Syed Shah Mohammed Quadri, J.
1. In these three cases, the question referred to this Court under s. 256(1) of the IT Act, 1961 (hereinafter referred to as 'the Act'), is common. For appreciating the question referred to us, we shall extract the question in R. C. No. 67 of 1987 :
'Whether, on the facts and circumstances of the case, the assessee-company is eligible for allowance under s. 80J for the asst. yrs. 1980-81 and 1981-82 ?'
2. The assessees, which are carrying on the business of catching fish from the sea, claim deduction under s. 80J of the Act for different assessment years. On the ground that the assessees were operating trawlers for catching the fish, the ITO rejected their claim. The assessees then carried the matter in appeals to the CIT(A) and the same were also dismissed. Then second appeals were preferred before the Tribunal. The Tribunal noted that exactly on similar facts, the Bombay High Court held that the assessee is not entitled to the deduction under s. 80J of the Act and rejected the claim. Thereafter, at the instance of the assessees, the above question is referred to this Court for opinion.
3. Learned counsel for the assessees contends that the trawler is a highly mechanised ship and is an industrial undertaking; therefore, the assessees are entitled to deduction under s. 80J of the Act.
4. Section 80J allowed deductions in respect of profits and gains from, (i) newly established industrial undertakings; (ii) ships; or (iii) hotel business, subject to the condition mentioned therein. The assessee did not claim the relief under s. 80J on the ground that it is industrial undertaking before the ITO, the appellate authority and the Tribunal; the deduction was claimed on the ground that it was carrying on the business by using ships. Therefore, the entitlement of the assessee for deduction under s. 80J has to be tested only on that ground, but not on the basis now asserted that it is an industrial undertaking.
5. Learned counsel placed reliance on the judgment of the Calcutta High Court in CIT vs . Union Carbide India Ltd. : [1987]165ITR550(Cal) . In that case, the assessee acquired trawlers with sophisticated equipment like echo-sounders, electronic fish-finding equipment, radars, etc., for deep sea fishing and set up a Deep Sea Fishing Division and claimed that its Deep Sea Fishing Division was an industrial undertaking. It was found that the trawlers were utilised not only for fishing, but also for decapitating, peeling and packing shrimps in special containers and freezing them in special quick-freezing chambers installed in the vessels. On those facts, the High Court of Calcutta held that the assessee was an industrial undertaking and entitled to the relief under s. 80J of the Act. That case is clearly distinguishable from the present case because in this case the assessee did not claim to be an industrial undertaking and none of the features, pointed out above, in the case before the Calcutta High Court, exists in the instant case.
The next case relied upon by learned counsel for the assessee is CIT vs . Poyilakkada Fisheries (P) Ltd. : [1992]197ITR85(Ker) . In that case, the Kerala High Court followed its own decision in the case of the assessee for the earlier assessment year where the question was whether processing of fish would amount to production of articles and was the assessee an industrial undertaking for the purpose of s. 80J of the Act On the finding recorded by the Tribunal that there was processing of fish, which amounted to production of articles, the Court held that the Tribunal was justified in affording the relief to the assessee. On the same ground on which the judgment of the Calcutta High Court is distinguished, the judgment of the Kerala High Court is also distinguishable.
We may refer to the judgment of the Bombay High Court in New India Fisheries Ltd. vs . P. M. Mehra, ITO : [1971]82ITR765(Bom) which was followed by all the authorities under the Act in this case. In that case, the assessee-company was carrying on the business of deep sea fishing. For that purpose, it acquired eight trawlers, which were being used for catching the fish. The assessee claimed deduction under s. 80J of the Act on the ground that the profits and gains were derived from ship. Justice Tulzapurkar (as he then was) held that the said expression 'any profits and gains derived from a ship' occurring in sub-s (1) of s. 80J of the Act would have to be construed as profits and gains directly derived from that source and that the benefit of that provision could not be availed of, if the assessee was using a ship or ships as instruments for carrying on the business activities which produced the income. It was further held that the profits and gains derived from the business activity like catching fish in deep sea with the aid of ships or trawlers and selling the same could not be regarded as 'profit and gains derived from the ship', to which the deduction allowed under sub-s. (1) of s. 80J of the Act, would be applicable. We are respectfully in entire agreement with the view expressed by the learned judge. In these cases, the assessees claim the benefit of s. 80J on the basis that they are using trawlers for carrying on their business. As the income here also is derived by using the ship for the purpose of catching the fish, it cannot be held that the deductions allowed under s. 80J of the Act, could be availed of by the assessees. In this view of the matter, the Tribunal is right in holding that the assessee cannot claim deduction under s. 80J of the Act.
For the aforementioned reasons, we answer the question referred to us in the negative, i.e., in favour of the Revenue and against the assessees.
6. The above referred cases are accordingly answered.