COMMISSIONER OF INCOME TAX V. KIRAN SHIP BREAKING CO.

TAXAP/192/2003

AI Insights

The case involves the Commissioner of Income Tax appealing against Kiran Ship Breaking Co. concerning the eligibility of ship breaking activities for deductions under section 80-IA of the Income-tax Act, 1961, for the assessment year 1996-97. The core legal issue was whether ship breaking constitutes manufacturing or production of a new article or thing, which is a prerequisite for availing deductions under the specified section. The High Court, referencing a prior decision, concluded that ship breaking does not meet this criterion, thereby denying the deduction. The matter was certified for appeal to the Supreme Court, acknowledging the ongoing legal debate on this issue.

• Counselvise Citation: [2004] 140 COUNSELVISE.COM (IT) 718103 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 15-01-2004
• Assessment Year: misc
• Other Referred Cases: Commissioner of Income-Tax v. Vijay Ship Breaking Corporation, 2003 (261) ITR 113
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: R K PATEL
• Assessee Lawyers: TANVISH BHATT
• Keywords: Deduction; Income Tax; Manufacturing; Production; Ship breaking
• Section: 80HH; 260A; 80-IA; 80-IA; 261; 80-I

Judgement Text

" IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL No 192 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/Magistrates,Judge/Judges,Tribunal/Tribunals? -------------------------------------------------------------- COMMISSIONER OF INCOME TAX Versus KIRAN SHIP BREAKING CO. -------------------------------------------------------------- Appearance: 1. TAX APPEAL No. 192 of 2003 MR TANVISH U BHATT for appellant No. 1 MR RK PATEL for Respondent No. 1 -------------------------------------------------------------- CORAM : HON'BLE MR.JUSTICE M.S.SHAH and HON'BLE MR.JUSTICE A.M.KAPADIA Date of decision: 15/01/2004 ORAL JUDGEMENT (Per : HON'BLE MR.JUSTICE M.S.SHAH) In this appeal under Section 260A of the Income-tax Act, 1961, the following substantial question of law, in respect of the assessment year 1996-97, has been raised for our consideration: \"Whether the Appellate Tribunal was right in law and on facts in allowing the deduction u/s. 80-IA to the assessee, holding that ship breaking activity gives rise to manufacturing and production of altogether a new article or thing?\" 2. Heard Mr. Tanvish U. Bhatt, learned counsel for the revenue and Mr. R.K. Patel, learned counsel for the respondent - assessee. 3. Our attention is drawn to the decision of another Division Bench of this Court in Commissioner of Income-Tax v. Vijay Ship Breaking Corporation, 2003 (261) ITR 113, taking the view that ship breaking activity was not an activity of manufacture or production of any article or thing for the purposes of availing of the benefit of deductions under sections 80HH and 80-I of the Income-Tax Act, 1961. In view of the aforesaid decision which squarely concludes the controversy against the assessee, we hold that the Tribunal was not right in allowing deduction under section 80-IA of the Income-tax Act, 1961, the provisions of which are similar to the provisions of Section 80-I of the Income-tax Act, 1961 for the purposes of the present controversy, because ship breaking activity does not amount to manufacturing or producing a new article or thing. 4. At this stage, Mr. R.K. Patel, learned counsel for the assessee, states that the aforesaid decision of this Court has been challenged before the Hon'ble Supreme Court and the Hon'ble Supreme Court has granted leave to appeal and, therefore, he prays for certificate under section 261 of the Income-tax Act, 1961. 5. In view of the aforesaid statement that the SLP against the aforesaid decision is granted which statement is not disputed by the learned counsel for the revenue, we certify this to be a fit case for appeal to the Hon'ble Supreme Court. 6. We accordingly allow this appeal in aforesaid terms with no order as to costs. (M.S. Shah, J.) (A.M. Kapadia, J.) --- (karan) "