Itxa/1497/2016 Of Pr. Commissioner Of Income Tax-1 v. M/S. Nyk Line (India) Ltd

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO. 1497 OF 2016 Pr. Commissioner of Income Tax-1 .. Appellant v/s. M/s. NYK Line (India) Ltd. .. Respondent Mr. Suresh Kumar for the appellant Mr. Niraj Sheth I/b Mr. Atul Jasani for the respondent CORAM : AKIL KURESHI & M.S. SANKLECHA, J.J. P.C. DATED : 30[th] JANUARY, 2019 1.This appeal is filed by the Revenue to challenge the judgment ofthe Income Tax Appellate Tribunal ("the Tribunal" for short) raisingfollowing questions of law for our consideration :- (i)Whether on the facts and in the circumstances of the caseand in law, the Tribunal was right in deleting the addition madeby the Assessing Officer on account of Container DetentionCharges (CDC) pertaining to the relevant assessment year,without appreciating the expenditure on collection CDC arealready debited to the P & L Account? (ii)Whether on the facts and in the circumstances of the caseand in law, the Tribunal was right in deleting the addition madeby the Assessing Officer on account of Container Detention Charges (CDC), which is in the nature of reimbursement ofexpenditure incurred by the assessee agent to collect CDC onbehalf of the principal? (iii)Whether on the facts and in the circumstances of the caseand in law, the Tribunal was right in holding that the assesseehad not incurred any expenditure on collection of CDC? 2.The respondent assessee is a shipping agent providing suchservices to its principal one NYK Japan. The assessee in the process ofproviding such services in India to such foreign base company, receivescommission. The dispute between the assessee and the Revenuerevolves around the Container Detention Charges (“CDC” for short).The assessee under peculiar circumstances of the case, though receivedcertain amounts for and on behalf of principal, did not offered to taximmediately on the ground that there was delay in holding such sumson behalf of the principal. It is only under a letter dated 25[th] May,2009 written by the principal, according to the assessee, that theincome accrued to the assessee. The assessee, therefore, accounted forsuch income in the return filed for Assessment Year 2010-11. Thisrelated to the entire period from the year 1993 onwards. The Revenueargues that such income should be taxed in each separate year duringwhich such charges were collected. The Tribunal however, hold in favour of the assessee inter alia observing that the income accrued tothe assessee only upon the principal writing said letter on 25[th] May,2009. 3.Quite apart from the view of the Tribunal being plausible on thefacts of the case, we also note that the assessee has already offered theentire income to tax in the Assessment Year 2010-11. The Revenue'sattempt at taxing such income in respect of individual year has failed onseveral occasions since the reopening of assessment was not permitted.We wonder whether in such circumstances, it is even be prudent for theRevenue to pursue this line. Additionally, we record the statement ofthe Counsel for the assessee that in order to protect the assessee againstdouble taxation, the assessee has filed appeal before the Tribunal inrelation to Assessment Year 2010-11 and kept the question of taxing theentire income in the said year alive so that in case the Revenue succeedsin the present appeal and similar other proceedings, the assessee canatleast protect itself from being taxed all over again for Assessment Year2010-11. He stated on instructions that if the Revenue is not allowedto shift the income this year, the assessee would not press its appealbefore the Tribunal on this ground for Assessment Year 2010-11. 4.Under the circumstances, no question of law arises. 5.The tax appeal is dismissed. (M.S. SANKLECHA, J.) (AKIL KURESHI, J.)