Section 10(15)(iv)(c) — the law in short
What the courts have decided on section 10(15)(iv)(c), in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.
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Vijay Ship Breaking Corpn v CIT
Supreme CourtHelps taxpayerValidity unconfirmed
Does breaking up ships count as production for the section 80HH and 80-I deduction, and must I deduct tax at source on usance interest paid abroad on the vessel I bought?
Yes to the deduction, and no tax was deductible. The Supreme Court held that ship breaking gives rise to the production of a distinct and different article, so the deduction under sections 80HH and 80-I was rightly allowed. Production is wider than manufacture, the two words are used disjunctively, and nothing in the ordinary meaning of produce requires the article to be new. On the second question, Explanation 2 to section 10(15)(iv)(c), inserted on 18 September 2003 with effect from 1 April 1983, exempts usance interest payable outside India by a ship breaking undertaking on the purchase of a ship. Since the sum was not assessable in India, no obligation to deduct under section 195(1) arose.
Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.