2014 (10) TMI 789

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.... the present Tax Appeals for consideration of the following substantial question of law: Whether, the Appellate Tribunal was right in law and on facts in allowing the deduction u/s 80-HH and 80-I to the assessee, holding that ship breaking activity is a manufacturing activity and as a result of which a new article or a thing is produced? 2. The assessee firm is engaged in the business of ship breaking at Alang Port. During the years under consideration, the assessee claimed deduction u/s 80HH and 80-I on the ground that ship-breaking activity is manufacturing activity. The Assessing Officer rejected the claim on the ground that ship breaking activity cannot be considered to be an industrial undertaking engaged in manufacture or production ....

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.... of articles which emerged when the ship breaking activity stood undertaken. In our view, the important test which distinguishes the word "production" from "manufacture" is that the word "production" is wider than the word "manufacture" as held in N.C. Budharaja & Co."s case. Further, it is true that in N.C. Budharaja & Co."s case, the Division Bench has used the words "new article". However, what the Division Bench meant was that a distinct article emerges when the process of ship breaking is undertaken. Further, the Legislature has used the words "manufacture" or "production". Therefore, the word "production" cannot derive its colour from the word "manufacture". Further, even according to the dictionary meaning of word "production", the w....