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TMI Blog1983 (10) TMI 109X X X X Extracts X X X X X X X X Extracts X X X X ..... taken over at the value of Rs. 22,14,11,000 from the Government of India while the assessee acquired 6 crafts at a cost of Rs. 13,23,87,579. Investment allowance on all crafts and relief under section 80J of the Income-tax Act, 1961 ('the Act') even on newly acquired crafts, though specifically admissible to ships, were disallowed by the ITO on the ground that a dredger was not a ship. He alternatively took the view that these crafts were previously owned by the Government of India and that also, according to him, disentitled the assessee to the allowances. He rejected an alternative claim for higher depreciation also on these dredgers. 3. In first appeal, these decisions were contested and an additional ground claiming total immunity fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n resident in India'. In this view, he confirmed the disallowance of investment allowance claimed at 25 per cent on Rs. 22,14,11,000 and relief under section 80J on these crafts while directing allowance of both on crafts newly acquired at Rs. 13,23,87,579. He referred to certain other provisions under the Act where transactions with the Government or the Government company were contemplated. He, therefore, concluded that the Act contemplates the Government to be a person and that the decisions to the contrary under constitutional law cannot help the assessee. He confirmed depreciation, as allowed by the ITO, but limited relief under section 80J to own capital excluding borrowed capital in respect of newly acquired crafts. 4. The assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the benefit. The narrow view, as canvassed by the authorities, it was claimed, will frustrate the very object of the relief. 'Person resident in India' is, it was pointed out, a technical phrase in a tax statute and should be given the same meaning as in the statute. Dictionary meaning cannot be glibly assigned so as to enlarge the meaning. Authorities from the works of Maxwell, Craes and Bindra were cited for this well accepted proposition. This is known as primary rule, Rule of Interpretation. 'Context Rule' also pointed out to the previous owner being a 'resident' assessee. He read an extract from Justice Subba Rao, CJ. in State of West Bengal v. Union of India AIR 1963 SC 1241 SC (sic), wherein it was pointed out that the statute would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of shipping potential by way of replacement enabled by the grant of investment allowance which necessitates creation of reserve and subsequent use thereof for replacement. 8. We have carefully considered the facts as well as the arguments. The main point for consideration is whether the Government of India could be considered to be a 'person resident in India' within the meaning of Explanation to clause (vi) of sub-section (1) of section 32 made applicable to section 32A dealing with investment allowance. If it could be so treated, the assessee admittedly will not be eligible for relief. We find it difficult to accept the arguments of the revenue that the Government of India could be treated as a 'person resident in India'. We are in su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aning of section 6 of the Act'. Section 6 defines residence with reference to physical stay in India or with reference to the place where control and management are located. Both these broad categories of residence with further classification as between 'not ordinarily resident' and otherwise could hardly apply to the Government. If the Government of India or any State Government were to be included as a 'person', certainly tests of residence would not have been framed in this manner. (iv) Above all, it is not correct to find out the meaning of the word 'person' and 'resident' separately when what is contemplated is a 'person resident in India'. When this phrase is read as a whole, as it ought to be read, this can hardly mean a Government ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of India is quite in accord with the intention of the statute. 9. We have, therefore, to accept the assessee's contention on this point and direct investment allowance on acquisition of crafts from the Government of India on Rs. 22,14,11,000, subject to the ITO's satisfaction regarding other conditions, like creation of reserve, etc. 10. It follows from our above inference that the ships were 'not owned and used in Indian territorial waters by a person resident in India within the meaning of section 80J(5)', since they were used only by the Government of India. Hence, the mere previous ownership by the Government of India and use by it in Indian territorial waters could not disentitle the assessee from relief under section 80J for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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