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TMI Blog1989 (7) TMI 178X X X X Extracts X X X X X X X X Extracts X X X X ..... able is not in dispute. The only dispute is the amount on which the said allowances should be calculated. The assessee has claimed the above allowances of Rs. 9,99,611. The details are as under : Rs. CIF value of plant machinery under Norwegian aid 6,76,336 Customs duty and clearance charges 3,05,410 Installation charges incurred 17,865 ---------- 9,99,611 ---------- The Income-tax Officer has allowed the abovementioned allowances on Rs. 3,23,275 which is the tot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... els for the implementation of Boat Building Programme of the Govt. and for this purpose the assessee Goa Shipyard Ltd. had been selected as one of the Building Yard where two large fishing vessels to be used for exploratory fishing, charting of fishing grounds, evaluation of fishing methods and gear as well as training of personnel would be constructed initially under this contract. It is further mentioned that the vessels which were to be constructed would be delivered to the Govt. for operation by the Exploratory Fishery Project, Bombay and Central Institute of Fisheries, Cochin. It was further mentioned in the said agreement that the Govt. of Norway, being responsible for the administration of the programme, was desirous of getting built ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e above facts the said amount of Rs. 6,76,336 was liable to be taken into account for computing the abovementioned reliefs namely depreciation, investment allowance, additional depreciation and extra shift allowance. 6. The relevant provision is section 43(1) and Explanation 2 to said section. Section 43(1) lays down that actual cost means actual cost of the asset to the assessee, reduced by that portion of the cost thereof, if any, as has been met directly or indirectly met by any other person or authority. Explanation 2 lays down that where the asset is acquired by the assessee by way of gift or inheritance, the actual cost of the asset to the assessee shall be on written down value thereof as in the case of previous owner for the previ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was the Govt. of Norway. There was no question of any depreciation having been allowed to the Govt. of Norway in any prior year in respect of plant and machinery in question. The CIF value on which customs duty was paid by the assessee represented fair market value on the date of acquisition. This is not disputed on behalf of the department. In the circumstances the said value should be regarded as the actual cost of the asset to the assessee under Explanation 2 to section 43(1) of the Act. The submission on behalf of the department was that since no depreciation had been allowed to the Govt. of Norway in respect of the said plant and machinery in any prior year, the written down value in the hands of the Govt. of Norway could not be determ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision of Kerala High Court is not an authority for the proposition that when the plant and machinery is received by an assessee as gift from foreign Govt., the CIF value of said plant and machinery cannot be regarded as cost to the assessee. 11. In this connection the decision of the Calcutta High Court in the case of Simon Carves India Ltd. v. CIT [1983] 141 ITR 712 is relevant. In that decision the assessee had imported two mobile cranes from UK. Those cranes had been given to the assessee by the company as gifts. In that case the department had not disputed that the depreciation was allowable on the value of the cranes. The question was as to what value should be taken. In that case cranes had been received as gift under certain con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T v. Solomon Song [1933] 1 ITR 324 (Rangoon) by the Amending Act aforesaid section 10(5)(c) was inserted, the provisions of which corresponded to those of Explanation 2 to section 43(1) of the Income-tax Act, 1961. Thus the position now is that where an assessee acquires an asset by way of gift or inheritance its actual cost to him would be itself written down value in the hands of the predecessor-in-title on the date when the gift became effective and that if the market value of the asset on the date of gift or on the date of inheritance was less than the said written down value then the market value would be required to be adopted. We have applied the said principle in deciding this point. We accordingly confirm the order of the CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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