1. While
there is no specific distinction, it can be inferred that Section 44B is a
special provision for computing profits and gains of an FSC engaged in
'regular' shipping business in India, while section 172 deals with taxation of
an FSC engaged on "occasional" shipping business basis in India.
2. One
of the differences between the two sections is that section 44B does not
prescribe any procedure to be followed for assessment and collection of tax. In
other words, return filed u/s. 44B would be assessed under normal provisions of
the Act. Further, the 'non obstante' clause refers only to sections 28 to 43A.
3. On
the other hand, section 172 prescribes a method for assessment and recovery of
the tax, and the 'non obstante' clause refers to all other sections in the ITA.
4. To
avoid long drawn process of calculating profit, particularly in case of an FSC
which includes apportionment of profit/allocation of proportionate expenses
incurred worldwide, a sum equal to 7.5% of freight has been prescribed as
deemed taxable income under presumptive taxation in both the sections. The only
difference is the scope of income. Under section 44B,income has two limbs:
First, the amount paid or payable to the assessee on account of carriage of
passenger, livestock, mail or goods shipped at any port in India, and the
second being the amount received or deemed to be received in India on account
of above carriage, shipped at any port outside India. While under section 172,
income definition covers only the first limb related to a particular ship.
5. The
return u/s. 44B needs to be filed annually irrespective of number of ships
departing from the Indian port during the year. However, in case of section
172, ship wise return is required to be filed. The Master of a ship is
responsible to prepare and file the Return of Income before the ship departs
from the Indian port. Alternatively, it can be filed within the 30 days of
departure of ships, if the master of ship has made arrangement for filing of
Return of Income and payment of tax to the satisfaction of the AO. The assessment
of the same needs to be completed within 9 months from the end of the financial
year in which return is filed. U/s. 172, the owner or charterer of the ship has
an option to get the income of the ship assessed under normal provisions of the
Act. In this regard, declaration needs to be filed before the AO prior to the
completion of the assessment year.
6. In case where an FSC was not engaged in occasional shipping business, but in regular shipping business, and its Indian agent was regularly filing return of income and was assessed as well, it would be outside the scope of section 172; it would rather be liable to be assessed on basis of return filed under section 139(1) for its entire income (Rajkot ITAT in case of ITO (Int. Tax.) v. Marine Containers Services (India) (P.) Ltd. [2012] 28 taxmann.com 251/[2014] 61 SOT 260
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