Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
Popular Search: articles on VAT and GST in India :: TAX RATES - GOODS TAXABLE @ 4% :: cpt :: ACCOUNTING STANDARD :: Central Excise rule to resale the machines to a new company :: ARTICLES ON INPUT TAX CREDIT IN VAT :: form 3cd :: empanelment :: VAT RATES :: TDS :: due date for vat payment :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: VAT Audit :: list of goods taxed at 4% :: ACCOUNTING STANDARDS
« News Headlines »
 India is moving towards a flawed GST
 ICAI to organise two-day international conference in Hyderabad
 Here's how to calculate tax payable on your capital gains
 Income Tax calculations for the financial year 2016-17
 CPE Events 17 October - 22 October 2016
 High Court raps I-T Department for wrong tax demand
  CBDT signs 5 advance pricing pacts with Indian taxpayers
 Finance ministry warns tax officials of action against GST protest
 Big changes for small units under GST
 Parliament’s winter session to begin on November 16 to expedite GST rollout
 Income-tax (27th Amendment) Rules, 2016 - 92/2016

Chartering foreign ship? Get ready to pay tax here
September, 08th 2006
In an order that will have a bearing on all corporates who charter ships for a certain period, a Chennai bench of the income-tax tribunal has held that a ship is an equipment and hence payment for chartering a foreign ship could be construed as royalty and, therefore, taxable in India. The order by the division bench of Income-tax Appellate Tribunal (ITAT), Chennai, comprising MK Chaturvedi and KD Ranjan, was in the case of Poompuhar Shipping Corporation, a Tamil Nadu government undertaking. It charters vessels from India and abroad to transport coal for the state electricity board. The shipping company did not deduct tax while remitting the payments for the charter of foreign ships. The I-T department took a stand that the shipping company should have deducted tax while making remittance. In a rather controversial order the ITAT upheld the I-T departments stand on the issue. According to TP Ostwal, a senior chartered accountant, This order will generate a debate on the interpretation of the concept of royalty. The crux of the argument between the department and the shipping company was that the payment for chartering ships amounted to royalty, which under the provisions of the Income Tax Act, is liable to be taxed. In order to treat such remittance as royalty payment, the ship should be construed as equipment because royalty has been defined as the consideration for the use of or right to use any industrial or commercial or scientific equipment. Therefore, the shipping company argued that time charter of ships is not a contract for hiring an equipment effecting such liability under Section 9 (I) (vi) of the I-T Act. Since a ship cannot be construed as an equipment, liability to deduct tax at source does not arise, said the shipping company. The ITAT, after examining several definitions for the term equipment, observed that the term has various shades of meaning. It said, Lifeboat is equipment qua the ship. Ship is equipment qua the business. Equipment denotes things that are needed for a particular purpose or activity. In the present case we find that the asssessee is in the shipping business and in the context of the business of the assessee, ship can be construed to be an equipment in business. Besides, the ITAT also observed that the two berths, exclusively kept under lease for ships chartered by the shipping company, could be treated as permanent establishment. A PE is always a base for levying tax on an entity, and hence the transaction under question is taxable in India.
Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Quality Assurance Services Testing and Re-testing

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions