9911796707
TMI Blog1985 (4) TMI 120X X X X Extracts X X X X X X X X Extracts X X X X ..... lowance was not granted to 10 out of 11 dredgers transferred in favour of the assessee-corporation. So also section 80J relief was not granted to them in the original assessment. Subsequently, it came to light that Tug No. IV was acquired by the assessee-corporation with effect from 31-3-1976 afternoon itself and was used as such in its business. The claim of investment allowance under section 32A would be available to such ships or dredgers acquired from 1-4-1976 and in respect of ships acquired prior to that date, the IAC felt that they were entitled only to initial depreciation under section 32(1)(vi) of the Act. The IAC held that inasmuch as Tug No. IV was acquired and installed before 1-4-1976, the assessee-corporation was not entitled to investment allowance and the said allowance granted in the original assessment should be disallowed. The assessee-corporation by its letter dated 11-3-1983, on the other hand, contended that the investment allowance already granted was justified for reasons more than one : (i) It is contended that the Government of India transferred the ship, with effect from 31-3-1976, the same could be used in business with effect from 1-4-1976 only and it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowance. In view of the conclusion, the learned IAC arrived at, namely, that on the date of acquisition, Tug No. IV was second-hand in the hands of the assessee-corporation, the IAC also held that the value of such second-hand ship cannot be allowed to enter into capital computation. Therefore, he withdrew the section 80J allowance of Rs. 8,58,000 previously granted under section 80J to this corporation. Thus, the IAC had completed the reopened assessment under section 143(3) read with section 147 of the Act by his reassessment order dated 23-3-1983 relating to the assessment year 1977-78. 2. Aggrieved against the reassessment order, the assessee took up the matter in appeal before the Commissioner (Appeals). When the matter was pending before the Commissioner (Appeals), the assessee took up an additional ground claiming initial depreciation on the cost of the tug, under section 32(1)(vi). Before the learned Commissioner (Appeals), the decision of this Tribunal which emanated from the original assessment for 1977-78, wherein it was held that the dredgers used by the Government before their acquisition by the assessee-corporation were held to be new dredgers within the meaning of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... poration of India are in the nature of remuneration for services rendered by acting as an agent of the Government. From 1-4-1976, the Shipping Corporation of India started operating the dredgers as an agent of the assessee-corporation, on the same terms and conditions on which it acted as an agent to the Government of India as advised by the Government of India in its letter dated 24-9-1976. The description of the dredgers which were to be under the custody of the Shipping Corporation of India and the copy of the agreement were all furnished at pages 9 to 29. The board of directors of the assessee-corporation passed a resolution on 25-8-1977. Item No. 12 of the agenda which came for discussion before the board was as follows : " Agency arrangement with Shipping Corporation of India for operation of MOT crafts during the year 1976-77 " Following is the resolution : " The Board considered the agenda Item and noted that the agency arrangement came to a close with effect from 31st March, 1977. The Board accorded post facto approval for the terms and conditions of payment under the agency arrangement between DCI and SCI for operation of the floating crafts of the corporation during t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y him". [Emphasis supplied] The cumulative impact of the words italicised only indicates that the word 'acquired' in section 32A(2)(a) indicates only possessive ownership and putting the ship into use for the purposes of business. Both the learned Commissioner (Appeals), who decided the appeal from the original assessment and the Tribunal which decided the second appeal from the original assessment made it clear that the previous use of dredgers and tugs in territorial waters did not disqualify the assessee from the benefit of 'investment allowance'. The learned Commissioner (Appeals) presumed that from the afternoon of 31st March, Tug No. IV might have been put to use only in territorial waters by the Shipping Corporation of India which after 1-4-1976 became the agent of the assessee-corporation. In this view, the learned Commissioner (Appeals) felt that Tug No. IV was acquired only on 1-4-1976 and, therefore, the assessee-corporation is entitled to investment allowance. He felt that according to his finding, the assessee-corporation was entitled to investment allowance and there is no need to give effect to initial depreciation granted under section 32(1)(vi). He further held tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ridical person and not the Central Government. If the Legislature intended to include the Central Government within the definition of person, it would have included the same along with local authority under the definition. We have accepted this argument advanced by the learned counsel for the assessee-corporation and we hold that we find it difficult to accept the argument of the revenue could be treated as a 'person resident in India'. Ultimately, we held that the investment allowance is barred only where the purchase is from a person resident in India and that the Government of India is not a person and at any rate such person. The purpose of restricting the allowance only to purchase of ships from person other than 'person resident in India' is said to avoid the grant of such allowance on a ship more than once. In other words, it should not be possible for the same ship to get the allowance more than once by mere change of hands. Prior use in inland waters by itself is no bar. The object is obviously to encourage shipping industry. Ultimately, we found 'we, therefore, find that this allowance to the assessee even in respect of acquisition from Government of India is quite in acc ..... 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