TaxTMI 
TaxTMI 
2008 (11) TMI 93
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....al evidence to show that the assessee was engaged in the business of operation of ships during the year under consideration?" 3. The relevant facts giving rise to the present appeal are briefly set out hereunder. (a) The main objects for which the assessee company was incorporated are reproduced hereunder: (1) To promote, manage, assist, render services to and to invest in projects relating to offshore and onshore gas and oil exploration, prospecting, development and production, including but without being limited to, brokering of work contracts, construction contracts, exploration licences and financing agreements and arrangements in India and in any part of the world. (2) To acquire, purchase, sell, own, lease, charter, let out to hire, administer, manage, control, operate, construct, repair, alter, equip, furnish, fit out, decorate, improve and otherwise deal in offshore and onshore rigs and platforms, works, buildings, conveniences and equipments of all kinds, including equipments for seismic, electrologging, mudlogging, perforation, cementing, production, maintenance, diving and construction, irrigation, reclamations, sewage, drainage and sanitary works, water, gas....
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....cular No.554 dated 13 February, 1990 (see [1990]183 ITR (St.) 130) clarifies that companies should engage in the business of operation of ships. 4. Being aggrieved by the said order of the Income-tax Appellate Tribunal the present appeal is filed and is admitted on the questions set out in paragraph 2 above. 5. We have heard the learned Counsel appearing for the assessee as well as the revenue. Before we proceed to deal with the arguments advanced by the learned Advocates for the parties, it is necessary to set out section 33AC of the said Act as it existed in 1994-95 and also the amended section which admittedly came into effect only from 1^st April, 1996 and is not applicable to the case in hand. "33AC(1): Assessment Year 1994-95 In the case of an assessee, being a Government Company or a public company formed and registered in India with the main object of carrying on the business of operation of ships, there shall, in accordance with and subject to the provisions of this section, be allowed a deduction of an amount not exceeding the total income (computed before making any deduction under this section and Chapter VI-A) as is debited to the profit and loss account of th....
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....xternal aids are impermissible if the words of the statute are clear; (c) in the case of a clear statutory provision, arguments contrary to the words of the statute cannot be entertained based upon the avowed or perceived intention of the legislature or the object of the legislation. 8. The learned Advocate for the assessee submitted that application of the above principles of statutory construction establishes beyond doubt that the claim of the revenue that section 33AC contemplates actual carrying on of business of operations of shipping in the year of claim or that the company should engage in the business of operation of shipping is totally erroneous. He submitted that a bare perusal of section 33AC as it is stood in the Assessment year 1994-95 shows that it nowhere lays down the actual operation of shipping as a precondition for eligibility for deduction under section 33AC of the said Act. He submitted that such a precondition was introduced only from the Assessment Year 1996-97 onwards by amendment of section 33AC with effect from 1^st April, 1996. Without prejudice to his aforesaid contentions, the learned Advocate for the assessee also submitted that the appellant has....
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.... v. Commissioner of Income Tax (2005) 279 ITR 310 wherein it was held that the amendment to the Explanation to Section 9(1)(ii) brought about by the Finance Act, 1999 was deliberately introduced with effect from 1^st April, 2000 and was, therefore, intended to apply only prospectively. It was also understood as such by Central Board of Direct Taxes which issued Circular No.779 dated 14^th September, 1999 : [1999] 240 ITR (St) 3 which though not binding on the assessee, afforded a reasonable construction of the amendment. It was, therefore, submitted by the Assessee before us that the finding of the Tribunal that the Amendment brought by Finance Act, 1995 with effect from 1^st April, 1996 is clarificatory and retrospective, is erroneous and is contrary to the decision of the Hon'ble Supreme Court, particularly as the amendment to section 33AC by the Finance Act, 1995 makes a clear departure from the old provisions and is explicitly stated to be prospective. 11. Referring to the Circular No.554 of the Board dated 13^th February 1990 : [1990] 183 ITR (St.) 130 which speaks of the purpose of section 33AC as being the incentive for generation of internal resources by publ....
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....hat the assessee in order to be eligible for deduction has to actually operate ships or that the amount in respect of which deduction is to be allowed and credited to the reserved account, had to be the income earned from shipping business. In the instant case, the assessee was a company formed and registered in India and one of its main objects was to carry on the business of operations of ships. The company had entered into agreement for purchase of ships in the relevant assessment year i.e.1994-95 and actually operated them in the assessment year 1995-96. We agree with the submissions made on behalf of the assessee that the principles of satutory provisions laid down by the Hon'ble Supreme Court in the case of Orissa State Warehousing Corporation [1999] 237 ITR 589 and in the case of Padmasundara Rao [2002] 255 ITR 147 (SC) squarely applies to the instant case. We, therefore, do not agree with the argument of the revenue and upheld by the Tribunal that section 33AC contemplates actual carrying on of business of operation of shipping in the year of claim. 14. As regards the arguments/contentions of the revenue/Tribunal that the amendment brought by the Finance Act, 1995 with e....