TaxTMI 
TaxTMI 
1989 (7) TMI 146
X X X X Extracts X X X X
X X X X Extracts X X X X
....sessee and the I.T.O. was in respect of the treatment to be given to liabilities in working out the 'capital employed'. The assessee's contention was that the liabilities should be ignored while the I.T.O. was of the opinion that in view of the retrospective amendment made in Sec. 80-J of the Act by the Taxation Laws (Amendment) Act, 1980, the liability has to be considered in determining the capital employed. The I.T.O. therefore, deducted the amount of liabilities from the value of the barges and granted deduction u/s. 80-J of the Act accordingly. 5. Against the aforesaid action of the I.T.O., the assessee went up in appeal and contended before the Commissioner of Income-tax (Appeals) that the deduction u/s. 80-J of the Act should have been given with reference to the gross value of the capital employed and not the net value of the capital employed after deducting the liabilities as was done by the I.T.O. In view of the decision of the Hon'ble Supreme Court in the case of Lohia Machines Ltd. v. Union of India [1985] 152 ITR 308/20 Taxman 9, the C.I.T. (A) had no hesitation in upholding the action of the I.T.O. 6. The C.I.T. (A), however, was of the opinion that since a barg....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Thus the word barge never meant an ocean going ship carrying heavy weights. Under section 80J therefore there is no scope for allowing deduction on a boat or a small vessel sailing in the coastal waters or rivers. 11. In accordance with these facts, a barge can never be allowed relief as a ship. The ITO is directed to withdraw the 80J relief already granted on barges. " 7. Being aggrieved by the order of C.I.T. (A), the assessee has come up in appeal before the Tribunal. The learned representative for the assessee strongly argued that the CIT (A) was not justified in withdrawing the deduction already granted by the I.T.O. u/s. 80J of the Act in respect of the barges owned by the assessee. In this connection, he stated before us the nature of business carried on by the assessee (already reproduced above) and the fact that in the assessment years 1978-79 and 1979-80 the I.T.O. had allowed deduction u/s. 80J of the Act in respect of the barges owned by the assessee on the net value of the capital employed by the assessee. Till to-date no remedial action has been taken by the Revenue either u/s. 154 or 263 of the Act. For the years under appeal also the I.T.O. had granted relief....
X X X X Extracts X X X X
X X X X Extracts X X X X
....or transportation of own ore, the appellant had received Rs. 9,28,460 as freight earned from the Barge. This amount was earned by the appellant in the operation of the Barge for others on hire. In view of this fact it has to be held that the appellant was engaged in the business of operation of ships. The Income-tax Officer is therefore, directed to allow the investment allowance on the Barge. " The learned representative for the assessee made a statement at the Bar that the said order of the C.I.T. (A) has been accepted by the Revenue. Inasmuch as, no appeal has been filed by the Revenue against the decision of the C.I.T. (A) directing the I.T.O. to allow investment allowance on the Barges treating them as ship. Thereafter, he invited our attention to the decision of the Hon'ble Gujarat High Court in the case of CIT v. Shri Digvijay Cement Company Ltd. [1986] 159 ITR 253/25 Taxman 269 wherein the High Court had held that " Pontoon " is a " ship " for the purposes of granting higher rate of development rebate u/s. 33 of the Act. He also highlighted the fact that in coming to this conclusion, the High Court had referred to Part I of Schedule I to the Income-tax Rules, 1962. Si....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n behalf of the assessee. It is to be noted that the word " ship " is nowhere defined in the Act and the Rules made thereunder. Therefore, it would be necessary to refer to the meaning of " ship " appearing in other statutes like General Clauses Act, Carriage of Goods Act, Marine Insurance Act as wen as in the dictionary. When one refers to these Acts/Dictionary, one finds that very wide meaning is given to the word " ship ". The judicial as well as dictionary meaning of the word " ship " mentioned above also supports the stand taken on behalf of the assessee that a barge should be considered as a ship for the purposes of deduction contemplated u/s. 80J of the Act. In our considered opinion the descriptive meaning of the word " ship " contained in Part I of Appendix I to the I.T. Rules, 1962, clinches the issue involved in the present appeals. We find that for the purpose of Sec. 32 of the Act, which provides for depreciation in respect of certain classes of vessels, the said Part describes " ship " as a class of vessels and under the heading " ships " four different classes of ships are mentioned viz. (1) Ocean-going ships --- (i) Fishing Vessels with woodenhull ; (ii) Ot....