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TMI Blog1983 (10) TMI 96X X X X Extracts X X X X X X X X Extracts X X X X ..... rtners of the firm are his wife and children. Shri V. V. Job was paid a salary of Rs. 15,000 during the assessment year 1976-77 and Rs. 27,750 during the assessment year 1977-78. This was enhanced to Rs. 36,000 during the year 1978-79, being the year under appeal. 3.2 The ITO allowed only Rs. 27,000 and disallowed the balance amount of Rs. 9,000 under section 40A(2) of the Income-tax Act, 1961 ('the Act'). This was confirmed by the Commissioner (Appeals). 3.3 The matter relating to the assessment year 1977-78 came up before the Tribunal in IT Appeal No. 367 (Coch.) of 1979 and by the order dated 29-8-1981, the Tribunal held that the salary of Rs. 27,750 cannot be considered to be excessive or unreasonable. The question for consideration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion for increasing the salary further during the assessment year. The learned departmental representative also relied upon the ruling of the Kerala High Court in the case of CIT v. Westcoast Shipping Agencies (P.) Ltd. [1981] 127 ITR 442. 3.4 It is true that the salary of Rs. 15,000 paid in the year 1976-77 was enhanced to Rs. 27,750 for the assessment year 1977-78. But, there has been increase in the gross turnover from Rs. 47.2 lakhs to Rs. 67.1 lakhs and the gross profit from Rs. 7.55 lakhs to Rs. 9.32 lakhs. Even according to the learned representative for the assessee, the increase was mainly due to the firm engaging in fishing business for the first time. There has, therefore, been new investment and the increase in the turnover can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r cent which is allowable to ships, In dealing with the question, the Tribunal held that "Under the rules governing allowance of depreciation, boats like inland vessels, speed boats and ocean going ships are all classified under the broad head of ships. These rules framed under section 32 of the Act could be relied on for the interpretation of the word 'ship' appearing in that section. Section 32 deals with depreciation on ships, machinery, plant, furniture and buildings. Section 33 of the Act which deals with development rebate confines itself to ships, machinery and plant. It would be reasonable to assume that the word 'ship' in section 33 has the same meaning as in section 32. The meaning attributable to that word in section 32 being mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reply, it was contended by the learned representative for the assessee that the decision in the case of Cochin Co. related to the interpretation of the term 'shipping company' as occurring in a circular issued by the CBDT and it has no application to the present case. It was also contended that sub-section (2) of section 32A only requires that the new ship must have been acquired by the assessee engaged in the business of operation of ships and that if it is held that fishing trawler is a ship then the assessee, who is operating a fishing trawler should be deemed to be engaged in the business of operation of ships. 4.5 The first aspect to be considered is whether fishing trawler will be a ship within the meaning of sub-section (1) of sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t because the claim of the assessee for development rebate was resisted only on the ground that the trawler purchased by the assessee in that case was not a 'new ship'. We, therefore, hold that the fishing boat will be a ship within the meaning of the term as occurring in section 32A. 4.6 The next and the alternative contention of the learned departmental representative is based on sub-section (2)(a) of section 32A which provides that a ship or an aircraft for which investment allowance is allowable under sub-section (1) should be a new ship or new aircraft acquired after the 31-3-1976, by an assessee engaged in the business of operation of ships or aircraft. It was contended by the learned departmental representative that to come under c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, therefore, rested his claim solely upon a Circular No. 27(LIX-2) [F. No. 27(12)-IT/55), dated 6-7-1955 [see Taxmann's Direct Taxes Circulars Vol. 1, 1980 Edn., pp. 129-30] issued by the CBDT. Under the same, development rebate was to be allowed in the case of a second-hand ship purchased abroad by a shipping concern. It was held by the High Court that the assessee cannot rest its claim on the circular because the assessee was not a shipping concern as the business of the assessee was only the processing and export of fish. It is, therefore, clear that the decision of the High Court rested on the interpretation of the expression 'shipping concern' occurring in the circular. The expression 'an assessee engaged in the business of operation ..... X X X X Extracts X X X X X X X X Extracts X X X X
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