INCOME TAX ACT, 1961

Section 115VI

Income from shipping business - Forex rate fluctuation gains - Computation of -

Assessee was engaged in the business of shipping. It owned ships, boats, barges, etc., and also hired them. AO noted that assessee had opted for tonnage tax scheme under chapter XII-G. An amount being gain on account of foreign exchange fluctuation was credited to the profit and loss account. According to AO, gains on account of exchange rate variation of foreign loan was not covered under chapter XII-G, i.e., tonnage tax scheme. Therefore, amount was brought to tax under normal business income. CIT(A) upheld the order of AO holding that the gain, though revenue in nature, was not covered by chapter XII-G. Tribunal allowed the appeal of assessee Held: Supreme Court in case of CIT v. Bokaro Steel Ltd. (1999) 236 ITR 315 (SC) : 1999 TaxPub(DT) 1094 (SC) held that notional gains on account of restatement of foreign exchange liabilities on loan taken for purchase of ships would be considered to be a part of core activity of shipping company entitled to benefit of Chapter XII-G

Followed:CIT v. Bokaro Steel Ltd. (1999) 236 ITR 315 (SC) : 1999 TaxPub(DT) 1094 (SC). Distinguished:Dredging Corpn. of India Ltd. v. Asstt. CIT (2011) 47 SOT 112 (URO) (Vishakha.) : 2012 TaxPub(DT) 0330 (Visakhapatnam-Trib)

REFERRED :

FAVOUR : In assessee's favour

A.Y. :

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