The Delhi ITAT has deleted the addition of cash deposits made in bank accounts during the demonetisation period.
The two-member bench of Saktijit Dey, Vice President and M. Balaganesh, Accountant Member remarked that “Assessee is mandated to maintain cash balance at various levels in view of its business operations and to meet its business exigencies.
The ITAT ruled that when the books of account are not rejected and absolutely no deficiencies are found in the cash book maintained, there is no case for the Revenue to disbelieve the existence of cash balance as on Nov 8, 2016.
Regarding disallowance of employees’ contribution to PF and ESI where Assessee is covered under Tonnage Tax Scheme, ITAT noted that “business income under Tonnage Tax Scheme is calculated on presumptive basis based on the Tonnage capacity of the ship and number of days the ship was on voyage irrespective of actual profit/loss derived by Assessee from the operation of its qualifying ships.
The ITAT observed that disallowance made for employee’s contribution to PF/ESI would have no relevance as, ultimately, the business income is only determined based on tonnage capacity on presumptive basis and not on actual income basis”.
On the issue of miscellaneous expenses of Rs.11 Cr. i.e. write off of sum irrecoverable from ONGC, ITAT remarks that the Revenue failed to appreciate the undisputed facts that the Assessee renders service only to ONGC and offers income to tax on accrual basis as and when the bills are raised on ONGC and thus, when the disputed bills remain outstanding in sundry debtors, the same are written off.
The Assessee is engaged in the business of operation of ships for exploitation of mineral oil for ONGC and also for providing infrastructure facilities at New Mangalore Port; For 2017-18, the Assessee claimed Section 115VI deduction of Rs.134 Cr towards exempt shipping income and reduced Rs.189 Cr as exempt income while computing book profits of shipping income under Section 115JB.
The assessee claimed benefit of Tonnage Tax Scheme under Section 115VP/115VR which was denied by the Revenue; CIT(A) granted benefit of Tonnage Tax Scheme, both under the normal provisions as well as MAT provisons by relying on favourable CIT(A) order for AY 2016-17.
The tribunal noted that the issue is settled in favour of the Assessee by the jurisdictional HC in Assessee’s own case as well co- ordinate bench ruling in AY 2015-16 and AY 2016-17 wherein it was held that the vessel owned by the Assessee is a qualifying ship engaged in drilling business; Regarding tonnage tax deduction claimed while computing book profit.
The ITAT stated that “section 115VO specifically provides that the book profit/loss derived from Tonnage Tax Company under Section 115VI(1) shall be excluded from the computation of book profit under Section 115JB”.
Case Title: Jagson International Ltd. V/s DCIT