SHIP SCRAP TRADERS Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE issue in the present batch of cases is one of some potential general significance relating to interpretation of the words manufactures or produces any article or thing in relation to the deduction under section 80-HHA and 80-I of the Income Tax Act, 1961 ( Act for short ).

(2.) THE lucid and comprehensive judgments delivered in various appeals by various benches of the Income Tax appellate Tribunal, Mumbai delivered on different dates and the statement of case drawn in various cases while making reference give full account of the facts giving rise to the various references and batch of appeals. We give only the barest summary needed to understand the issue framed hereinafter. The petitioners and appellants are hereinafter referred to as Assessees for the sake of clarity and brevity.

(3.) THE assessees are engaged in the business of ship breaking. They purchase ships which are not seaworthy for the purpose of dismantling and sell the product derived therefrom. Deductions under section 80-HHA and 80-I of the act were claimed by the assessees for the respective assessment years involved in the respective cases under consideration, the details of which are not necessary for the purpose of deciding the issue involved in this batch of cases. The deductions claimed by the assessees were rejected by the revenue authority on the ground that the business and activity of ship breaking carried out by the assessee did not amount to manufacture or production of article or thing. For grant of deductions under sections 80-HHA and 80-I the assessee must manufacture or produce articles or things. In almost all cases, the assessees are claiming that they are treated as industrial undertakings by various tax authorities. They are holding licence under Central Excise rules, 1944 as iron and Steel obtained by breaking of ships are excisable and that they are registered as Small Scale industrial Units with the Director of Industries. Their industrial units are situated in the rural areas, as such, they claim to be entitled to the benefit of sections 80-HHA and 80-I of the Act.