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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 ..... and against the Revenue - appeals are consequently dismissed. - ITA 1395/2010 & ITA 1289/2011 - - - Dated:- 8-11-2012 - MR. S. RAVINDRA BHAT MR. R.V.EASWAR JJ. Presence : Mr. Sanjeev Sabharwal, sr. Standing counsel with Mr. Puneet Gupta, jr. Standing counsel for the appellant Mr. C S Aggarwal, Sr. Adv. with Mr. Rajeev Saxena, Mr. Pravesh Kumar and Ms. Pushpa Sharma, Advs. for the respondent. S. RAVINDRA BHAT, J: (OPEN COURT) The substantial question of law arising for consideration is ―Whether on the true and correct interpretation of section 115VD of the Act could it be held that ―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 r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for which it is required to be used but they are not dismantled instead ship itself shifts from one place to another for working on the other site. The ships are required to be registered under Merchant Shipping Act but not installations secondly they are not those which are not moveable and required to be shifted after dismantling. In the modern world there could be a case of installing any equipment on the ship for the specific cause or requirement but this would not be called offshore installation instead it would be called installation on the ship. There may be a case of installation which is taken from one place to another but that cannot be called as ship because while shifting from one place to another it is required to be partially or totally dismantled according to distance of place and availability of facilities. Further for a ship it is not only necessary to be registered under the Merchant Shipping Act but it has to fulfill all the requirements and formalities to be fulfilled. 7. The relevant 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. ‖ 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 revenue again and again. The drilling rig was placed on a vessel described as a barge, which could be moved out from place to place for offshore drilling. The Tribunal considered this aspect of the matter and came to the conclusion that the Deep Sea Matdrill is nothing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issues that have been urged by the counsel for the revenue, no substantial question of law arises. Deduction u/s 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 u/s 263 on the ground that the barge is not a ship and assessee s claim for deduction u/s 33AC has been wrongly allowed; question whether the conditions laid down in SS80-IA(3) and 80-IA(4) are fulfilled by the assessee are essentially question of fact and the AO having allowed the claim for deduction u/s 80-IA, revision u/s 263 was not justified. 6. This Court has considered the submissions. Section 115VD which defines a ship as Qualifying Ship reads as follows: 115VD. For the purposes of this Chapter, a ship is a qualifying ship if (a) it is a sea going ship or vessel of fifteen net tonnage or more; (b) it is a ship registered under the Merchant Shipping Act, 1958 (44 of 1958), or a ship registered outside India in respect of which a licence has been issued by the Director-General of Shipping under section 406 or section 407 of the Merchant Shipping Act, 1958 (44 of 1958); and (c) a val ..... X X X X Extracts X X X X X X X X Extracts X X X X
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