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TMI Blog2012 (11) TMI 594X X X X Extracts X X X X X X X X Extracts X X X X ..... ;Deep Sea Matdrill‖ is a ship for the purposes of chapter XX-G of I.T. Act?‖ 2. The relevant facts are that the assessee sought to opt for tonnage tax scheme under Chapter XII-G especially Section 115VP/115VR of the Income Tax Act, 1961. The assessee claims to be owner of ship/ vessels engaged in drilling operations. Its claim was rejected on the ground that in terms of Section 115VD, Deep Sea Matdrills were not qualifying ships. The Assessing Officer rejected the claim stating as follows: "I have gone through the submission of the assessee and the AO's report. After going through the submission of the assessee as well ass (sic) the AO's report, I am satisfied that assessee's claim is not found to be acceptable for the purpose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment which have been fixed at a place or set in a position for use. It does not mean anything i.e. apparatus or establishment which is being used without being fixed or set in a position for its use. Anything which is moving from one place to another for using the same cannot be termed as installed. Any movable thing cannot be treated as installation. Thus any installation which has been fixed or set in a position at distance place from shore or away from the shore is called 'offshore installation. The 'installation' is built by installing various equipments, fixing them for the work and then dismantled and shifted to another site. The ship is build or constructed also by various equipments and material for the purpose for which it is requi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the Official Gazatte, 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". 4. The Tribunal took into consideration the observations of the Appellate Commissioner and noticed that in this case the ship was not initially built and thereafter equipments were amounted or attached. In fact the Tribunal noticed that the Matdrill vessel was built by Nippon Kokan K.K. of Japan in 1981. It was planned for the special purpose of offshore drilling and all equipments befitted or mounted at that stage itself. The Tribunal was thus alive to the fact that the ship was initially designed f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther certificates have already been filed which were also necessary for issuing certificate by the office of DG Shipping."‖ 5. The Tribunal was also made aware of decision of this Court CIT Vs. Jagson International (2008) 214 CTR (Del) 227 where the same equipment was considered for the purpose of Section 33AC. This Court had also held that Deep Sea Matdrills owned or leased by the assessee were ships. The observations of this Court are as follows: "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 reven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act, the assessing officer had specifically mentioned in the reasons recorded that he was prima facie of the view that the vessel had been used in the Indian territorial waters prior to its acquisition by the assessee. A response was given by the assessee to the notice in which it was categorically mentioned that the ship was never used in India so deduction under section 80-IA(93) could not be denied to the assessee. The last issue addressed by learned counsel for the revenue relates, to section 80-IA(4) of the Act a bare reading of section 80-IA(4) of the Act shows that what is required to be determined is essentially factual and there is no legal issue which is involved, much less a substantial question of law. This issue was raised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shipping under section 406 or section 407 of the Merchant Shipping Act, 1958 (44 of 1958); and (c) a valid certificate in respect of such ship indicating its net tonnage is in force, but does not include- (i) a sea going ship or vessel if the main purpose for which it is used is the provision of goods or services of a kind normally provided on land; (ii) fishing vessels; (iii) factory ships; (iv) pleasure crafts; (v) harbour and river ferries; (vi) offshore installations; (vii)3[***] (viii) a qualifying ship which is used as a fishing vessel for a period of more than thirty days during a previous year." 7. In the facts of this case the vessels were consistently registered under Section 407 of the Merchant Shipping Act and had a va ..... X X X X Extracts X X X X X X X X Extracts X X X X
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