9911796707
TMI Blog2009 (10) TMI 649X X X X Extracts X X X X X X X X Extracts X X X X ..... separately defined in the dictionary. As per the New Lexicon Webster s Dictionary , offshore means moving away from the shore and towards sea . The word installation has been defined an installing or being installed/an apparatus set in a position for use such as lighting installation/a military establishment including the base and all its equipment. HELD THAT:- The Chapter of Merchant Shipping Act is named as Control of Indian ships and ships engaged in coasting trade . This clearly shows that it applies to only ships and not to the offshore installation. Section 405 specifically explained about application of part - it clearly states as under: Application of part - This Part applies only to sea-going ships fitted with mechanical means of propulsion of not less than one hundred and fifty tons gross, but the Central Government may, by notification in the Official Gazette, fix any lower tonnage for the purposes of this part. Thus ship required to be licensed is sea-going ship fitted with mechanical means of propulsion which is not provided in any of the offshore installation . We have perused the registration of the assessee s vessel u/s 407 of the Merc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time of above proceedings before Assessing Officer, the assessee had not received registration certificate under section 407 of Merchant Shipping Act, 1958. This fact has been noted by Assessing Officer in his order that assessee was not so registered. However, during the course of appellate proceedings, assessee had received the requisite licence under section 407 of the Merchant Shipping Act issued on 19-5-2006. CIT(A) considered various facts and directed the Assessing Officer to consider the same as "Qualifying ship" under section 115VD by following observations : "Subsequently, the appellant had received the licence under section 407 of Merchant Shipping Act, 1958 which was issued on 19-5-2006 under Licence No. PF-182/06 specifically mentioned that licence shall remain valid from 31-3-2006 to 2-7-2007. Since the licence was received after the rejection of the application, the matter was remanded back to the Addl. Commissioner of Income-tax to verify its claim in view of the new evidences filed by the ld. AR of the appellant. The Assessing Officer, vide its remand report dated 5-2-2007, has stated that although the assessee-company has obtained the licence from Director Gen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purpose for which it is required to be used but they are not dismantled and shifted to its another site. Contrary to that the drilling ship is built or constructed by various equipments and material for the purpose for which it is required to be used but they are not dismantled instead ship itself moves from one place to another for working on the other site. The ships meant for drilling purpose, which are popularly called as rigs are required to be registered under Merchant Shipping Act but not installations. Regarding the observations of the Addl. CIT that installation are mounted/fitted/attached/installed on ship does not make the offshore installations as the ships, it was submitted that there is no equipment, i.e., rig which is mounted/fitted/attached/installed on ships but this is a part and parcel of the ship which is used for drilling purpose. It is not the case where ship is built and thereafter, equipment for drilling are mounted/fitted/attached/installed. All the drilling equipments were planned and placed at the time of the manufacturing of the ship itself. This ship is not ship which is used after segregating equipments. The nomenclature of the drilling ship as a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pments for exploration of mineral salt are installed as a part and parcel of the ship only. These equipments cannot be separate from the ship and installed independent. In fact, these ships are manufactured specifically for the purpose of exploration of mineral oil and can be moved to any place of the assignment. Therefore, the findings of the Assessing Officer that the rigs are offshore installations is without any basis and citing any judicial pronouncement or Legislature or even the dictionary meaning. My view finds further support from the registration and the licence given by the Director General of Shipping under section 407 of the Merchant Shipping Act recognizing the rig as a ship only. Since this certificate has been given by the Competent authority of Government of India, same cannot be ignored for the purpose of income-tax. Had the legislator had any intention of excluding the same from the definition of the Qualifying Ship under section 115VD, same would have been mentioned specifically as was done in the case of dredgers by Finance Act, 2004 but same was also excluded from the list of the exclusion by the Finance Act, 2005 with effect from 1-4-2006. Moreover, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the shore, such as offshore fisheries." As the adverb it has been explained as under : "From the shore; at distance from the shore." In the Chambers Dictionary Deluxe Edition, this word "offshore" has been explained - from the shore; at distance from shore; without (placed or operating) abroad cited or operating the restriction of British law and tax. The word "installation" has been defined in New Lexicon Webster s Dictionary as under: "An installing or being installed // an apparatus set in a position for use, such as lighting installation // a military establishment, incl. the base and all its equipments." In the Chambers Dictionary, this word has been explained as under: "Act of installing; Act fitting something in a position for use; apparatus place in a position for use; the complete apparatus for electric lighting, or like; the military base, etc." It may be appreciated that the word "offshore" therefore means away from the shore or located at a little distance from the shore while the "installations" has been explained as an apparatus or establishment which have been fixed at a place or set in a position for use. It does not mean anything, i.e., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bservations of Additional Commissioner of Income-tax that installation which are mounted/fitted/attached/installed on ships does not make the offshore installation as the ships. It is submitted that there is no equipment, i.e., rig which is mounted/fitted/attached/installed on ships instead this ship is built in which rig and other equipments were planned on the ship from the very beginning of building a ship. It is not a case where ship is built and thereafter equipments were mounted/fitted/attached/installed but in the present case, the Deep sea Matdrill ship was built by Nippon Kokan K.K. of Japan who have built this ship in 1981 at Tsu City in Japan. While building this ship on 19-1-1981 it is planned for the special purpose of drilling in offshore and all the equipments which were fitted or mounted or installed or attached as may be required on the day of planning itself. Thus, this ship was not such ship which is used after segregating equipments and vessel because while building the ship itself all the equipments which are necessary were planned and placed at various places and while moving from one place to another whole ship is moved consisting of all the equipments, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of crane. It is, therefore, submitted that assessee s ship which is duly been registered and has obtained the licence under Merchant Shipping Act, 1958 by an authority of Director General Shipping be treated as "Qualifying ship" and not as an "offshore installations" as understood by ld. Addl. CIT. Apart from certificate from DG Shipping various other certificates have already been filed which were also necessary for issuing certificate by the Office of DG, Shipping. 8. Learned counsel for the assessee further contends that Hon ble Delhi High Court in assessee s own case for assessment years 1996-97, 1997-98, 1998-99 and 1999-2000 CIT v. Jagson International Ltd. [2008] 214 CTR (Delhi) 227 for the purpose of section 33AC has been held to be ship by following observations : "The issue whether the Deep Sea Matdrill is a ship for the purposes of section 33AC was decided in favour of the assessee in respect of the assessment year 1994-95. There is merit in the contention urged by learned counsel for the assessee that this issue cannot be agitated by the revenue again and again. The drilling rig was placed on a vessel described as a barge, which could be moved out from plac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k, namely, that the CIT had overlooked the agreements dated 28-2-1995 and 30-9-1999 which were on the record of the Assessing Officer. In all the three issues that have been urged by the counsel for the revenue, no substantial question of law arises. Deduction under section 33AC is allowable in respect of a barge with the drilling rig over it which can be moved from place to place and, therefore, CIT was not justified in exercising power under section 263 on the ground that the barge is not a ship and assessee s claim for deduction under section 33AC has been wrongly allowed; question whether the conditions laid down in section 80-IA(3) and 80-IA(4) are fulfilled by the assessee are essentially question of fact and the Assessing Officer having allowed the claim for deduction under section 80-IA, revision under section 263 was not justified." It was further contended that in assessee s own case in assessment year 2004-05 in ITA No. 2978/Delhi/2007 at the instance of revenue, a specific ground was raised that assessee was operating a rig and not a ship. ITAT vide order dated 17-10-2008 relying on the order of Hon ble Delhi High Court ( supra ) held the assessee s Deep Sea Matd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e do not find any fault) that the Deep Sea Matdrill is nothing but a ship. It is a barge, which can be moved from place to place like any other ship. When the drilling rig is in use, then apparently to save some expenses the ship s propeller is removed; but whenever it is required to be shifted, the propeller is refixed and the ship is made mobile. On merits, therefore, we are of the view that the claim made by the assessee in respect of section 33AC of the Act is quite justified. In view of the above discussion, it was argued by ld. AR that the issue now stands covered by the above-mentioned decision of the Hon ble High Court. The ld. DR did not controvert such pleading of ld. AR. In this view of the position, we hold that the CIT(A) has rightly held that the assessee is entitled to claim benefit of section 33AC and the appeal filed by the revenue is dismissed." 9. Learned counsel further contends that CIT(A) on the basis of facts alone vide order dated 16-3-2007 has held that assessee is entitled to option for tonnage tax scheme under section 115VP/115VR. Thereafter, Hon ble Delhi High Court delivered the above judgment of 14-11-2007 and ITAT, as mentioned above, o ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
