TMI Blog1988 (3) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the case, the Income-tax Appellate Tribunal is correct in holding that the ships were not owned by a person resident in India within the meaning of the Explanation, clause (1), below sub-section (2) of section 32A, but 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 prior to their requisition by the assessee, for claiming respective allowances under sections 32A and 80J ?" The answer to both the questions would depend upon the same consideration to which we shall presently refer. In the previous year relevant to the assessment year 1977-78, the assessee acquired eleven crafts for the value of Rs. 22,14,11,000. The assessee also acquired six more crafts at cost of Rs. 13,23,87,579. In its return for the assessment year 1977-78, the assessee claimed investment allowance under section 32A of the Act on the value of the crafts acquired. It also claimed deduction under section 80J on the value of the crafts. The Income-tax Officer rejected the claim on variety of grounds. Firstly, it was said that the crafts acquired by the assessee cannot be regarded as ships fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o questions which we had already indicated. We have heard Sri M. Suryanarayana Murthy, learned standing counsel for the Revenue, and Sri S. Parvatha Rao, learned counsel for the assessee-corporation. Section 32A of the Act deals with investment allowance. There is no dispute that it is allowable in respect of every new ship acquired after the 31st day of March, 1976, by an assessee engaged in the business of operation of ships. (See section 32A(2)(a) of the Act). The expression "new ship" occurring in sub-section (2) of section 32A is defined in the Explanation as having the same meaning as in the Explanation to clause (vi) of subsection (1) of section 32. It is, therefore, necessary to see the meaning of that expression according to the Explanation to section 32(1)(vi) of the Act. Now, the Explanation to section 32(1)(vi) is in the following terms: "Explanation.-For the purposes of this clause, (1) 'new ship' or 'new aircraft' includes a ship or aircraft which before the date of acquisition by the assessee was used by any other person, if it was not at any time previous to the date of such acquisition owned by any person resident in India." The purport of the above Exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... served that it is most generally used to denote what may be termed as an entity of assessment ; i.e., the possessor or recipient of an income which the Acts require to be separately assessed for tax purposes. Now, the definition of the expression "person" occurring in section 2(31) is crucial because the liability to pay tax under the Incometax Act by virtue of the charging provision contained in section 4 is upon every person in respect of his total income of the previous year. Thus, the definition of the expression "person" occurring in section 2(31) is significant for more reasons than one. If any particular entity cannot strictly fall within the meaning of the expression "person" occurring in section 2(31), then no liability attaches to that entity to pay tax under the Income-tax Act. Now, learned standing counsel for the Revenue invites our attention to sub-clause (vii) of section 2(31) which makes every artificial juridical person, not falling within any of the preceding sub-clauses, a "person". Learned standing counsel proceeds on that basis to contend that the Government or the State should be considered to be an artificial juridical person for the purpose of its status and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person for the purpose of section 2(31) and, consequently, is immune from taxation whether on the grounds of sovereignty or otherwise, it is natural to extend the same logic to understand the expression "person" wherever it occurs in the Act. We find nothing in the context that compels us to give a different meaning to that expression when it comes to the charging section 4 and give an entirely different meaning to that expression occurring elsewhere at different places in the Act. In our opinion, reliance of the learned standing counsel on the House of Lords judgment in Madras Electric Supply Corporation Ltd. v. Boarland [1955] 27 ITR 612 is misplaced. That was a case where the controversy centred round rule 11(2) of the Rules applicable to Cases I and 11 of Schedule D of the English Incometax Act, 1918, which provided that whenever any person succeeds to any trade which, until that time, was carried on by another person, the liability attaches to the person succeeding to the trade. It is not denied that rule 11 does not define the expression "person" ; nor has it been pointed out that Cases I and II of Schedule D contain any such definite expression. Therefore, for the purpose of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person resident in this country, then it is not the intention of the legislature to extend the benefit to such cases. Benefit is sought to be extended to cases where used ships owned by persons residing outside India are purchased. The context in which the expression "person resident in India" occurs in the Explanation to section 32(1)(vi) leaves no doubt, in our mind, that it does not take in Its sweep "the Government". The Government is not a person capable of having residence either on its own or in terms of section 6 of the Act. It would be frustrating the very legislative intention to deny relief on the ground that the assessee-Corporation purchased the crafts from the Government of India. Having regard to the facts and circumstances, we have no doubt that the Tribunal had come to the conclusion correctly that the scope and amplitude of the Explanation to section 32(1)(vi) does not disentitle the assessee to claim investment allowance under section 32A as well as appropriate deduction under section 80J of the Act. In our opinion, the Tribunal's conclusion is correct. In that view, we answer the questions referred to us in the affirmative, that is to say, in favour of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
