided by the Income Tax Appellate Tribunal, Madras in the assessee's own case for earlier years, but that has not been accepted by the department on the ground that the reference application has been taken out to the High Court and is pending finalisation and as such the demurrage earned is included in freight earnings and assessment was made. The Commissioner of Income Tax (Appeals), on appeal has accepted the stand of the assessee and deleted the demurrage charges. The revenue carried the matter on appeal to the Tribunal, which also held that the demurrage is not includible in the total income. The correctness of the same is canvassed in this appeal. 4. An identical question of law came up for consideration before this Court in the case of Commissioner of Income Tax v. Japan Lines Ltd., (2003) 260 ITR 656, wherein the Division Bench answered the question in favour of the revenue by holding that Explanation to section 44B inserted with retrospective effect from April 1, 1976, was applicable and the demurrage charges admittedly received in India had to be included in the assessee's income, by observing as follows : "Section 44B of the Act, which is a special provision for computing profits and gains of shipping business in the case of non-residents, under the Explanation that was added by the Finance Act, 1997 with effect from April 1, 1976, expressly provides that demurrage charges or handling charges or any other amount of similar nature shall be regarded as the part of the amount paid or payable to the person engaged in the business of operation of ships on account of the carriage of passengers, livestock, mail or goods shipped at any port in India." 5. Following the above said judgment the question of law is answered in favour of the revenue and against the assessee. The appeal stands allowed. No costs. Sd/ Asst.Registrar /true copy/ Sub Asst.Registrar mf https://hcservices.ecourts.gov.in/hcservices/ To 1. The Income Tax Appellate Tribunal, Madras 'B' Bench, Madras. 2. The Commissioner of Income Tax (Appeals)V, Madras-34. 3. The Deputy Commissioner of Income Tax, Special Ranage-VI, Madras-34. + One cc to Mr.K.Subramaniam, Advocate, SR 68854 T.C. (A) No.526 of 2004 PUR (CO) RH (23.12.09) https://hcservices.ecourts.gov.in/hcservices/