COMMISSIONER OF INCOME TAX vs. M/S.MAHALAXMI SHIP BREAKING CORPORATION.

PDF · subscribers
TAXAP/82/2003HC GujaratGJHC24025846200307 November 2014Bench: HONOURABLE MR. JUSTICE KS JHAVERI,HONOURABLE MR. JUSTICE K.J.THAKER3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court of Gujarat held that ship-breaking activity does give rise to the production of a distinct and different article. The Court relied on its previous decision in the case of Vijay Ship Breaking Corporation and others v. Commissioner of Income-Tax, (2009) 314 ITR 309 (SC). In that judgment, it was held that ship-breaking activity results in the production of a new article, making the assessee entitled to deductions under Sections 80HH and 80-I of the Income-Tax Act, 1961. Consequently, the question framed was answered in favour of the assessee and against the Revenue. The appeal filed by the Revenue was dismissed.

What were the facts?

The assessee, M/s. Mahalakshmi Ship Breaking Corporation, engaged in ship-breaking at Alang Port, claimed a deduction of Rs. 5,03,467 under Section 80HH of the Income Tax Act, 1961, for the assessment year not specified. The Assessing Officer disallowed this claim, holding that ship-breaking is not a manufacturing activity. The Commissioner of Income Tax upheld this decision. The Revenue appealed this matter to the High Court of Gujarat.

What were the issues?

1. Whether the Appellate Tribunal was right in law and on facts in allowing the deduction under Section 80HH to the assessee, holding that ship-breaking activity gives rise to manufacturing and production of altogether a new article or things? (Question of law and fact, concerning Section 80HH of the Income Tax Act, 1961). Assessee's Contention: The assessee contended that ship-breaking activity constitutes manufacturing, entitling them to the deduction under Section 80HH. (Not explicitly recorded, but implied by the claim and subsequent arguments). Revenue's Contention: The Revenue argued that ship-breaking activity cannot be considered an undertaking engaged in the manufacture or production of articles or things, and therefore, the deduction under Section 80HH should be disallowed.

Which sections of the Income-tax Act were involved?

Section 80HH,Section 80-I

AI-generated summary — verify with the full judgment below

O/TAXAP/82/2003 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 82 of 2003

FOR APPROVAL AND SIGNATURE:

HONOURABLE MR.JUSTICE KS JHAVERI

and HONOURABLE MR.JUSTICE K.J.THAKER

================================================================ 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ================================================================ COMMISSIONER OF INCOME TAX....Appellant(s) Versus M/S.MAHALAXMI SHIP BREAKING CORPORATION.....Opponent(s) ================================================================ Appearance: MR M.R. BHATT SR. ADVOCATE FOR MRS. MAUNA BHATT, ADVOCATE for the Appellant(s) No. 1 RULE SERVED for the Opponent(s) No. 1 ================================================================ CORAM: HONOURABLE MR.JUSTICE KS JHAVERI and Page 1 of 3

O/TAXAP/82/2003 JUDGMENT HONOURABLE MR.JUSTICE K.J.THAKER

Date : 07/11/2014

ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE KS JHAVERI) 1. While   admitting   the   appeal   on   01.04.2003,   the   following substantial question of law was framed; “Whether the Appellate Tribunal was right in law and on facts in allowing the deduction u/s.80­HH to the assessee, holding that ship breaking activity gives rise to manufacturing and production of altogether a new article or things?” 2. The facts in brief are that the assessee­firm is engaged in the business of ship­breaking at Alang Port. During the year under consideration, the assessee claimed deduction u/s.80­HH on the ground that ship­breaking activity is a manufacturing activity. The Assessing   Officer   disallowed   the   claim   of   Rs.5,03,467/­   on   the ground that ship­breaking activity cannot be considered to be an undertaking engaged in manufacture or production of articles or things. On appeal, the CIT confirmed the order of the Assessing Officer. 3. We have heard learned Senior Standing Counsel Mr. M.R. Bhatt   for   the   Revenue.   Though   served,   none   appears   for   the assessee.   The   question   whether   ship­breaking   activity   can   be considered a manufacturing activity or not is already answered by this   Court   in   the   decision   rendered   in   the   case   of   Vijay   Ship Page 2 of 3

O/TAXAP/82/2003 JUDGMENT Breaking Corporation and others v. Commissioner of Income­Tax, (2009) 314 ITR 309 (SC) wherein, it is held that ship­breaking activity gave rise to the production of a distinct and different article and therefore, the assessee was entitled to allowance of deductions under Sections 80HH and 80­I of the Income­Tax Act, 1961 in respect of profits from ship­breaking activity. In view of the above, the question is answered in favour of the assessee and against the revenue. The appeal is, accordingly, dismissed. (K.S.JHAVERI, J.) (K.J.THAKER, J) Pravin/* Page 3 of 3

More judgments on Section 80HH

All 102 judgments and leading authorities on Section 80HH →

Recent GST High Court judgments

Search GST case law →