COMMISSIONER OF INCOME TAX vs. KIRAN SHIP BREAKING CO.

TAXAP/191/2003HC GujaratGJHC24025955200315 January 2004Author: HONOURABLE MR. JUSTICE MOHIT S. SHAH,HONOURABLE MR. JUSTICE A.M.KAPADIA3 pages
AI SummaryAllowed

What were the facts?

The appeal concerns the assessment year 1995-96. The Commissioner of Income Tax (Revenue) is the appellant, and Kiran Ship Breaking Co. (assessee) is the respondent. The challenge is to an order of the Income Tax Appellate Tribunal (ITAT) which allowed the assessee to claim deduction under Section 80-IA of the Income-tax Act, 1961. The Revenue contends that ship breaking activity does not constitute manufacturing or production of a new article or thing, which is a prerequisite for claiming such deduction. The ITAT had ruled in favour of the assessee on this point. The High Court was considering the substantial question of law raised by the Revenue.

What did the High Court hold?

The High Court held that the Appellate Tribunal was not right in allowing the deduction under Section 80-IA to the assessee. The Court relied on its own previous decision in Commissioner of Income-Tax v. Vijay Ship Breaking Corporation, 2003 (261) ITR 113. In that judgment, a Division Bench of the High Court had taken the view that ship breaking activity does not constitute manufacturing or production of any article or thing for the purpose of availing deductions under Sections 80HH and 80-I of the Income-tax Act, 1961. The Court noted that the provisions of Section 80-IA are similar to Section 80-I for the purpose of this controversy. Therefore, the Tribunal's decision allowing the deduction was set aside. The Court certified the case as fit for appeal to the Hon'ble Supreme Court, as the assessee's counsel stated that a Special Leave Petition (SLP) had been granted by the Supreme Court against the cited High Court decision.

What were the issues?

1. Whether the Appellate Tribunal was right in law and on facts in allowing the deduction under Section 80-IA to the assessee, holding that ship breaking activity gives rise to manufacturing and production of altogether a new article or thing? (Question of law and fact, concerning Section 80-IA of the Income-tax Act, 1961). Assessee's Contention: The assessee argued that ship breaking activity results in manufacturing and production of a new article or thing, thereby qualifying for deduction under Section 80-IA. Revenue's Contention: The Revenue argued that ship breaking activity does not amount to manufacturing or producing a new article or thing, and therefore, the assessee is not eligible for the deduction under Section 80-IA. The Revenue relied on the decision of another Division Bench of the High Court in Commissioner of Income-Tax v. Vijay Ship Breaking Corporation, 2003 (261) ITR 113, which held that ship breaking activity is not an activity of manufacture or production for the purposes of deductions under Sections 80HH and 80-I.

Which sections of the Income-tax Act were involved?

Section 260A,Section 80-IA,Section 80HH,Section 80-I,Section 261

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

TAX APPEAL No 191 of 2003

For Approval and Signature:

HON'BLE MR.JUSTICE M.S.SHAH and HON'BLE MR.JUSTICE A.M.KAPADIA

============================================================ 1. Whether Reporters of Local Papers may be allowed : NO to see the judgements?

2.

To be referred to the Reporter or not? : NO 3. Whether Their Lordships wish to see the fair copy : NO of the judgement?

4.

Whether this case involves a substantial question : NO of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder?

5.

Whether it is to be circulated to the concerned : NO Magistrate/M

The order continues below.

Read the full judgment

A free account opens 10 full judgments a month. Re-reading one you have already opened does not count again.

Create a free accountSign in

See plans and prices

The summary, the parties, the sections and the citations above are open to everyone and always will be. Only the text of the order and the PDF are metered.

More judgments on Section 80-IA

All 591 judgments and leading authorities on Section 80-IA →

Recent GST High Court judgments

Search GST case law →