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2009 (10) TMI 649 - AT - Income TaxExemption under Tonnage Tax Scheme - drilling rig as Qualifying ship - "offshore installation"- licence u/s 407 of Merchant Shipping Act - at the time of disposal of assessee’s application in Form No. 65, the assessee’s ship was not registered under the Merchant Shipping Act - AO held that assessee is not eligible for Tonnage Tax Scheme. Thereafter, the assessee received the above registration/licence - same was filed before CIT(A) as additional evidence, which was admitted and was sent to the AO for remand report. In the remand report, AO raised an objection that in the definition provided in section 115VD for qualifying ship, offshore installation has been specifically excluded. Word ‘offshore installation’ has not been explained or defined in the Income-tax Act. As per the English dictionaries, it is found that the word ‘offshore’ has not been defined anywhere but the words ‘offshore’ and ‘installation’ have been separately defined in the dictionary. As per the New Lexicon Webster’s Dictionary, ‘offshore’ means ‘moving away from the shore and towards sea’. The word ‘installation’ has been defined an installing or being installed/an apparatus set in a position for use such as lighting installation/a military establishment including the base and all its equipment. HELD THAT:- The Chapter of Merchant Shipping Act is named as "Control of Indian ships and ships engaged in coasting trade". This clearly shows that it applies to only ships and not to the offshore installation. Section 405 specifically explained about application of part - it clearly states as under:— "Application of part - This Part applies only to sea-going ships fitted with mechanical means of propulsion of not less than one hundred and fifty tons gross, but the Central Government may, by notification in the Official Gazette, fix any lower tonnage for the purposes of this part." Thus ‘ship’ required to be licensed is sea-going ship fitted with mechanical means of propulsion which is not provided in any of the "offshore installation". We have perused the registration of the assessee’s vessel u/s 407 of the Merchant Shipping Act, which are in respect of the ship, which has been referred to by the CIT(A). Hon’ble Delhi High Court in assessee’s own case for assessment years 1996-97, 1997-98, 1998-99 and 1999-2000, CIT v. Jagson International Ltd. [2007 (11) TMI 610 - DELHI HIGH COURT] and ITAT held that assessee’s vessel to be a ship and not a rig. In view thereof, the assessee’s application u/s115VD/115VR is to be allowed for the purpose of option of tonnage tax scheme. Order of CIT(A) is upheld and appeal is dismissed
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