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TMI Blog1995 (4) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... pply regarding the assessee's claim for the higher rate of deduction under the development rebate. On the Revenue's further appeal, the Tribunal noted that the assessee-company carries on business of catching and selling fish from the seas by plying diesel powered mechanised trawlers. It accepted the verdict of the Commissioner, however, on both counts and rejected the assessee's claims. The assessee proposed and the Tribunal has accordingly referred to us the following three questions : " 1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in denying the higher development rebate of 40 per cent. on mechanised diesel fishing trawlers ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in denying the relief under the provisions of section 80J of the Act ? 3. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in interpreting that the shipping trawlers cannot be said to be included in the word 'ship' appearing in section 80J of the Act ? " Since it is not in dispute that the assessee had used in the relevant accounting year diesel powered mechanised fishing trawlers for catch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use as a ship. That is how trawler gets its name. Having regard to its use in fishing, the vessel is called a trawler. Webster's Third New International Dictionary gives the meaning of the word 'ship' as : 'any large sea-going boat ; a sailing boat having a bowsprit and usu. a square-rigged foremast, mainmast, and mizzenmast each composed of a lower mast, a topmast, a topgallant mast, and sometimes higher masts ; a boat intended or used for navigation and propelled by power or sail ; a boat or structure used for purposes of navigation or intended or used for transportation on a river, sea, ocean, or other navigable water without regard to its form or means of propulsion' ; Webster's New Twentieth Century Dictionary, second edition, 1979, gives its meaning as : 'any vessel of considerable size navigating deep water and not propelled by oars, paddles, or the like ; distinguished from boat'. Similar meanings are given for the word in other dictionaries. Webster's Dictionary gives the meaning of the word 'trawl' as 'a long line, sometimes more than a mile in length and supported by buoys, from which short lines with baited hooks are suspended ; used especially in deep sea fishing, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 33. We are in entire agreement with the assessee in regard to this approach to the question. Except that section 33 is applicable to priority industries whereas depreciation is allowed in respect of every category and not restricted to priority industries, we are not able to see any distinction between sections 32 and 33 in so far as the meaning of the word 'ship' is concerned. In these circumstances, we are of the view that trawlers are covered by the expression 'ship' in section 33 and, therefore, the assessee is entitled to development rebate at 40 per cent., of its cost. " We are in respectful agreement with the above view of the court. The court has recorded the above in the case of the assessee for rebate under section 33 of the Act for the assessment year 1974-75. Learned counsel for the Revenue has not been able to give to us any strong reason to differ from the view taken by the court in Chola Fish and Farms P. Ltd.'s case [1987] 166 ITR 600 (Mad). Since the court has accepted that the trawlers used by the assessee come within the meaning of "ship" and also held that the assessee is qualified for rebate under section 33 of the Act, the first question is answered i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... " The conflicting points of view are put with clarity in the judgment of Braund J., in Sarju Bai v. CIT [1947] 15 ITR 137 (All), at pages 144, 145 where he expresses himself as follows : 'The argument on the one hand is that interest payable (whether by statute or not) on arrears of rent which have already become a debt due is not referable in any way to the agricultural relationship as landlord and tenant, but is attributable solely to their character as creditor and debtor. It is said that the interest is in its nature merely that commercial compensation which either the accepted practice of business or in some case the Legislature has adopted to see that a creditor does not suffer from the default of his debtor. That, it is said, has nothing whatever to do with the relationship of landlord and tenant and, therefore, is not in any way derived from the agricultural land which is the subject-matter of the tenancy. That is one way of putting it. The other way of putting it is that interest on arrears of rent is something which in this case has been introduced by the United Provinces Tenancy Act as a condition of the relationship between landlord and tenant. Arguing from that, it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... awlers. When compared to any produce of the land, fish is a product of the sea or water. It is obviously not a product of the trawlers. One cannot relate the fishes to trawlers, although trawlers are used to catch fish. Our view has an eminent companion in the judgment of the Bombay High Court in the case in New India Fisheries Ltd. v. P. M. Mehta, ITO [1971] 82 ITR 765. Tulzapurkar J., posed two rival interpretations : (1) The expression "any profits or gains derived from a ship" occurring in sub-section (1) of section 80J should be read along with the first condition appearing in sub-section (5) of section 80J and, if it is so read, it would be clear that the profits and gains earned by the company during the relevant years, if not wholly, at least a substantial part thereof, could be said to have been derived from a ship (meaning the trawlers in question), for it was clear that but for the fact that the company owned the eight trawlers and used them for its business of deep sea fishing, a substantial part of their profits and income would not have been earned at all ; and (2) In order that the benefits of sections 80J and 80K could be availed of by an assessee, it must be show ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e three different sources have been grouped together in sub-section (1) clearly shows that the Legislature intended to confer benefits of the said sub-section upon the profits and gains derived directly from the sources mentioned therein and, therefore, in my view, the expression 'any profits and gains derived from a ship' occurring in sub-section (1) will have to be construed as profits and gains directly derived from that source and the benefit of that provision cannot be availed of if the assessee is using the ship or ships as instruments for carrying on his business activity which produces the income. If profits and gains derived from the business activity like catching fish and selling the same are to be regarded as profits and gains derived from a ship simply because the ship is used for catching fish, then profits and gains derived from a business carried on by using the building where the business is housed will have to be regarded as profits and gains derived from the house property. " Learned counsel for the assessee, however, has drawn our attention to a cryptic order by a Division Bench of this court in T. C. No. 246 of 1982 dated February 17, 1994 (Chola Fish and Far ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 80J of the Act. He has pointed out that the Revenue authorities including the Tribunal have not considered the claim of the assessee for deduction under sections 33 and 80J of the Act for, according to them, the trawlers of the assessee were not ships for the purposes of the said provisions. It would have been a good ground because we have found that the trawlers are ships and answered the third question accordingly for the purposes of sections 33 and 80J of the Act and further found that the trawlers of the assessee are qualified for the rebate under section 33 of the Act for a remand. There may be a situation where the trawlers are not merely instruments but are the source of income. We are not, however, required to go into this aspect and we have found no reason to remand the case for the said purpose because it is clearly stated in the statement of the case and there is no dispute as to that before us, that the petitioner has been using diesel powered mechanised trawlers for fishing in sea. The trawlers, in these circumstances, cannot be anything but instruments used by the assessee, whose business activity is fishing and income is derived from the business of selling the fish ..... X X X X Extracts X X X X X X X X Extracts X X X X
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