Qualifying ship test under tonnage tax law: mobile drilling vessel held outside the offshore installation exclusion.

A mobile deep-sea matdrill registered under the Merchant Shipping Act, 1958 was held to be a qualifying ship under section 115VD of the Income-tax Act because it was a sea-going vessel of the prescribed character and not an offshore installation. The decisive factors were that it was built for drilling operations, moved from place to place without being dismantled, and was not fixed at one location. The exclusion for offshore installations did not apply, and the Revenue's challenge to tonnage tax treatment failed.

---

---

Issues: Whether the assessee's deep sea matdrill was a "qualifying ship" under section 115VD of the Income-tax Act, 1961, or fell within the exclusion of "offshore installations".

Analysis: The vessel was registered under the Merchant Shipping Act, 1958 and held a valid certificate. The relevant statutory definition required the ship to be a sea-going vessel of the prescribed tonnage, duly registered or licensed, and excluded offshore installations. The material showed that the matdrill was built as a mobile vessel for drilling operations and was moved from place to place without being dismantled. Offshore installations, by contrast, are fixed at a place and are generally dismantled and shifted only after the purpose is completed. The earlier view of the Court that such a matdrill could be treated as a ship also supported the assessee's case.

Conclusion: The matdrill was a qualifying ship and not an offshore installation. The issue was decided in favour of the assessee and against the Revenue.

Final Conclusion: The Revenue's challenge failed, and the denial of tonnage tax treatment could not be sustained.

Ratio Decidendi: A mobile drilling vessel registered under the Merchant Shipping Act and used for operations from place to place is a qualifying ship for the purposes of section 115VD, and is not excluded merely because it carries drilling equipment.

---