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Issues:
- Whether the assessee is considered an industrial undertaking engaged in manufacturing activities for the purpose of claiming deductions under sections 80HHA and 80-I of the I.T. Act. Detailed Analysis: The appeal before the Appellate Tribunal ITAT Bombay revolves around the objection raised by the revenue against the decision of the ld. CIT(A) regarding the classification of the assessee as an industrial undertaking engaged in manufacturing activities. The revenue contended that the activities of breaking ships and selling parts do not qualify as manufacturing activities, thus challenging the eligibility of the assessee for deductions under sections 80HHA and 80-I of the I.T. Act. Upon hearing the rival submissions, it was established that the assessee's primary business involved breaking ships and selling the parts and other articles. The Assessing Officer argued that these activities did not constitute manufacturing, contrary to the assessee's claim of being an industrial undertaking eligible for deductions under sections 80-HHA and 80-I. In the appeal process, the ld. CIT(A) referred to precedents from High Courts and Tribunals to support the view that the assessee should be considered an industrial undertaking engaged in manufacturing activities. The revenue heavily relied on the decision of the Hon'ble Supreme Court in a specific case, while the assessee's counsel cited various decisions, including a case from the Bombay High Court, to support the contention that breaking and dismantling ships could be classified as manufacturing. The Tribunal extensively analyzed the legal principles associated with the terms "industrial undertaking," "manufacture," and "production of articles" in light of significant judgments, including those of the Hon'ble Supreme Court and the Hon'ble Bombay High Court. The Tribunal highlighted the evolution of these concepts post the Supreme Court's decision in a specific case, emphasizing the importance of interpreting statutory provisions based on their plain natural meaning and avoiding alterations unless necessary to prevent ambiguity. By applying the legal principles elucidated by the Hon'ble Courts, the Tribunal concluded that the activity of breaking or dismantling ships did not qualify as manufacturing or production of articles. Citing the judgments of the Hon'ble Supreme Court and the Hon'ble Bombay High Court, the Tribunal held that the assessee was not entitled to deductions under sections 80-HHA and 80-I of the I.T. Act. Consequently, the Tribunal reversed the decision of the ld. CIT(A) and allowed the appeal filed by the revenue.
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