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of <h1>Court affirms Tribunal decision on 'Deep Sea Matdrill' ship classification for tonnage tax</h1> <h3>THE COMMISSIONER OF INCOME TAX NEW DELHI Versus JAGGON INTERNATIONAL LTD., Jagson International Limited</h3> THE COMMISSIONER OF INCOME TAX NEW DELHI Versus JAGGON INTERNATIONAL LTD., Jagson International Limited - TMI Issues:Interpretation of section 115VD of the Income Tax Act regarding the classification of 'Deep Sea Matdrill' as a ship for Chapter XX-G purposes.Detailed Analysis:1. Background: The assessee sought to opt for the tonnage tax scheme under Chapter XII-G of the Income Tax Act, claiming ownership of ships/vessels engaged in drilling operations. However, the claim was rejected on the grounds that 'Deep Sea Matdrills' were not qualifying ships under Section 115VD.2. Assessing Officer's Rejection: The Assessing Officer rejected the claim stating that the drilling rig did not fall under the definition of a 'qualifying ship' as per the IT Act. The vessel was not registered under the Merchant Shipping Act, and the main business objective was not the operation of ships.3. Appellate Commissioner's Direction: The Appellate Commissioner directed the assessing officer to reconsider the vessel as a 'qualifying ship' after it was granted registration under Section 407 of the Merchant Shipping Act. The Commissioner allowed the claim, leading the Revenue to approach the Income Tax Appellate Tribunal.4. Tribunal's Consideration: The Tribunal analyzed the nature of 'offshore installations' and ships, emphasizing that movable equipment on ships does not constitute offshore installations. It highlighted that the vessel in question was initially designed for drilling purposes and moved between locations without dismantling, meeting the criteria of a 'qualifying ship.'5. Court's Decision: The Court upheld the Tribunal's findings, noting that the vessel was consistently registered under the Merchant Shipping Act and had a valid certificate. It rejected Revenue's argument that the vessel was an 'offshore installation,' emphasizing the vessel's operational nature requiring movement to different locations.6. Precedent and Conclusion: The Court referenced a previous judgment regarding the classification of 'Deep Sea Matdrill' as a ship for Section 33AC purposes, supporting the assessee's position. Ultimately, the Court ruled in favor of the assessee, dismissing the appeals brought by the Revenue.In conclusion, the judgment clarified the interpretation of Section 115VD regarding the classification of 'Deep Sea Matdrill' as a ship for the tonnage tax scheme, emphasizing the vessel's operational characteristics and registration under the Merchant Shipping Act. The Court's decision favored the assessee, highlighting the distinction between ships and offshore installations based on operational requirements and movement between locations.
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