2014 (10) TMI 789

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....92 respectively, the revenue has preferred 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 under....

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....that the ship breaking activity resulted in production 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....

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....n favour of the assessee and against the Department." 5.1. In the aforesaid decision the Honble Supreme Court has held that ship breaking activity gave rise to the production of a distinct and different article and therefore the assessee is entitled to deduction under sections 80HH and 80-I of the Act. 6. Ms. Mauna Bhatt, learned advocate on behalf of the revenue is not in a position to dispute the above and is not in a position to show and/or point out any contrary decision. 7. Having heard learned advocates appearing on behalf of the assessee and the question posed for consideration before us reproduced hereinabove and considering the decision of the Honble the Supreme Court in the case of Vijay Ship Breaking Corporation and Othe....