Tribunal Condoned Delay and Allowed Deduction: Assessee's Appeal Successful

Sirius Shipping Co. Ltd. Versus Assistant Commissioner

Sirius Shipping Co. Ltd. Versus Assistant Commissioner - [2002] 257 ITR (A. T.) 38 Issues Involved:
1. Condonation of delay in filing the appeal.
2. Allowability of deduction u/s 33AC of the Income-tax Act, 1961.

Summary:

1. Condonation of Delay:
The assessee filed an appeal against the order of the Commissioner (Appeals) with a delay of 113 days. The delay was attributed to the assessee acting on the advice of their authorized representative to file a rectification petition u/s 154 instead of an appeal. The Tribunal considered the affidavit filed by the director of the company and the supporting case law from the Cochin Bench of the Tribunal in Autoser (P.) Ltd. v. Asst. CIT [1998] 101 Taxman-Mag. 70 (Coch). The Tribunal noted the absence of any mala fide intent and found the reasons for the delay satisfactory, thus condoning the delay and admitting the appeal.

2. Allowability of Deduction u/s 33AC:
The primary issue was whether the assessee, engaged in the business of shipping but not owning any ships, was entitled to deduction u/s 33AC. The Assessing Officer disallowed the deduction on the grounds that the assessee did not own or hire any ships, merely providing services to Reliance Industries Ltd. The Commissioner (Appeals) upheld this view, stating that the appellant was not carrying on the business of operation of ships as required by section 33AC.

The Tribunal examined the relevant provisions of section 33AC, emphasizing that the deduction is income-based and not asset-based. It noted that the section does not explicitly require ownership of ships at the threshold level for claiming the deduction. The Tribunal found that the assessee's activities of ensuring efficient running and maintenance of ships fell within the scope of "operation of ships." The Tribunal also highlighted that the assessee had subsequently acquired a ship within the specified period, fulfilling the conditions of section 33AC.

The Tribunal concluded that the assessee was entitled to the deduction u/s 33AC and quashed the orders of the lower authorities. Consequently, the appeal for the assessment year 1995-96 was allowed, and the related appeal against the order refusing rectification u/s 154 was dismissed as infructuous. The appeal for the assessment year 1996-97 was also allowed on the same grounds.

Conclusion:
The appeals in I.T.A. No. 1044 (Mds) of 1999 for the assessment year 1995-96 and I.T.A. No. 1773 (Mds) of 1999 for the assessment year 1996-97 were allowed, and the appeal in I.T.A. No. 1043 (Mds) of 1999 for the assessment year 1995-96 was dismissed as infructuous.